It's Not Your Money!

It's Not Your Money!

This week, The NonProfit Times reported that Louisiana State Treasurer John Kennedy has demanded that 36 organizations either outline what they’ve done with state appropriations or return the money. If these organizations do not comply with reporting requirements by September 4 (original deadline was August 31), Kennedy will refer them to the newly-created Office of Debt Recovery. (http://www.thenonprofittimes.com/news-articles/authorities-go-after-36-charities/).

This is a scenario that is paying out far too often. In New Mexico, 15 mental health nonprofits' state funding was recently withheld and management teams from out of state were brought in to take over management of the agencies as a result of an independent audit which found gross errors in spending of Medicaid dollars, double billing, excessive salaries in some cases, and other problems.

A CEO of a nonprofit I volunteered for some time ago admitted that he found it 'necessary' at times for cash flow to take money out of restricted funds for day-to-day expenses. WHAT?

Another CEO, passionate about her agency's mission to serve troubled teens, realized that funding restrictions forced her to drastically shorten the average length of treatment so much that her agency couldn't provide adequate services for clients, and she wanted to serve more and more kids, so she found ways to circumvent the 'system' and allowed some 'creative' billing programs.

It's Not Your Money!

While I decry some of the restrictions placed on donations, grants, and so much of  federal funding, nonprofits have got to be clear about this: It's not your money! Nonprofits just cannot be fast and loose with funding, regardless of the pressures placed upon them to do more with less. They have to follow the rules set by the funding source ... or find another way to sustain themselves and their critical programs and services.

Those nonprofits who have, for years, relied heavily on grant funding from governmental sources are perhaps most prone to finding creative ways to make the funding 'work' and create ways around the restrictions. I can understand the temptation, but the fact remains: It's not your money.

Question: Do some funding sources wait too long to investigate the uses of their restricted funds? Does a donor have a way to check on the uses of a restricted gift? Do some funding sources make it too easy for some agencies to get creative with the use of funds because the restrictions are confusing and perhaps not mission-driven? Are some agencies so stressed for funding to serve more and more that they seek funding that isn't 'right' for their missions in the first place?

Sure. All of these scenarios are possible and probably happen every day many times over.

Here is what I think after more than 45 years as an agency CEO, board leader and nonprofit consultant: Nonprofits simply must find ways to diversify their funding sources, moving away from their heavy reliance on government grants and other sources of restricted funding.

I know, easier said than done, but the recent trend toward earning money through social enterprise is one excellent way many nonprofits are gradually reducing their reliance on these restrictive funding sources.

Until that reliance is drastically reduced, however, the fact remains: It's not your money!

Jean Block
Jean Block Consulting Inc/Social Enterprise Ventures LLC
www.jblockinc.com/wwwsocialenterpriseventures.com

Strategic Planning - Why Bother?

Yep - I said it. Right out loud. Why even bother with strategic planning for your organization?

Heresy? Or truth? Here's a likely scenario: The organization's board and staff leaders invest considerable time and money into a one or two day planning session. Of course, they spend time filling in the squares on a SWOT analysis, and they discuss and discuss and discuss important things.. They argue about whether something should be labeled as a strategy, a goal, or a tactic.

At the end of the second day (heaven forbid it is longer than that) the result is often a laundry list of things the organization should accomplish in the next 5 or 10 years, set out in something that looks like this:

I.   Important Words Here
    A.   Some more words abut the Important Words
         i.   A few more words
             a.   Words
                 ii.   More

A facilitator puts together a lengthy report full of more words that is supposed to show how much value they have added to the process, everyone gets a copy and promptly files it away with an audible sigh and checks that off the Things To Do This Year List and quickly files the plan on a shelf. There on the shelf, the Strategic Planning Document gathers dust.

I suggest that this scenario is what gives most strategic planning a bad name. I've sat through these deadly and drawn out sessions as a board member and have been discouraged as a result. The "plan" described above is not a plan - it is an outline! Key elements are missing in the outline: who is responsible and when the action willget done.

No wonder this type of strategic planning doesn't generate enthusiasm and doesn't result in action and outcomes. And no wonder it sits on a shelf gathering dust.

Instead, I'll offer some key points that I have learned as a facilitator about making strategic planning not only a fun and energizing process, but one that really can move mountain for an organization.

1. Keep it short and sweet, focused on outcomes and results, not just talk. If this isn't the first planning session, one day of well-focused work should be all that is required to review the current plan, evaluate progress and set priorities and goals for the coming year.

2. I am often asked to facilitate a process to establish a 5 or 10 year strategic plan, and I decline. Here's why. There is no urgency to get to work on a plan that plans that far out. Those who write that plan are likely to have moved on before anyone gets motivated to work on it, and the new volunteers and staff have no ownership of the long-range plan. And, at the fast pace everything is moving today, that long range plan could be obsolete in several months.

3. Instead of developing a such long range plan, try writing a 5 or 10 year Vision for the organization. State what you want to have accomplished in 5 or 10 years. Then, review the mission statement to be sure it will address the long term vision. Adjust as need be. As a group, come to consensus on 3-5 key priorities to achieve the long range vision that will provide focus for board and staff for the coming 12 to 18 months.

4. Establish committees or task forces of both board and staff that will focus on the 12- to 18-month priorities. Appoint (or get volunteer) committee chairs. Ask everyone present to sign up for the committee(s) they most want to work on.

5. Break into the committees and draft preliminary action plans for each priority that lists Key Activities, Responsibility and Target Dates for completion. Share preliminary plans with the entire group. Require each committee to flesh out their plan within the next 30 days to be presented to the full board.

6. Keep the plan alive! Don't put it on the shelf! Format the agenda for upcoming board and staff meetings to include a review and progress report on the status of the individual plans to keep everyone focused on the desired outcomes set at the planning meeting.

An easy and workable agenda for the planning meeting might look like this:

1. Opening remarks, plan for the day and outcomes to be achieved.
2.  Discussion and consensus: 5 Year Vision.
3.  Mission review if required.
4.  Review and evaluate progress on the previous year's plan.
5.  Discussion and consensus: priorities needed to achieve 5 Year Vision.
6.  Establishment of committees to address priorities.
7.  Committees draft preliminary plans.
8.  Draft plans shared.
9.  Next steps and adjourn.

Here is a simple format to use for the committee action plans:

Column 1               Column 2               Column 3          Column 4
Key Activities        Responsibility       Target Date       Status (reported a board and staff meetings)

Would this work for your organization?  Try it! 

Share your best and worst strategic planning experiences.

Jean Block, Jean Block Consulting, Inc.
www.jblockinc.com
jean@jblockinc.com

Getting Back "In The Box"

As I read posts and blogs recently, I have seen many encouragements to think and perform "Out of the Box." We've begun to equate Out of the Box Thinking as the desired tool for innovative management and leadership.

While I don't disagree with this encouragement for the most part, I credit a savvy and astute Chamber of Commerce executive for making me think differently. She and I recently had lunch. She shared how she had gotten back to basics at her Chamber. She had realized that the constant focus on new thinking, new ideas, new programming, new everything was beginning to erode the basics that had made her organization a leader in the area.

So, she led her organization to get back to basics. To get back Inside the Box to focus on the tried and true management principles that create and sustain a healthy organization. She was focusing on board development, recruitment, training and management. Focusing on membership development, recruitment, retention and benefits. They were assessing all their programs and services within the framework of how successful they were in terms of meeting community and member needs and whether these programs were managed efficiently and effectively. She was focusing on staff development and satisfaction. She was thinking and acting strategically.

And she was reaping the benefits in a newly energized board, increases in membership satisfaction and renewal rates, and a more stable staff.

So, while I agree that organizations need to be willing to let go of old and tired thinking and should be open to embracing new, "Out of the Box" ideas, I also believe there is a time in the evolution of every organization when it is critical to step back, assess and renew their focus on the basics of what works.

Without a strong foundation upon which to base new thinking, new ideas, new programs, all the flurry of newness will likely fail.

And in today's challenging nonprofit environment, when communities rely even more on the nonprofit sector to meet community needs, perhaps getting back Inside the Box is more important than ever!

Jean Block
Jean Block Consulting, Inc. www.jblockinc.com
Social Enterprise Ventures, LLC  www.socialenterpriseventures.com

The baby Bird Syndrome - Whose Fault Is It?

The Baby Bird Syndrome. Whose Fault Is It?

It's a fact.

For many nonprofits, funding from traditional sources such as the federal government and even corporate and foundation funders has shrunk or even disappeared. Those organizations that for years and years and years have relied on "renewing the grant" to fund vital programs and services are now faced with the dilemma of finding new revenue sources...and they may not be there...or reducing staff and cutting back on programs and services.

So Whose Fault Is It?

Perhaps we might lay some of the blame on the traditional funding sources who have taught nonprofits to keep coming back for more, just like little baby birds. This has resulted in an entitlement generation of nonprofit leaders who have known no other way to manage their agencies. I've actually heard nonprofit execs say things such as, "The feds have sent us money forever. We've always gotten it, regardless. Recently we got an infusion of cash from the ARRA pot. There will be more, for sure."

If we are realistic, when we look at the history of traditional funding, we can see that nonprofits have been trained to ask for more, to rely on others to sustain them, to become less and less self-reliant, to take less and less responsibility for their futures.

For many organizations, the warnings have been written on the wall for years, but the baby birds have not been willing to jump to the edge of the nest. And that is understandable because for many, the warnings have been more like Chicken Little alarmists messages, and the status quo just took over.

Who's to Blame?

But now the warnings are louder. Nonprofits are hearing No more often. They are having to wake up to the fact that it is way past time to take responsibility for themselves, to seek and secure new sources of revenue, especially those sources that the agency can control to a greater extent.

And so, we must place some of the blame on the nonprofit sector itself. Complacency has become the norm. "Things aren't perfect, but at least this way of operating is what we know. We have learned to work within the entitlement process and have managed to make it work for us. Besides, what else is there?"

What Can We Do?

Well, instead of hand wringing and running around like a Chicken Little predicting the end of the nonprofit sector, nonprofits have a choice. Actually, the choice has always been there, but few nonprofits have stepped to the edge of the nest, tried their wings and found a new level of freedom from tradition.

These savvy nonprofits have learned to diversify their funding sources. Their leaders, both board and staff, have been proactive, they have understood the reality and inevitable result of relying on funding sources over which they have little or no control.

The savvy nonprofits have learned to operate in a more business like manner that protects their valuable programs and services from the whims of donors, economic slowdowns and federal budget issues. They have begun social enterprises. They have taken charge of their funding.

Dependence or Independence?

The choice it yours. I am not a Chicken Little alarmist, but I can promise you that the entitlement generation of nonprofits is now faced with a steep learning curve that will rock it to the foundation. The new generation of nonprofit leadership must  be realistic and must take responsibility for its own capacity and sustainability. They must be willing to look at mergers and a higher form of collaboration than ever before. They must be willing to put traditional turf issues aside and work for a greater purpose.

It's a hard fact, but if a nonprofit's mission, purpose, programs and services are really needed, then a deep commitment to change is required...from nonprofit leaders to funders.

Jean Block
Jean Block Consulting, Inc. and Social Enterprise Ventures, LLC
www.jblockinc.com
www.socialenterpriseventures.com

Just Talk To Me!

Last week, I endured another unpleasant airline trip and it got me thinking. I was on my way from Albuquerque to Boston to teach workshops the next day.

The day began at 3 AM with a recorded call from American Airlines alerting me that my scheduled flight was delayed so I couldn't make my connection. Nothing more.

I called AA a couple of hours later and after a 30 minute hold to reach a human, more holds while someone wearily tried to solve my problem, I was booked on United flights instead.

In Houston, we boarded the plane to Boston...and sat at the gate, seat belts fastened, in a steaming hot plane for 3 hours...with little to no communication from flight attendants or flight deck. Passengers were restless, calling UA directly or checking via the Internet to gain information about why were were delayed, when we would leave, when we would arrive in Boston, etc.

The result? 200+ people left to wonder about their fate that day. Canceling plans. Delaying pick ups. Stressing out. And, ultimately, swearing they would never fly on United again!

Of course, this time of year, one expects weather delays in airports, so it was no surprise.

But the way both these airlines handled inevitable delays is a perfect example of why people get angry when they are left out of the loop, left to wonder, made to feel undervalued.

It got me to thinking about how often we probably do the same thing in our organizations. We either simply assume that everyone knows what is going on, or we appear to be too busy to stop and talk, or we let our own problems overshadow the work of others...

And all it takes is communication. Talk to employees. Talk to the board of directors. Talk to donors. Talk to those we serve. Empathize and understand.

If the 200+ people in the hot airplane were a part of the conversation, were kept in the loop about things that affected them directly, were offered water (for Pete's sake), were given a word of understanding for how inconvenienced they were, the end result would have been a positive feeling about the airline.

Food for thought...since there was no food on the airplane!

Jean Block
www.jblockinc.com

Ethical? Or Not So Much? What Do You Think?

Here is the scenario:

1. Agency provides advocacy, services and referrals for a special population.
2. Board president is a professional services provider.
3. Board president has been in her position as board leader for 10 years (no term limits).
4. Board president makes a generous annual contribution to the agency.
5. Board president's company has enjoyed high volume of referrals from the agency.
6. Board president does not disclose any conflicts of interest.
7. Board president has begun to pressure the agency to direct all referrals to her company.
8. Agency's mission is to provide individualized case management and referrals that are client-centered.

What do you think about this scenario? Is there a conflict of interest? Is the board leader operating in the best interests of the agency and its clients?

Looks to me as though there is a clear conflict of interest and that the board leader should disclose that she is not 'independent' as defined in the current IRS Form 990. And I would be concerned that she is really over the line in pressuring the agency's staff to refer to her company exclusively.

Then there is the issue of a lack of term limits for board members and officers.

And I wonder what other service providers and the agency's funders and grantors would think about this practice of referring to the board leader's company exclusively.

And It looks to me as though the board leader and the board have completely forgotten the mission of the agency they govern.

If you were the concerned chief executive staff person, what are your options? What would you advise him to do in this scenario?

How could this scenario be prevented or remedied?

I have seen this type of scenario more than once in organizations I have advised over the years so
I've outlined a way to more clearly define board and staff roles in my newest nonprofit resource book, "The Invisible Yellow Line: Clarifying Board and Staff Roles" available from CharityChannel Press Bookstore at www.charitychannelpress.com/bookstore/productid/158/catreferrer/2236 or from Amazon.com.

Jean Block

Why Doesn't the Board (complete the sentence)?

I was asked last week during a webinar about board and staff roles, for tips on how to make the board more engaged at board meetings. The question came from an executive director who said her board is passive and just lets her do all the talking.

My immediate answer was "Stop talking." 

I think it might be just that simple. Far too often chief executives in nonprofits are their own worst enemies. They fall into the trap of thinking that they must constantly prove their worth to the board of directors by taking the lead at board meetings, monopolizing the conversations.

I think what this leads to very often is a shift from the board's initiative to the staff's initiative. And the result can be a passive board that doesn't have to think for itself or take its governance responsibilities seriously.

So, stop talking.

Allow the board leader to lead the board. Even if this technique results in some uncomfortable moments of silence, let it happen. To get the conversation started, ask the board members what they think and then wait for them to answer.

Would this work for your board?

Share the most pressing needs for your board's enhanced performance.

This discussion and more great tips for board/staff relations: "The Invisible Yellow Line: Clarifying Board and Staff Roles. www.charitychannel.com/bookstore/productid/158/catreferrer/2236

Jean Block
www.jblockinc.com
jean@jblockinc.com

The You:Me Ratio

I've been on both sides of the fundraising table, as both the Asker and the Giver, so I've learned a few things about asking effectively to get what you want from the Giver.

Here is the absolutely most important element in asking: The You:Me Ratio.

It's pretty simple, really. Givers give if you've fulfilled their giving needs. If you're only focused on what you need, it's not likely to get the Giver's attention and motive them to give much, if anything. Sure, you can guilt a Giver into giving something once, but you want to build lasting relationships with Givers, I think.

Here is how the You:Me ratio works. In this formula, You is the Giver and Me is the Asker. Got it?

Now take a look at a recent appeal letter or sponsorship request your organization has developed. Get a red pen and a green pen. Every time you see your organization's name, or words "we" or "us" or "our", circle it in red. Every time you see the potential Giver's name, or the words "you" or "your", circle it in green.

If you've focused on what's in it for the Giver to give, you'll have more green circles. But if you've focused on what you, the Asker, wants, you'll see more red circles.

Your appeal, or ask, is more likely to result in a higher return when you focus on the Giver, not on the Asker.

Try it. What do you think?

More practical fundraising ideas in "FUNdraising! 180+ Great Ideas to Raise More Money". Go to www.createspace.com/4087379.

Jean Block
wwwjblockinc.com

Why Doesn't Everyone Do It?

 

Why wouldn’t a nonprofit organization jump at the opportunity to earn unrestricted revenue? What’s keeping them in the old mode of ‘charity-think’? 

I am thinking that much of what stands in the way of progressive thinking in the majority of nonprofits is habit. Habit that is reinforced by thinking such as:

 

·         “Things aren’t good right now, but they’ll get better if we can just wait it out.”
·         “The next fundraiser will be big and will bail us out.”
·         “We’ll write more grant applications. One of them is sure to hit.”
·         “If only the board would fundraise, that would help.”
·         “We have no choice. We’ll just have to cut staff and do more with less.”
·         “We can’t earn money. We’ll lose our nonprofit status.”

 The old charity-think assumes that nonprofits have to wait for handouts. They have to rely on the generosity of others to sustain themselves, and that just doesn’t make sense anymore.

 That’s operating from a position of scarcity rather than potential abundance. And it’s defeatist!

 Instead, I think that nonprofits have to get out of old habits, stand up tall, realize their missions are important and take control of their own capacity, at least to some extent.

So what’s getting in the way? Fear of change? Fear of failure? Misunderstanding about how to earn money? Lack of planning?

 I’m curious to know the reasons why more nonprofits don’t jump into the water, even just the shallow end of the ocean of earned revenue opportunities that exist.

Your thoughts? Have you tried it? Were you successful? If you failed, what were the causes of failure?

Jean Block Consulting, Inc. and Social Enterprise Ventures, LLC

www.jblockinc.com and www.socialenterpriseventures.com

 

The Invisible Yellow Line (trademarked)

Football? What Does Football Have To Do With Nonprofit Management?

Some years ago, I was pondering the muddy mess of board and staff roles with a nonprofit I was advising. While taking a break to watch my favorite football team play, I suddenly envisioned the perfect way to describe this relationship.

The spectators who watch a football game on television or other electronic media clearly see a yellow line on the field that denotes the position of the next down. It’s clear as can be. But the players on the field can’t see the yellow line. It’s invisible to them. It moves and at times can be hotly contested.

The working relationship of board of directors and staff in a nonprofit also has an Invisible Yellow Line. The goal is to transition from a playing field with a muddy mess of assumptions to a partnership where all the players understand and accept their roles and your nonprofit’s mission is served.

It is worth noting that every organization is different. In some cases, the Yellow Line can be seen pretty clearly. At other times and in certain instances, the line is invisible and will continue to move as the organization deals with different issues at different times.

For example, in the early stages of a nonprofit’s development, the board may have to roll up its collective sleeves and get involved in day-to-day administration. However, as the nonprofit matures, the board has to modify its role to step back away from the day-to-day and focus on its governance and fiduciary duties, allowing administrative professionals to manage the day-to-day.

The basics remain the same, however:

                        Board = strategic direction, policy, and fiscal oversight.

                        Staff = management and administration.

Admittedly, this is an oversimplification, because both board and staff have complementary roles to play in all areas of an effective partnership.

Spectators who watch a football game on television or other electronic media see a yellow line on the field. It’s clear as can be. But the players on the field can’t see the yellow line. It’s invisible to them. The same is true in the nonprofit environment. Board and staff are on different teams (even though both teams have the same goal, serving the organization’s mission), and the line separating their roles is invisible, moves, and can be hotly contested at times.

Wouldn’t it be great if there was just one set of rules that defined the roles of board and staff? Rules that never changed? It would surely make this nonprofit operating structure easier to understand and to work within. I’ve looked high and low for these rules, both as a board leader and as a staff leader, and I’ve never found them. The fact is, things change. Organizations evolve. People evolve.

And another thought for you to ponder. Teams have leaders. Regardless of what you call yourself in your organization, consider this: teams follow their leaders. Therefore, whether you are the board leader or the staff leader, realize that you can set the example for an effective partnership or you can set up an adversarial relationship. In either case, your team will follow your lead!

So, what to do? Talk about it!

Invisible Yellow Line issues play out under the general topic of communication. This is especially critical with regard to leaders and their roles. A lack of open and honest communication will inevitably result in suspicion and mistrust.
Dealing with issues when they are molehills before they become mountains can, and will, relieve incredible stress in the board and staff leader relationship and in the relationships of all others in your organization.

The bottom line in discussions about the Invisible Yellow Line is simply this: communicate. Openly and honestly. Clarify roles at all levels of board and staff leadership to prevent what could inevitably become stressful and unproductive relationships rife with misunderstanding and mistrust.

 

 Excerpted from The Invisible Yellow Line: Clarifying Board and Staff Roles. Author: Jean Block. Published by Charity Channel Press.  www.charitychannel.com/bookstore/productid/158/catferrer/2236