Strategic Thinking Is Imagining Your Future

Many boards want their CEO to lead the strategic thinking process. It makes logical sense but it is often impractical.

Those same boards expect their CEO to be on top of the operational data at all times. Being on top of the operational data at all times is a demanding expectation. It trains one to think short term (“How will what I am seeing affect the budget, clients, staff attitudes, etc.?”).

When it is time to think strategically, it is hard for the executive to switch gears.

The complexity of our society means the executive is watching many things happen concurrently and has very little time to consider the big picture

The tight budget means every expense must be closely monitored which leaves very little time to focus on the future

The tight budget means many executives are doing non-executive tasks which reduces the time available to do executive tasks and strategic thinking is often sacrificed in an effort to respond to the immediate

Boards expect to receive status reports from the executive, which provide information on the recent history of the organization and the board rarely ask the executive to predict the future beyond the end of the budget cycle

Thinking strategically is a learned skill and the preceding demands provide limited opportunities to hone the skill

Rarely is the executive’s ability to think strategically a part of his or her annual review

The solution is …

Select a board member or a friend of your organization who is a good strategic thinker to lead the strategic planning retreat or hire a consultant

Encourage the retreat facilitator to continue to coach your executive on strategic thinking over the next year

Budget (expense and matching income) for additional help in next year’s budget so your executive has time to think strategically

Change the board’s expectations about the content of the executive’s status report (80% current operations and 20% looking forward 3 – 5 years in the future)

Create a board committee to monitor external non-financial/economic trends (local, regional, and national) that are likely to affect the mission and clients then have the committee report on their observations quarterly

Next Step:

Make strategic thinking an organizational priority

Change your expectations of your executive placing a greater emphasis on strategic thinking

Change the structure of the board meeting to include some time (never less than 10%) for strategic discussions

Provide the donors with an understanding of the board’s strategic thinking annually and solicit input from the donors

Highly sustainable nonprofits have a vision of the future. They are inaccurate but surprisingly close. The vision is close because the board periodically adjusts the vision. Because the vision is close, the nonprofit is better prepared for what happens. The high level of preparedness is the reason for the high level of sustainability.

Take the preceding steps and you will be impressed with how much better prepared your organization will be one year from now. When the next crisis hits, you will be thrilled by your ability to weather the storm. All because your nonprofit is thinking strategically.

As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.

Life as a Fundamentalist

When the world is in turmoil, we have four choices. Which one will you choose?

The four choices are:

1 Do nothing and assume everything will return to normal

2 Throw up your hands and quit

3 Become more careful, conservative, and process driven

4 Throw out the rule book and write a new one

If you are part of a nonprofit board, you know the board’s job is to lead the organization to prosperity and sustainability.

Don’t React – Is a great thing to do if you have a flat tire. A flat tire can turn your day into turmoil but it rarely extends beyond the first 24 hours. From the nonprofit board’s perspective, the equivalent of a flat tire is an operational issue. The board should be dealing with more important issues.

Quit – This might be the right response for the current board. Most people have very little experience with crisis management at the organizational level. If so, the board needs to recruit its replacement. Closing the doors and turning out the lights is the wrong decision. The people who are receiving services still need those services. Quitting might save money and be less work but nonprofits exist to make meaningful, measurable, and permanent changes.

Tread Lightly– Being careful, conservative, and process driven sounds like retuning to the fundamentals. For a football player blocking, tackling, and ball handling are the fundamentals. Being the best you can be at each of those skills is critical whether the game is in turmoil or not. Rushing the kicker, using a zone defense, and onside kicks are all processes (tactics) which must be carefully chosen based upon the circumstances. Over commitment to the process can cause one to miss seeing new and emerging opportunities.

Improvise – Is usually the right choice. It is perceived as the high-risk choice because no one knows what the new rules will be or require.

Tread lightly is often perceived as the right choice but seldom lives up to expectations. Turmoil implies that the rules are changing. Doing a better job of controlling costs is admirable. It is also one of the fundamentals of good management. However, it fails to ensure that the right decisions for the changing situation are being discussed or made. It is making the right decisions that will increase sustainability. Saving a few more dollars so that the bank account is bigger is like coasting to the edge of the cliff and bragging about the improved fuel mileage as the car descends.

Next Step:

Ensure the crisis is really turmoil rather than a momentary problem

Ask someone to come to the next board meeting with a list of the issues surrounding the crisis

Form a committee to objectively evaluate each issue, direction of change, and its positive and negative impact on the future of the mission (not organization) and clients, then report at the following board meeting

Form a new committee to objectively evaluate the findings and purpose a plan at the next board meeting

Discuss the plan and table it for a vote at the following board meeting

There are several reasons for the lengthy process.

Taking time to study, plan, and decide will raise the level of objectivity

Taking time will allow everyone to become more comfortable with the “new normal” (post turmoil reality)

Provide an opportunity to study what others are doing (government, for-profit, nonprofits, and individuals)

Taking time provides non-board members with an opportunity to comment and take ownership in the plan

As you know, sustainability is enhanced by making the right decisions. Making quick decisions only shortens the time if they are the right decision. If it is the wrong decision, it reduces sustainability, costs time, and reduces the resources available to implement the right decision.

As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.

Solve a Different Problem

Conventional thinking about problem solving produces conventional solutions. When conventional solutions are insufficient, it is time to be unconventional.

Conventional solutions are great when everything is working as expected. During periods of tumult, it is unlikely that any problem is conventional. Therefore, it is unlikely that a conventional solution will provide optimal results. There is a chance that a conventional solution will fail to solve the problem. If the conventional solution misses the mark, there is a loss of time and resources. Time and resources are precious all of the time but their value increases significantly when there is turmoil and uncertainty.

What is the alternative?

Looking at every problem differently opens a new set of possibilities.

During normal times, a pre-school’s response to a drop in donation might be to increase the number of newsletters, appeals, and face-to-face contacts. An unconventional approach might be to open a pre-school in one of the community’s upper income neighborhoods and charge above market rates.

Donors might be willing to fund an expansion of the business that provides a sustainable income. The sustainable income can be used to underwrite the tuition of the lower income students in the original facility.

While the donors want the mission to continue, the wild swings in the stock market may make it difficult for the donors to comfortably pledge to support the mission. A large one-time gift that keeps on giving might be more comfortable for donors. Creating a financially independent nonprofit in times of uncertainty is appealing to many donors.

In addition, raising funds to start a new center is a capital campaign. Capital campaigns often bring in new donors. One example of a prospective new donor is the young family near the new location who will benefit from having a high quality pre-school nearby.

Instead of trying to encourage donors to give more, the process becomes one of giving the donors more to give to (help more children in more locations).

Next Step:

Decide if there is enough tumult to justify looking at both the conventional and unconventional approaches to solving a pressing problem

Find more than one unconventional view of the problem

Have the courage to adopt an unconventional solution when there are sufficient benefits to justify the additional risk

Leading organizations have higher sustainability. In times of crisis and turmoil, leaders emerge. Leading the way forward out of crisis is the process of finding the unconventional solution to an important problem. It will propel your organization into a leadership position in your market and increase your organization’s sustainability.

As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.

Community Engagement Increases Sustainability

Sustainability in its simplest form is ensuring a nonprofit will have the strength to continue to serve the community far into the future. Have you thought about how to engage the community in your organization’s sustainability?

When the community is engaged in your sustainability, the community works with you to raise funds, advocate for your organization and mission, and encourage clients to enroll.

Here are four areas that will help increase community engagement:

Board – Ensure that 15 – 25% of the board are members of the community at large rather than related to your nonprofit or its clients. They might be representatives from nonprofits that offer upstream or downstream services to your clients. They represent for-profits who sell to your clients, employ your clients, or benefit from your mission. They may be government representatives who have an interest in the success of your clients or mission.

Strategic Plan – Each year when you update or draft a strategic plan, invite the community to attend one or more presentations on the plan. Giving the community the opportunity to comment on the plan will increase the community’s sense of involvement and ownership. It will also help you ensure that all of the major areas are adequately covered before you commit resources to your plan.

Report – Treat the entire community as if they were donors. Invite the community to attend one or more meetings to discuss your service results from last year. Be sure to report on the meaningful, measurable, and permanent changes your organization has made in the community and the lives of those you serve. This process helps the community understand why your organization is important to every citizen. It also provides the community with the opportunity to suggest changes and tell you what services they value.

Collaborate – Every social issue is too big for one organization to solve. Regardless of the issue, there is someone who is or could be providing pre, post, or concurrent services to your clients. As your collaboration in the community grows, your name recognition will increase. In addition, the collaboration will increase your success with clients. Both will ensure greater community support.

Next Step:

Increase your outward focus and the way you express your outward focus (“Our clients need …” instead of “Our organization needs …”)

Develop a plan to increase the community’s engagement

Prioritize the preceding four areas for engaging the community and focus on the first priority for the next 6 months

After 6 months review your success, adjust your plans, and broaden your activities to include the other three areas

Sustainability is directly related to the value the community perceives the nonprofit offers. The preceding four areas will increase the perceived value of your nonprofit, provide valuable input, and raise your success rate when serving clients as well as increases the community’s support in all forms. Can you think of a better way to increase your success in 2012?

As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.

Mission Accounting

How much does your nonprofit spend on its mission? Besides wanting to say, “Every dime” what is the real answer?

There are two reasons the opening question is important.

Times are tough and donors want the best value for their money. Knowing what percentage of their gift goes to mission and the percentage that goes to overhead, administration, and other things is becoming more important to the donors every year.

The best way to make spending on the mission more efficient in the future is to know how much is being spent today.

There is no question that overhead, administration, marketing, technology, and other things are critical to the operation of the organization. However, many of those things are the cost of doing business rather than the cost of serving a client (cost of the mission).

One small nonprofit we are working with has an annual budget of about $110,000. Of that sum, only about $15,000 is cash and the rest comes from gifts in-kind. About 75% of their budget is spent on direct services to the clients. The rest goes to normal business expenses (lawyers, accountants, marketing, phones, rent, etc.). Their CEO and about half of their facilitators are volunteers (not considered in-kind services). The other facilitators receive a modest fee. All of their services are provided at their business partner’s locations so the rent, phones, utilities, etc. are unnecessary to serve the clients but critical to the organization.

The demand for their services is increasing. That speaks volumes for the effectiveness, value, and community support for their services. Their sustainability is increasing which means their strength and community impact will increase.

The board wants to grow the organization. However, they also want to find a way to keep their current budget balance (25% for organizational support and 75% committed to direct client services).

Another client spends 5% of their budget on direct services to the clients. Their budget is $1.2 million. They have declining demand for their services, declining donor support, and sustainability is threatened. The community is aware of the organization but pays very little attention to it.

Somewhere along life’s journey, the larger organization’s focus shifted from being about the clients and the mission to being about the organization and what the organization needs. When that shift took place, the organization began its decline.

Assuming you cared equally about both missions, which organization are you more likely to support with your time and gifts?

Both organizations are extreme examples. The small organization is going to find it impossible to keep their budget balance. It is the passion of the board, CEO, and others than makes the balance possible. As the organization grows, the passion will become diluted and organizational expenses will increase.

The larger organization needs to change their budget balance. The passion for the mission is disproportionally diluted. They need to rekindle the passion and find a better balance.

Next Step:

Determine the budget balance for your organization

Ask the staff to create a plan that will increase the percentage spent on direct client services (mission related) by 5% over the next year while decreasing the overhead and other expenses by the same 5%

Make monitoring the budget balance the primary focus of the financial report at each board meeting

Each year challenge the staff to keep increasing the percentage of the budget spent on the mission and clients

You will notice two immediate benefits to this approach:

The conversation will change from, “We can’t afford to do that for the clients.” to “How can we ensure our clients receive what they need.” The change in the conversation will energize fundraising, board engagement and volunteer recruiting.

As the percentage tilts more toward the clients, your reputation, sustainability, donor support, and number of clients served will increase.

When analyzing or talking about a nonprofit it should never be about the money. But when you analyze the money it is easy to tell what the organization is about.

If a stranger analyzed your budget, what would they think about your commitment to the mission?

As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.

Good Boss Versus Board

We all want to work for a good or great boss. Every nonprofit board has the potential to be the great boss we all want.

Most people believe there is a direct relationship between the performance and sustainability of an organization and the strength and quality of its leadership. The nonprofit board is a major component of the leadership team.

When the board is responsible for hiring the senior executive, some argue the board is solely determinate of the quality of the leadership. If there is a problem hiring and retaining executives, the board must take full responsibility for the quality of the nonprofit’s leadership.

In many parochial schools, the final selection of the senior leader (usually principal) is the responsibility of the senior religious leaders. This means that the senior religious leaders must share responsibility for the sustainability and performance of the school as well as the quality and strength of the leadership (board and senior professional staff). The board has shared responsibility also.

None of the preceding exonerates the professional. He or she is one of the senior leaders and plays a significant role in the overall success of the organization. However, in practical terms the senior executive has less responsibility than the boards or religious leaders who hire them.

The three qualities most of us want in a great boss are integrity, influence, and mission focus.

Integrity – Can I trust you? If you say you are going to do something, will you follow through as promised when promised or do you offer excuses and explanations?

Influence – Can you gather support for the cause, mission, and programming we do? Can you speak with others in power who surround our organization and advocate on behalf of our clients?

Mission Focus – Are your priorities our mission’s priorities? Are your decisions based upon what is best for our clients? Do you believe the team is doing the best it can with the resources we have? Are you trying to find more resources to expand the capacity of our organization to serve the mission? In short, are we all on the same team?

It is important to remember that the board is a single entity made up of a collection of individuals. When we think about the board as a “boss”, we are thinking about the collective decision-making and action. It is more than just how the board chairperson acts. It is how the group performs as a team which determines the level of greatness of the board’s leadership.

As an example, if 1 person on the 18-person board is highly influential and the other 17 are minimally influential, the board is a minimally influential boss. It is the same as the individual who only chooses to use their influence one day out every 18. He or she might be wonderful on that one day, but the rest of the time, the team he or she is leading suffers.

Next Step:

Remind your board that it sets the standard for your organization by who it hires, the decisions it makes, and its other actions

Challenge your board to be the boss it would like to work for

Remind your board of the three criteria used to determine the greatness of a leader (integrity, influence, and mission focus)

Sustainability depends on good leadership. As leadership improves, the sustainability of the organization improves. Each board meeting is an opportunity for the board to demonstrate its leadership. Each board meeting is also an opportunity for the board to fine-tune its leadership skills through a short educational session.

Is your board conscience of the need to be a great boss and is it intentionally trying to be a better boss?

As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.

Coaching for Success

It makes sense for every leader to have a coach. Who is coaching the senior professional leaders of your nonprofit?

The top athletes have coaches because it is the best way to improve already superior performance. Our communities, those in need, and the passionate donors who support our nonprofits also deserve superior performance. These trying times demand superior performance. What could a coach do to help your nonprofit’s senior executive more easily respond to the challenges?

There are two sources of executive coaching for your nonprofit professional. One is free and the other is relatively inexpensive.

The inexpensive approach is to change the way you contract with consultants. Many nonprofits hire consultants to do a job. They essentially outsource the problem to the consultant. Instead, think about hiring the consultant to teach your professional how to do the job. Make the transferring of skills to your staff part of the success requirement for the project.

This of course assumes the task is one that is strategic to the organization and occurs periodically.

One organization we know of has a grant consultant who is responsible for finding grant opportunities for the organization. The consultant has been doing this for a few years. The development staff creates the grant proposal but the consultant has the relationship with the grant sources (government agencies, foundations, etc.).

This situation developed when the organization needed grant money. It lacked a relationship with any of the local or regional funders. They hired a grant facilitator (consultant). Today, they still rely on the facilitator to maintain the relationships.

Even if the initial contract had been more expensive, the savings over the last few years would have more than justified the initial expense. The organization is vulnerable if something happens to the relationship with the facilitator.

We see this same thing happen with job descriptions, strategic plans, organizational restructuring, program incubation, event planning, and many other activities. If it is a task that is repeated periodically, it is worthwhile for someone in the organization to know how to do it.

Think about your senior executive for a moment. Write down the 3 – 5 skills that would enhance his or her performance. Next to each skill, write the name of the board member who is best in that skill area. You have just created your coaching staff for your executive and the coaching is free.

There is a temptation to say, “But Mr. X is only slightly better or maybe even a little less skillful than our executive in that area.” There are two points to consider:

1 Do you think that Tiger Woods’ coach was a better golfer when Tiger was number 1 in the world? The skill of the coach is less important than the ability of the coach to objectively analyze performance and productively guide the change process.

2 If your first choice for a coach is unable or unwilling to be a coach, assign the person the task of finding someone who will do the coaching as a gift to your nonprofit.

Next Step:

Decide which three skills will enhance the performance of your executive

Recruit someone or a team to coach your executive

Change the way you contract with your consultants so that each consulting engagement builds valuable skills

Sustainability requires growth. An organization’s growth is limited by the growth of the slowest member of the staff. Use your consulting agreements to ensure that the staff is developing a richer set of skills each year.

When the senior executive’s growth each year is less than necessary to sustain the organization, you are in the early stages of a decline which leads to crisis. Sustainability is at risk or may have already started to decline.

Lack of growth is also an indicator that soon the executive will become overwhelmed by the responsibilities of the job. When the executive becomes overwhelmed there are three predictable consequences:

Executive burn out

Executive resignation or dismissal

Organizational decline

Please choose none of the above. Find a coach for your executive. It is good for his or her career, your clients, the donors, and the community. It is the winning choice and that is what coaches do best – help winners win.

As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.

Every Day is a Test

Every day every organization around the globe is tested. Do you know how the test is scored?

The highly sustainable nonprofits know the scoring system and pass the test more often than other nonprofits. The rewards for passing the test are better client retention, more clients, loyal donors, passionate advocates, and a growing reputation as well as positive community impact.

The scoring is rigorous, objective, and comprehensive. Everyone (donors, competitors, clients, business partners, community members, employees, volunteers, and others) is provided with an opportunity to rate your nonprofit’s performance.

The test is simple:

How did people’s lives change because of your program?

The scoring system follows. Those organizations who excel receive the highest score:

Measurable – How well can you and those outside your organization measure the change?

Evident – What independently verifiable evidence is there that change occurred?

Permanent – How long did or will the change last?

Meaningful – How many people would agree that the change is meaningful to them?

Comparable – How do your results, in the preceding four areas, compare with similar organizations (local, regional, national, and global)?

Expectations – How well is your organization meeting the expectations of all of your constituents (staff, donors, clients, client families, community, business partners, referral sources, advocates, and others)?

Part of every board’s responsibility is to monitor the performance of their nonprofit. Many times the board focuses on the financial performance. Many of the nonprofits that are struggling today had good financial performance 5 years ago. However, their boards were only looking at the financials.

It is the preceding 6 criteria that determine an organization’s sustainability. Good financials today means you can meet payroll at the end of the month. However, it says nothing about your ability to meet payroll, serve clients, attract donors, or stay open 5 years from now. Meeting payroll at the end of the month and serving clients 5 years from now are both critically important.

Financial strength is a byproduct of your past commitment to being sustainable. You can think of financial strength as the fruit from the sustainability tree. When your sustainability tree is well tended, you will have a good financial harvest in the future. The financial harvest will be a little better next year but the best harvests come after years of careful tending.

Next Step:

Ask your board to develop an evaluation process for your organization covering the 6 areas

Determine what you need to do to increase your scores

Reevaluate your organization every 6 months and develop a trend line for its performance

The most sustainable organizations are the ones whose trend lines are rising the quickest. As the stockbrokers say, “Current performance is no guarantee of future performance.” However, an improving trend line is an indication of the leadership’s commitment to sustainability.

Remember, sustainability is an unforgiving judge. A phrase like, “We had a bad quarter.” may appease an unhappy donor but it is unable to change the arc of your trend line. The only formula for changing the arc is persistent, intentional, and dedicated effort.

Who are the nonprofits who pass the test most frequently in your area (growing reputation for excellence in the 6 areas)?

What steps do you need to take to ensure your community lists your nonprofit’s performance as one of the top 10?

As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.

Mission Enablers provides a free weekly e-newsletter. Each week you will recieve three articles (board, fundraising, and organizational leadership). Each articles provides useful, actionable infomration that will help your organization increase its capacity to serve others.

Nonprofit Boards and Leadership

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Redirect

Strategic Thinking Is Imagining Your Future

Life as a Fundamentalist

Solve a Different Problem

Community Engagement Increases Sustainability

Mission Accounting

Good Boss Versus Board

Coaching for Success

Every Day is a Test

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