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These hands-on ideas are provided by Peter Brinckerhoff to help your your organization get more mission from your resources. Click on the topic(s) of interest to you. Remember, all of Peter's books and workbooks are full of state-of-the-art ideas, forms, formats, and organizational self-assessments. Order them today from: www.amazon.com
You can get much more out of your mission statement. It's a key resource, and the reason that you exist. First, make sure that your mission statement is up-to-date. If your mission reflects only part of what you do, (for example if it limits you geographically or in terms of the people you serve) you could have Unrelated Business Income Tax liabilities. Review your mission statement with board and staff every two years to assure that it is relevant and reflects the things your organization is doing. Then, file it with the Internal Revenue Service to make sure that their records coordinate with yours. Third, make sure that you use the mission statement in management and board meetings. Have copies of the statement actually on the table to remind people of the central point of your organization. It won't end all your discussions, but it will keep you focused on the important things.
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Is it OK for a Not-For-Profit to make money? Is it OK to make a PROFIT? Absolutely. Not only is it legal (there is no regulation or statute that forbids it) it is essential to your organization's ability to perform its mission. Only profits allow you to innovate, competitive and take risk on behalf of the people youserve. I talk to organizations throughout the country who feel somehow that it is wrong to make money. It's not, as long as the money goes back into the mission.
Is it legal for a 501(c)(3) to make a profit? Of course. Your organization has a federal tax exemption from taxes on profits made pursuing your mission. If you make profits from things not related to your mission, you pay tax on those profits just like any business (this is the Unrelated Business Income Tax). But the law does not forbid you from making money. Look at it this way: Congress wanted you to make money and re-invest it back in your community. That's why you have the tax exemption!
What does get in your way are funders (who want to pay you as little as they can and often take back what you don't spend) and public opinion, which apparantly thinks that not-for-profits should all be living hand to mouth. Think beyond the next mouthful...plan with your board to become, over the long term, a profitable, and still mission-based, organization.
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We hear more and more about not-for-profits doing marketing. In some cases, this is just another term used for public relations. In some cases, it really is marketing; that is, identifying a customer group, asking them what they want, and giving it to them to the best of your ability. This is a lot of work, and a different way of doing things for many organizations. So what results will you get? At least these:
- Happier funders, happier service recipientsWhen you ask people what they want and give it to them (as best you can) the customer, whether that is someone in your service group or a funder, is happier.
- More return customers, more referrals.Happy customers come back. And, in the competitive environment that not-for-profits are in, return customers are gold. Imagine if 90% of this years donors to your fund raising effort donated again next year? That's an example of a return customer.
- More efficient, targeted services.By asking people what they want and giving it to them, you will target your resources on the real needs in the community, and perhaps discontinue services that are no longer needed or in great demand.
- More income. It stands to reason that happier customers who return will also refer people to you. All of this translates into more income for your organization.
Good marketing is good mission. Good marketing brings about good mission results. Get your marketing into high gear and you'll see the results!
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As you work with your board, think of them as a resource, not a restriction. You have to have a board, and too many managers resent the "extra" work a board represents. But in an era of receding resources, you need to utilize every single resource you have to the maximum to get the most mission. If your board doesn't know the difference between governance and management, you may have a big job ahead of you, one that will take months or years, but effective not-for profits have strong boards and strong staffs.
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Successful not-for-profits are ones that treat everyone-the people that they serve, their funders their donors, their board, their community- as customers. In an increasingly competitive environment, not-for-profits who want to do the most mission realize that marketing and customer service are essential elements in providing that mission effectively. Is your organization market-based (reacting to changes in the wants of your many markets, asking and listening to customer wants), or one that simply sells its services? I think you need to be market oriented, flexible and adaptable to rapidly changing circumstances.
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As a professional, you have probably been well trained in doing diagnoses or needs assessments. And, you therefore know what people need. But that is often not what they want, and, in marketing, wants win, every time. I call this conflict between needs and wants, the Not-For-Profit Marketing Disability, and it really gets in the way of success for many organizations. You need to ask people what they want, and then do your best to give it to them. And, you can do that and still stay close to your mission. Remember that no matter what your organization does, you are a mission-based business, one that has to appeal to your many markets to survive. These markets may be customers, people you serve, people who pay you (including for many readers, the government). Not only do you need to treat everyone like a customer but you need to make sure that you meet people's wants, not just their needs. All of us have needs, but we buy wants. Don't let this disability get the best of you.
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Remember, to get more out of staff and board meetings, start and end the meetings on time. It respects the time of the participants, and keeps people focussed. Too many meetings start when everyone arrives (which rewards those with bad behavior and punishes those with good behavior), and go on forever. With no ending time, work will expand to fill the time allotted, and that means meetings seem to never end. Have an agenda, include time allotments for each item on the agenda and make sure that the meeting chairperson sticks to them. You will have happier, more efficient and more effective meetings. It may take a while for some organizational cultures to adapt to this more businesslike attitude, but the payoff will be worth it.
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One of the worst things that can happen with a new board member is to have that person come on the board and leave within a few months. Sometimes this occurs because the person didn't understand their role, or the mission of the organization, or the work level that was expected. But it has been my observation that often it is just because the new board member didn't feel welcome, didn't stay long enough to be part of the "gang". There is a solution for that, and it works. It's called a board mentor.
When a new member joins your board, have another board member assigned as their mentor. The mentor's job is to meet the new member before the first meeting, introduce them at that initial session, sit next to them for the next six meetings (to answer all the questions that the new member has) and to check in with the new member after the first two or three meetings to make sure that they understood their written material, to answer questions, etc.
The idea of mentoring is to have the new member have a "safe" place to ask those questions which they may consider "dumb", and to get on the inside track sooner. Try mentoring. It works!
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The next wave of change in not-for-profits is in mergers, collaborations and joint ventures. Pushed by increasing competition, more open markets, and a dearth of resources in the face of increasing demand, not-for-profits in the arts, human services, education and community development are discussing the once taboo idea of giving up their autonomy to assure the survival of their mission. Are you and your organization ready to even consider such an issue? Start by looking at what is happening in your arena of service. Are your funders requiring more efficiency, less administrative costs? Are you affected at all by managed care? Are other organizations that you compete with (even just for donations) improving their efficiency? If the answers to even some of these questions are yes, you might want to check your readiness to compete and have at least preliminary discussions with staff and board members about what your limits are in partnering, collaboration or even merger. Don't think this issue will go away, it won't. Start talking about it, considering it now. And, if you have a story to tell me about what your organization has done or is doing in this area, send me an e-mail . I'd love to hear from you.
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More and more not-for-profits are facing true competition in the area of service delivery. If you are in the human services, this is becoming increasingly true. Those of you who are in the arts, environmental issues, or work with the homeless have long competed with each other for donations and volunteer resources, but more and more government funding is competitive and not a given, even for long established organizations. Managed care is also driving this competitive trend.
To get ready for this important change make sure that your staff and board understand that you must compete to be able to survive and provide more mission. You need to carefully assess your competition, who they are, what they do well and what they don't. You need to focus on your target markets, and compete where you have the best chance to succeed.
Most importantly, you don't need to fear competition. If handled well, it can make your organization more responsive, more efficient and more effective in providing the mission that you are in business to pursue.
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Boards need members who bring a variety of skills, experience, perspectives and connections in the community. One of the most important positions on the board is that of Treasurer. In my view, the treasurer is the board person who has to truly understand the often arcane financial structure and funding regulations that the not-for-profit endures. He or she needs to be the board's advocate on finance, the one that other board members can turn to and say, "Are we OK here?" and feel confident that the Treasurer really does understand.
Learning and understanding on this level does not come quickly for most of us, and when we find a good Treasurer we want to keep them in place forever which, of course, is not fair to them.
Naturally, the treasurer doesn't do it alone: you need a Finance Committee that goes over the budget and the monthly and quarterly financial reports and then in turn provides its report to the board. But the Finance Committee (usually chaired by the Treasurer) can provide another service to the organization: a training ground for future Treasurers, and this is where this month's TIP comes in.
Many not-for-profits have a succession sequence for board President. The Vice-President will succeed the President when the President's term is over. This makes sense. Think about doing the same thing for a Treasurer. Have a Vice-Chair of the Finance Committee, who is the heir apparant to the Treasurer's job. Let him or her steep themselves in the financial issues, and chair the committee in the Treasurer's absence. This way you grow your next Treasurer in advance, reducing the chaos and potential lack of oversight when your current Treasurer leaves.
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As a not-for-profit manager or board member, you are a steward of the (unfortunately limited) resources that the not-for-profit has. One of those is the ability to raise funds through donations and gifts. Not-for-profits that are thinking beyond the current moment are putting some of those donations into an endowment or a restricted fund to have for future needs.
You don't need to be huge, or have a 25 year history to start an endowment. We have clients that are only 3 years old with $350,000 annual budgets that still have saved a $20,000 toward their long term endowment. Then they know that the interest and dividends from the endowment will be a regular source of income-not one subject to political whims or funding delays.
Most importantly, an endowment is often seen as a competitive advantage for some donors, who fear that their donation will either be used immediately, or worse, will penalize the organization if it needs to return "surpluses" to a core funder. Consider an endowment as a long term effort, but one that needs to start now. In Financial Empowerment, I list one of the characteristics of an empowered organization as "getting 5% of its income from the earnings on its endowment." How do you measure up to this threshold?
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One of the most important things for a not-for-profit manager to remember is that you are running a mission-based business, not simply a charity. With limited resources, you need to get as much mission for the money as you can. That means paying attention to standard business practices in running your organization. Just because business invented it doesn't mean its bad. Good marketing is good mission, monitoring cashflow means staying around to do mission, smart personnel practices mean not getting sued, and on and on. Use all the resources available to you: including the business techniques that are tried and true.
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Growing Staff Stars
All organizations benefit when their employees grow on the job and in their jobs. Giving people more responsibilty, more education, and challenging tasks is part of a manager's job: it retains the good people, chases away the people you don't really want to hold on to, and improves the overall skillset of the staff. In many not-for-profits there isn't a realistic career path-there just aren't that many staff positions, nor adequate turnover. To combat that, here are some things you can do now to help grow your staff.
- Make sure that your staff committees (marketing, planning, quality assurance, etc.) have representatives from all levels of staff, including line staff. Don't fall into the trap of believing that only senior managers can make good observations, or have original thoughts.
- Allow some of your management team to work directly with volunteer committees. Your chief financial person should be the primary staff person for your Finance Committe, your lead marketing staff person should support your Marketing Committee, etc. Learning how to support volunteers is an important part of a nonprofit staff person's skillset.
- Require staff training of every staff person every year. Build an organization that values life-long learning. And, remember that you have to go to training too. Role model the behaviors you want your staff to exhibit.
- Push decisions as close to the line as possible. People close to the action really do make good decisions-if you train them how to, and if, when they do something you don't like, you don't yell at them, but rather go over their decision and ask "now, what did we learn from this?" instead of chewing them out.
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One of the key elements of improving the mission-capability of your organization is to develop the technique of looking at your expenditures as investments in mission. Usually, we think of expenditures as bad things, merely to be minimized. But when you and your board start to look at the utilization of any resource, cash, people, buildings, or equipment as an investment, a lot starts to change.
To begin, you have to ask: "What are we getting for our investment?" And, you should find the answer in two parts: First, you should look at the return in mission; second, examine the financial return. What this means in practice is that you may have services that lose money, but are so mission-rich that the overall return on investment is appropriate. On the other hand, something that is not mission rich (such as fund-raising) needs to make money.
At first, this will be a stretch for your staff, board, and perhaps even for you. But the more you look at expenses as investments, the more you will try to wring as much mission out of every dime as possible.
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Sharing Your Internal Information Widely
A crucial resource for most organizations is their information-budgets, planning, personnel information, marketing materials. And, some of this information is widely available-think about your organization, is there a hierarchy of information-some people see everything, some see very little? If the answer is yes, the question is why?
John Chambers, CEO of Cisco Systems (the people who build the stuff that runs the internet) says this about his huge organization: "No one of us is as smart as all of us." And this wisdom requires him to share information about the company with all of his staff. For you, the benefit comes from training all, yes all, your staff how to read financials, and then how to read your financials, and then to see them regularly. This also means including staff in reviewing your strategic plan, being involved in the development of marketing materials, and, in general incorporating the resource of your staffs' minds in the tasks at hand.
There are two ways at looking at information-they are both true:
1. Knowledge is power; if I have all the knowledge I have all the power.
2. Knowledge is power; if I share all the knowledge, we all get powerful together.
Your choice, but which will build your organization sooner and better. It is HARD to give up the information for many of us, but our organization, and the people we serve, will benefit.
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Joining the Right Association.
Do you want to hear about how other organizations are solving their problems---problems that your organization has as well? Do you want to find out what resources are out there to utilize, often for low cost or free? Do you want to have the option to participate in group purchasing, low-interest debt, or hear national speakers? How about learning about how to use technology to further your mission? Do you want to be informed about legal and legislative developments quickly? All of these opportunities await you if you find and participate in the right association for you.
A good association can be a tremendous boon to you, and to your mission. Most associations have annual conferences where you can catch up with what your peers are doing, hear educational sessions and view vendors of products and services that you may need. Many provide other training opportunities, online or snailmail newsletters, and group purchasing opportunities. All of this is good, but it is often expensive. And, you only have so much time and money to send staff to meetings anyway. So, how do you choose?
First, look at your choices. Are there more than one option available to you? See my list of Kinds of Associations below to get an idea of the choices you have.
Second, evaluate their services in light of your needs. Are you paying for things you won't use? For example, if the big conference of the year is in a location or at a time that don't work for you, and that is 90% of the benefit of belonging to a particular association, perhaps membership at this time is not for you. Find out what comes with membership, and what add-ons you can purchase. Then ask for four or five current members to call for references. Is what's advertised really being provided by the association?
Third, remember to value the intangibles. Just visiting with your peers for a day or two at a conference can be of tremendous emotional and psychological benefit to some people. To others it can be seen as a waste of time, and a stress producer rather than a stress reliever. How do you view the effort it takes to get all you can out of a membership? Another key intangible to factor in is "the cause". For many of us, supporting our cause, be it animal rights, environmental protection, expanding the arts, or preventing child abuse is crucial. You may feel that joining an association just to support their legislative and public awareness activities is worth your membership fee.
Fourth, do this kind of review annually at budget time, both for your current memberships as well as potential ones. There are always plenty of organizations willing and eager to take your money. Remember, an association is selling you a block of services. You are the customer and under no obligation to continue a membership just because you "always have been a member". Good stewardship demands that we regularly look at our mission investments in terms of the return we are getting for them.
Kinds of Associations to Consider
There are a number of different kinds of associations and organizations to consider. I am not recommending any group over another, and you should remember that individual organizations will vary widely in cost, in services available, and in the quality of those services.
Trade Associations. These are the state, regional or national association of Whatever You Do. They provide local, regional, and national perspective and resources for you. The California Association of Retarded Citizens, or the YMCA of the USA would be examples. These kind of groups know your particular field well, and vary widely in the kind of assistance and education they provide
State Associations of Nonprofits. These groups provide help to all 501(c) (3)s in a particular state. They nearly always have educational programs and publications, and often provide technical assistance and group purchasing options. Remember, even though these groups don't specialize in knowing your mission, they do have much to offer your management, board development, and fund raising acumen. To find a searchable list of state nonprofit associations, go to:www.ncna.org/states.htm
Management Services Organizations (MSOs): These organizations are not-for-profits whose mission it is to provide technical assistance and training to not-for-profits in their community. They can be of enormous value to not-for-profits in need of onsite help, or a quick piece of advice. Most major cities have an MSO of some kind, which may or may not be linked with a state nonprofit association. For a listing of MSO's near you, go to:http://www.idealist.org/support_states.html
Chamber of Commerce. Yes, I know you are a not-for-profit, but the Chamber is for everyone. Remember, you are not just a not-for-profit, you are an employer, a purchaser of products and services. You add to the economic activity, the commerce in your community. Your Chamber may well provide you an excellent network for volunteers, updates on Human Resources regulations, and a broadening of your organizational horizons. You can find your Chamber in your local phone book.
Remember that joining a larger group of peers can have great value-but that the value should be worth the cost, both in time and money.
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Management Support Organizations
Management Support Organizations are not-for-profits that are dedicated to helping other not-for-profits improve. MSO's vary widely in the number of staff and volunteers they have, and in the services they provide. Nearly all offer training and workshops, and some manner of consulting, either through paid staff or volunteers. Some offer group purchasing, some group insurance. Check yours to find out. And try to take advantage of the services and information they offer---it may well be worth your while. There are both local and statewide MSO's. Here is a little more about each kind, and how to search for one near you!
State Associations of Nonprofits. These groups provide help to all 501(c) (3)s in a particular state. They nearly always have educational programs and publications, and often provide technical assistance and group purchasing options. Remember, even though these groups don't specialize in knowing your mission, they do have much to offer your management, board development, and fund raising acumen. To find a searchable list of state nonprofit associations, go to:www.ncna.org/states.htm
Management Services Organizations (MSOs): These organizations are not-for-profits whose mission it is to provide technical assistance and training to not-for-profits in their community. They can be of enormous value to not-for-profits in need of onsite help, or a quick piece of advice. Most major cities have an MSO of some kind, which may or may not be linked with a state nonprofit association. For a listing of MSO's near you, go to:www.idealist.org/support_states.html
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