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December 20, 2012

Board member investment

Essential #6: Board Members as Investors: the boards role in giving and fundraising


What would it mean to your organization if your Board of Directors worked hard to ensure the financial sustainability of your nonprofit? How would your clients or community benefit from the board being fully engaged in the fundraising efforts of your organization? Imagine, if the financial pressure were taken off of the Executive Director and shifted to the BOD; would the effectiveness of the organization increase as the Executive Director became able to focus efforts moving the organization towards its vision and mission?

As we’ve been discussing, an active and engaged Board of Directors is primary in the success of a nonprofit. Fundraising or ensuring the organization has adequate financial resources to achieve its mission is one of the primary functions of ALL boards. This means good board members both give personally and influence others to give.

WHY DOES BOARD GIVING MATTER?

Board giving is the #1 Indicator of fundraising success for nonprofit organizations. Research indicates that the most effective fundraising campaigns involve board members. This is because board members are the primary investors in the organization; they are the bedrock to supporting and ensuring the success of a nonprofit. As such, they should support the nonprofit, not only through a personal investment of time, but also by investing their financial resources into the organization. This personal investment sets the tone for the organization’s overall fundraising success. June Bradham, author of What Boards Really Want, found that the single most powerful predictor of overall fundraising success is Board Giving! This alone should encourage our board members to get involved.

Board giving should be standard in nonprofits but unfortunately this isn’t the case with all organizations. Without board members adequately securing financial sustainability and leading the organization as an example in individual giving the organization may find it difficult to raise funds from individuals or foundations. If the closest people to the organization, ie: the board members, are not giving, then why would any one else want to give?

Board giving sets a leadership example for staff, volunteers and other funders to follow. As Timothy Seller noted in an article, Roadmap to Fundraising Success, “Historically, and still today, the most effective gift solicitation is that of a peer volunteer asking for gifts in a face-to-face solicitation.”

Board members are uniquely positioned to invite peers to join them in their support of your organization and can open the door to a wealth of resources in the form of volunteers and finances. In the corporate world of products and services, word-of-mouth marketing is gaining momentum as the biggest trust builder between a brand and a new customer. What this means is if a friend tells you about a product or service that they love you are more likely to try and then buy into the brand. The same can be said of individual giving to a nonprofit, and the Board of Directors can play a huge part in building the trust and effectively fundraising for their nonprofit.

Board giving increases engagement. Through giving, members become much more engaged and passionate about the organization. Members have increased credibility when asking others to “join” their support for organization. By not only verbally supporting the organization, but also giving to it, board members can authentically encourage and inspire others to give.

If your board of directors does not have a Board Giving policy in place this should be the first step to better board involvement in fundraising. Support for the organization should start in the boardroom. This process may take time and may require a change in organizational culture. Start small and take little steps with the goal that eventually your entire board is on board and actively supporting your organization through giving.

KEY STEPS FOR BOARD GIVING AND FUNDRAISING INVOLVEMENT

1. Create a Board Giving policy and ensure that accountability is built into the policy. Without accountability it is easy for members to disregard the policy and not follow through on the commitment.

I work with many organizations that have policies that state something like, “I will financially support the organization at a level that is personally significant to me.” While this sounds nice it is not measurable and there is no way to determine if the member has met their responsibility. On the other hand, I work with other organizations that require board members to give a certain amount each year – for example, “As a board member I will give a minimum of $5,000 this year.” This is obviously easier to track but this requirement makes many leaders uncomfortable.

One idea is to include language that allows accountability but does not set a minimum giving requirement. As an example, “Each year, but no later than Thanksgiving and without having to be asked, I will make a personal financial contribution at a level that is meaningful to me and will put XYZ organization in the top 3 charitable organizations I support. This year I pledge to give: _________.”

2. Put into writing the fundraising roles and goals of board members. Share this information with potential members during the recruiting stage. Though it may scare some people off, it is better to be honest and recruit board members who understand and accept the duties you are asking of them. Luring people in under false pretenses almost always results in frustrations and headaches for everyone.

3. Model and reinforce success by providing annual training. Fundraising does not come naturally to many people. These are skills that should be taught and reinforced on a regular basis. Help board members understand that you aren’t asking them to “shake down” friends and family. Fundraising can be as natural as sharing stories and expressing a contagious excitement about all that’s happening at your organization.

4. Clearly explain the options for giving/getting to board members. Most board members I’ve talked to find it easier to fundraise for projects, or something tangible, than the broad mission. That means we have to make fundraising as simple as possible for them.

For example, I was working with a domestic abuse shelter and we were transitioning the board to a more active fundraising role. We explained the funding need and then helped each board member make a plan for raising funds. The options provided to members included things like: 1) sponsor a room night for $95, 2) sponsor a day in the life of the shelter $4,250, 3) become a premier sponsor for an event $5,000, 4) provide education/training to a woman $75/month.

Providing these options equipped board members to confidently go out and make specific requests for funds. It simplified the process and increased the comfort level with the process.

5. Provide written materials that allow board members to easily share more information about the organization. Our board members don’t always remember the stories and statistics that we share in meetings. They aren’t living and breathing the mission of the organization on a daily basis so it’s easy to forget the talking points when meeting with potential funders. Develop materials, perhaps even a simple impact card that members can keep with them to help them when sharing about the organization.

6. Reward successes by ensuring your members are continually recognized for their efforts. When a board member has successfully solicited funds for the organization, share and celebrate this with the other members. It’s great if the board member is also willing to share how they overcame any fear or objections. This will allow members to learn from one another and grow in fundraising together.

Jim Collins, in Good to Great and the Social Sectors notes, “To make the greatest impact on society requires first and foremost a great organization, not a single great program. To truly be a great organization, board members MUST embrace their role and responsibility as fundraisers for the organization.

If you would like help with this process, please contact me at tiffany@applegateconsultinginc.com or 417-894-4640.

Posted by Tiffany Applegate on December 20, 2012 at 1:32 PM
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Categories: Board Governance | Fundraising
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October 30, 2012

ESSENTIAL #5 - MONITOR AND STRENGTHEN PROGRAMS AND SERVICES

“The price of greatness is responsibility.” Winston Churchill

Halloween can be an exciting time when you are a kid. Candy, costumes, friends - it’s a time my youngest looks forward to enthusiastically. In fact, she begins dressing up and trying on costumes weeks in advance.

Recently she came out of her room with a pirate’s sword, a princess dress, and hulk hands. Though it was kind of cute it reminded me of some of the nonprofits I’ve seen (and worked with) over the years. They started out trying to be one thing (in my daughter’s case a princess), but because of funding cuts/availability, passions of board and staff members, or other reasons they end up losing focus and are now in a position where those looking in don’t know what they are supposed to be (Princess? Pirate? The Hulk?).

The Board’s Responsibility

It’s the Board of Directors’ responsibility to guide and keep the organization focused on the mission. In our previous article on strategic planning I mentioned that it is important to continually visit the mission – is it clear, accurate and up-to-date? Just as it is important to get a regular health check-up, an organization should make time to review the health of the organization. Are the programs and mission aligning? Do the programs or the mission statement need to tweaked or updated?

Example: Mission Check-Up

A non-profit in Chicago had a mission to provide immediate refuge for children ages birth to 12 whose families were in crisis. By partnering with families and the community, they believed they would strengthen families and prevent child abuse and neglect in their community. As the organization grew so to did their various programs and services to the community and they soon became extremely busy. On the one-year anniversary of the non-profit the Board and staff came together to review the programs and services. In a white board session they looked at each activity and reviewed how it aligned with the mission of the organization. They found their services fell into four main areas:

  1. Immediate shelter to children in need
  2. Educational/training opportunities for parents 
  3. Outreach and training to the community
  4. Crisis center activities and support for adults

The organization had found that as they helped children in need, often there was a mother or guardian needing crisis support. This resulted in the fourth activity where much of the organization’s resources and time was being focused. As the organization re-looked at their mission they realized that while this service was good it was not within their mission. The board members and staff chose to look at other community service organizations in the area that they could partner with in order to refer adults. This decision allowed the organization to continue being targeted on their mission to provide immediate refuge for children in crisis while still caring about the families of these children.

This example is one that highlights the importance of regular mission check-ups as they can help identify any areas of mission creep (or abandonment). Mission creep leads to confusion for the audience and it is the board’s role to stop it. Once identified, the board can choose to stop offering the service, pass it to someone else, or modify the mission. But that service or program that doesn’t align with the mission, must be questioned and something must change. There are several cases in which an organization has ultimately failed in it’s mission because they were constantly adding programs where money could be found – instead of keeping focused on the mission.

Ensuring Effective Programs

As regular review by the Board of Directors ensures that programs are aligning with the mission it is also imperative that the Board knows that these focused programs are effective and furthering the mission. It is vital to track outcomes or activities within each program. Outcomes are measurable end results and activities are a set of tactics that are used to achieve the outcome. The need for focused outcomes has become more and more important as many non-profits have performed activities and programs but have very little to show by way of evidence. By focusing on outcomes an organization can begin to measure success.

A recent article in the Boston Globe highlights the shift for non-profits to begin employing strategies that have traditionally been used by for-profits. In this article the president of a large nonprofit shares, “If you aren’t measuring what you’re doing, then you’re not evolving what you’re doing. In the for-profit world, companies live or die by whether or not they’re getting better at what they deliver, and in the nonprofit world, we need to be doing the same.”

The article also provides the following example of an organization employing an outcome tracking system:


Roca Inc., a Chelsea nonprofit for high-risk youth, has found that it is possible to measure the progress of changing someone’s life. Before Roca embarked on a radical transformation in 2005, participants considered it a place to hang out and play basketball with friends. There was no time limit on being in the program, and those who took part did not have to meet specific goals. Roca maintained a simple Microsoft Access database of members’ enrollment in GED classes and leadership seminars, but there was nothing to prove the agency helped people become law-abiding, employable citizens.

Now, every move participants make is entered into a software program, from their efforts to stay sober to completing a transitional employment program.

The group’s youth workers are also closely tracked, and outside institutions analyze Roca’s results. One significant finding that came from the overhaul: Those who had the most success holding down a job and staying out of trouble moved out of the program in just two years, leading the agency to establish a two-year model.

“It was all guesswork,” said founder Molly Baldwin, of Roca’s beginnings. “I hope we did more good than bad. But we weren’t really sure ever. Now we’re able to see if we’re being helpful or not.”


It is up to the BOD to help guide the organization into effective programs and services that are focused on the mission. All programs and services should not only have activities that are reported upon but these programs should be linked to outcomes tracking systems. As seen in the Roca, inc. case above the tracking system does not have to be complex – it can be simple and start small.

I recently worked with a crisis shelter that had a difficult time determining outcomes because of the transitional nature of their clients. We developed a simple pre- and post- survey that at least began showing immediate outcomes – such as savings accounts, educational level, income, etc. These details were able to lead the organization to making informed decisions about the successes and challenges within their services.

Why Bother with Outcomes?

In the 2012 report More Money for More Good, research was compiled on what donors are looking for in funding non-profits: 9 out of 10 donors say that an organization’s effectiveness is important. Donors say that information about a nonprofit’s approach, expected results, effectiveness, and past performance—in other words, impact information—is most important to them but hardest to find.

Funders give dollars with the intent to make a real difference. Board members are responsible for making sure this is happening.

Key Steps:

  • Regularly evaluate your organization’s activities: are they in line with your mission?
  • Ensure that every program and activity has some sort of outcome tracking system in place
  • Regularly evaluate and review the effectiveness and impact of your programs
  • Learn from your tracking systems and make changes and adjustments as necessary to ensure your activities are as effective as possible


Posted by Tiffany Applegate on October 30, 2012 at 3:11 PM
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Categories: Board Governance | Outcomes/Results
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August 30, 2012

Nonprofit Strategic PlanningESSENTIAL #4 - ENSURE EFFECTIVE PLANNING

“Destiny is no matter of chance. It is a matter of choice. It is not a thing to be waited for, it is a thing to be achieved.” William Jennings Bryan

Success is a team effort. Whether an organization succeeds or fails at achieving it’s annual goals or it’s mission, is not just the responsibility of the CEO. In fact, within nonprofit organizations the BOD holds the primary responsibility for actively planning for the future and achieving mission fulfillment.

Strategic planning is essential in regards to actively planning for the future. This process is so important for an organization that the non-existence or poor set up of a strategic plan can have detrimental results to the organization. The strategic planning process ultimately helps the BOD develop a plan that guides the actions and impacts the success of the entire organization.

Unfortunately the idea of strategic planning can seem tedious and daunting for many board members. Strategic planning does not have to take an unreasonable amount of time. Sitting in long, boring meetings on a regular basis to continuously plan and re-plan can create burnout for many board members. If an organization has been neglecting it’s strategic planning the initial fact-finding and preparation may prove to require a bit of a time commitment. However, as an organization begins to develop its strategic planning system the BOD will be able to move quite effectively and efficiently through strategic planning process.

The following are some helpful suggestions in ensuring that your organization develops a sound strategic plan.

Know your mission
A common mistake in strategic planning is developing a plan based upon a snapshot of what is happening right now – not on what the organization wants to make happen. If the organization currently exists with severe financial constraints those constraints may dictate what the BOD thinks the organization can do. Instead of focusing on these constraints, a good strategic plan should ask what impact do we seek to make and where do we want to be in a determined amount of time? Once these questions are answered it is easier to align your plans and activities with the mission and goals of the organization.

Be prepared
The world we live in is dynamic and these changes affect our plans and goals – but they should never hinder our mission. Your organization can spend six months developing a strategic plan and the next day a horrific natural disaster occurs in the area you work or Bill Gates knocks on your door and offers you a million dollars. What do you do?

An organization needs a plan that allows the BOD to make decisions on new challenges/opportunities as they arise. In Nonprofit Strategy Revolution, David La Piana recommends developing 5-8 key decision-making criteria to help decide whether or not a particular strategy is consistent with the organizational identity. This should be heavily influenced by your values.

I am on the board of a nonprofit and our decision-making criteria is based upon undertaking strategies that are consistent with our mission; focus on our competitive edge; are financially sustainable; don’t result in debt for our organization; allow us to be the best in the field; and strengthens our position as a community partner.

As new opportunities come up, we run them through our criteria to determine whether or not we move forward. If we answer no to anything, we don’t go forward. If we answer yes to all, then we have to compare it to the other strategies we are moving forward on and decide which one makes a greater impact on our mission.

Other decisions that should be made up front include:
  • Who will you serve? Who won’t you serve?
  • Where will you serve? Where won’t you serve?
  • What money will you accept? What won’t you accept? (i.e. Recently a little league was out of money and going to have to close down ending the little league program in the town. A strip club came forward to provide the money they needed to continue services. Some were outraged that a kids’ little league accepted money from a strip club. They made the decision in a desperate mind-set rather than ahead of time. I’m not making a judgment call on whether or not they should have accepted the funds but it’s easier to make clear strategic decisions when an organization is not completely out of money.)
Holding tight to your mission and values, as well as following the decision-making criteria your organization has created allows you to remain relevant in the face of dynamic circumstances while still continuing to focus on the mission and strategic plan. An organization that sways in it’s focus and changes it’s goals continually will not succeed because it will never have the ability to monitor it’s growth if it keeps changing the goal line.

Regular Check-ups
So you have a plan in place – now what? A typical strategic plan looks 3-5 years ahead. For some, making plans can be a fun activity – but how do you execute a 5-year plan and make sure you stay on the path to achieving your goals? It is very important that after goals are created that align with the organization’s mission these goals are then broken down into timely action items and deliverables.

This is how we function in every other area of our lives. For example, in The Pollyanna Principles Hildy Gotlieb suggests that if we had a flight at 12:00pm we would figure out what time we had to get up by working backwards. “I have to get to the airport by 10:30 so I’ll have to leave by 9:30. I still need to pack so I need to get up by 7:30.” If this is a part of our daily living (creating timely action items and deliverables), then it should certainly be a process we implement in our strategic planning.

In addition to developing key action items and deliverables, the BOD is also responsible for developing systems for monitoring and evaluating the progress of the strategic plan. Creating an effective monitoring and evaluation (M&E) framework requires that the BOD include in the strategic plan key questions and time frames for M&E. Monitoring is the act of continually checking in on targets and activities planned throughout the course of a plan. Evaluating assesses what the organization set out to do, what has been accomplished, and how it was accomplished. These tools help an organization know whether the plans are working and empower the BOD to make changes as needed.

Some key monitoring questions could include:

  • Will the goals be achieved according to the timelines specified in the plan? If not, then why?
  • Should timeframes be changed? 
  • Are there adequate resources to achieve the goals (ie: money, equipment, training, personnel)? 

 

The frequency of reviewing the strategic plan depends upon the type of organization and the rate at which the organization is experiencing change. At the least, the BOD should monitor on a quarterly basis and the CEO monthly. Evaluating the organization could be on an annual basis.

While a strategic plan is key to the success of an organization, it is important to remember that it is a roadmap that often changes based upon internal and external influences. Learning to be a relevant organization with a firm mission while holding to a strategic plan will give your organization the strong foundation it needs for success.

Key Steps:

  • Know your mission 
  • Be prepared 
  • Regular Check-ups

 

 

Posted by Tiffany Applegate on August 30, 2012 at 12:15 PM
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Categories: Board Governance
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August 17, 2012

Nonprofit Fundraising from Individuals“It is not necessary to change. Survival is not mandatory.” W. Edwards Deming

As we continue our series of funding sources for nonprofit organizations, our first focus is on individuals.

A widely-held perception is that corporations and foundations are the biggest sources to tap for grants and donations. The reality is that four out of every five philanthropic dollars (80%) contributed by individuals and bequests. This number increases to 87 percent of total giving if you include family foundations.

According a report compiled annually by the American Association of Fundraising, in 2010 Americans gave a staggering $290 billion to their favorite causes. Despite the tough economic conditions faced by many, total giving was up 3.8% from 2009.

What are the most important characteristics of successful fundraising with individuals?

Relational

As any of my regular readers or clients know, one of my favorite quotes is “Relationships are primary, all else is derivative,” from Dr. Ronald David of the Kellogg Foundation. Successful relationships are not typically one-sided. Think about your own experiences. Do you enjoy talking with people who only talk about themselves and really don’t care much about your thoughts and opinions? I know I don’t. I like to participate in the conversation.

Donor relationships work the same way. Focus on having two-way conversations and show concern regarding their wants and needs. This means that you must find a way to speak to the real desires and motivations of the people you are trying to engage and avoid the old “spray and pray” approach that nonprofits have historically used.

How to Apply Within Your Organization:

  1. Ask your donors directly (in-person as listed below, also via phone and online) why they give.
  2. Schedule face-to-face meetings with donors on a regular basis to uncover and truly comprehend their motivations fully. These should be scheduled weekly if possible, and spending the time and resources to really analyze the data that they collect is vital.
Integrated

Your various revenue development initiatives should be integrated with each other to ensure consistency in the minds of the individuals you are trying to reach. For example, having completely different campaigns and messaging across various fundraising efforts or marketing mediums can confuse and cause indecisiveness among people that may not understand what exactly they are supporting or what cause they are joining.

Social media is fast becoming a significant potential source of donations and needs to be considered in this integration process. The increasing user comfort and acceptance of online transactions has made giving via the Internet easier than ever. And with more and more people online – and spending time on social media sites – everyday, connecting with them via this channel is a good way to encourage awareness, engagement and giving with individuals.

How To Apply Within Your Organization:

  1. Ensure that everyone is “on the same page” by training both the board and staff on messaging, and why it’s so important that it be consistent.
  2. Make sure that Social Media, Website, Print, Radio and Television, etc. messages are all consistent in what they communicate.
Aligned

Your fundraising efforts need to be aligned directly with the overall mission of the organization and your values. In other words, doing something completely out of character for your organization to make a buck should never be a consideration.

How To Apply Within Your Organization:

  1. Make sure that your organizational values are well-defined and widely known and accepted within the organization.
  2. Decide up front what money you will and won’t accept and what programs and services you will and won’t offer. It’s far easier to say “no” to money and stay aligned when you have a well-defined mission and values, and aren’t desperate for revenue that does not fit within this framework. Defining these principles up front will keep you aligned and on-track when your organization is in danger of being pulled in the wrong direction.
Ethical

The misrepresentation of your organization, your motivations, results or how funds are utilized should never, ever be allowed to occur. Once credibility from an organization is lost among the public, it is VERY hard to recreate, if not impossible. Recent examples are many and include some of the largest and most recognized organizations and charities, including the American Red Cross, the Salvation Army and UNICEF.

How To Apply Within Your Organization:

  1. Be prepared to respond immediately. Get “in front” of the news as quickly as you possibly can, to begin your response before outside opinions are fully formed and disseminated. 
  2. Develop a disaster plan, going so far as to draft press releases that can be quickly modified and released when or if something happens.
  3. Be sure your policies and procedures are developed and implemented regarding financial accountability and stewardship to prevent these types of problems in the first place.
Guiding organizations through the creation of their revenue development plan and all of its supporting components is one of the primary things that I do every day with our clients. Please contact me at (417) 894-4640 for more information on how we can work in partnership to strengthen the revenue development process - and the financial results that it generates - for your organization.

Next up: Revenue Development – Focusing on Individuals Part II

 

Posted by Tiffany Applegate on August 17, 2012 at 1:03 PM
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July 23, 2012

 

SUPPORTING AND EVALUATING A NONPROFIT LEADERESSENTIAL #3 - SUPPORT AND EVALUATE THE CHIEF EXECUTIVE

“You cannot escape the responsibility of tomorrow by evading it today.” Abraham Lincoln

After the CEO/Executive Director has been chosen, the process of leadership has just begun. Now comes the real work. Supporting your CEO/ED and providing them with an honest assessment of their work are critical to great leadership.

SUPPORT

This should come as no surprise, but the CEO/ED can only be as effective as the team surrounding him or her; they provide leadership, but they should not be the only one creating or implementing all of the strategies and tactics that make for a successful organization. They need help. So supporting them and following their direction is necessary from all levels of the nonprofit, from the board down to individual staffers and volunteers.

Strong and vocal support of the right CEO/ED is critical for his or her personal and professional development, as well as the organization’s success. Support shows that you value the work they are doing and recognize that the organization is benefiting from it. As a result, the CEO/ED is more likely to stay. This is ever more critical as finding good Chief Executives is increasingly difficult.

The board (and especially the board chair) should ensure that the chief executive has the moral and professional support he or she needs to further the goals of the organization. Without this support, it’s easy for the chief executive to feel isolated and alone. This can be as simple as responding to emails, coming to board meetings prepared, or taking and returning phone calls.

WHY EVALUATE?

Evaluating the CEO/ED is a primary responsibility of the board, and for good reason. This regular review of the CEO/ED helps ensures that the organization has the right person in place to further the mission. It ensures that organizational goals are being met, new goals are being set, and the CEO/ED is growing professionally. It also helps set the appropriate compensation for the CEO/ED.

Reviews should be done annually, and the evaluation process should be formal and documented to ensure that it meets standards of fairness and practicality. Managing the process in this way also leaves written record of the board's impression of the chief executive's performance. This record can be necessary for a number of different reasons down the road, such as salary increases, probationary activities or in the worst case scenario, firing.

You should note that most CEO/EDs that I work with are quite eager to be evaluated, since they cannot know how they are truly performing without a review process. They want documentation of their performance - and also a development plan to improve upon it. But many boards are uncomfortable with the process so they avoid it. Don’t be scared to evaluate!

HOW TO EVALUATE

It should go without saying that evaluations should be done with the utmost integrity and honesty in the process. There should undoubtedly be some (or much!) good, but also some areas identified that need further development.

When reviewing your CEO/ED, you need to be aware of any internal politics that may affect the process, such as a board member who is on the opposite side of a hot button issue – and could use the performance review at their platform against the CEO. For this reason and others, reviews shouldn’t be based solely on opinions, but as objective as possible.

Though a general sense of the leadership ability of the executive will certainly emerge through generalized assessment, reviews should primarily be made against set standards; of things that can be measured. Don’t turn the review into a popularity contest rather than a results-based process.

Be sure when conducting a performance review that you are evaluating based on facts and give the opportunity for the CEO/ED to respond. Recently, a client received a review from her board. She felt much of the information was incorrect and went through board meeting minutes to show what she was instructed to do. When she submitted the rebuttal no one responded leaving her very frustrated and feeling attacked. The CEO/ED, a great leader, submitted her resignation shortly afterwards.

CONSIDERATIONS

There are many individual questions and answers that can be used to evaluate a chief executive. Some of the most effective that I have found over the years include:

Did the CEO/ED accomplish the goals set by the Board for the performance period?

How well does the ED understand the mission and strategy of the organization, and then translate them into action?

How well has the ED hired and developed staff members?How satisfied are you with the morale of the staff and volunteers?

Does the ED fully understand the organizations programs and services?

Does the ED ensure that programs/services are high quality?How satisfied are you with the fundraising ability of the ED?

How knowledgeable is the ED on financial matters?

Are you satisfied with how the ED makes financial decisions?Are the operations policies in place satisfactory? Any changes needed?

Is the ED professional?

Does the ED have good communications and provide a good environment for staff?

Is the ED maintaining a positive reputation in the community?

How has the ED responded to unexpected challenges or opportunities?

What are 3+ strengths you see in the ED?

What other ways does the ED contribute to the success of the organization?

Remember that these questions should be asked in a way so that they can be answered with measureable results. The goals set forth to answer them favorably should be well documented and understood by all parties. This can avoid frustration, misunderstanding and headaches at review time.

Once the review is complete, key areas for professional development should be identified and goals should be considered for the next review period. By supporting the CEO of your nonprofit with the right resources, and providing timely feedback and constructive advice on their performance, you are making a positive impact on the future success of your organization!

Next: Essential #4 - Ensure Effective Planning

Posted by Tiffany Applegate on July 23, 2012 at 2:01 PM
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Categories: Board Governance
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May 18, 2012
Nonprofit FundraisingWe live in a new era where consumers, businesses, investors, employees, and service providers attach real economic value to social outcomes. An era where the "feel good" issues of yesterday—education, the environment, health care, the arts, animal rights—all have direct economic consequences and opportunities.

This represents a major shift in the world of nonprofits from basic charity to the concept of "investment". Simply being a "right and just cause" is no longer enough to generate donor revenue in 2012.

So how do you attract supporters to your cause in a demanding – and crowded – marketplace of ideas? Realize that it's hard for today's organizational donor/investor to measure or truly understand fuzzy concepts like "improve the quality of life" or "protect" animal rights/access to the arts/healthcare etc. To know if you're making a good investment, you have to have a way to measure your results. And what exactly do those phrases mean?

I believe that every nonprofit is in existence to make an impact of some type for the individuals, communities and/or the causes they serve. And yet many agencies have a hard time understanding let alone articulating the impact that they create. Today's nonprofit must capture and communicate its impact in simple, compelling terms that break through the clutter. Let's explore 3 approaches to effectively market your organization and its impact to investors.

1. ACTIVITIES (USUALLY) AREN'T ENOUGH

For years many most nonprofit organizations have promoted their activities rather than their impact to attract clients, funders, and other supporters. For example, many of the traditional brochures and websites I see even today highlight the Programs Offered or the Number of People Served.

This approach may have been fine when most people viewed their donations as gifts, and simply wanted to see where the money was going. But as noted more and more people view their philanthropic dollars as investments now, and see themselves as investors or funders rather than "donors". And investors of course like to see the benefits and true results of what their dollars have accomplished, not just where they were invested. So just sharing a list of what you do is no longer enough. People appreciate the actual work that you do, surely – but they invest in your impact on individuals and communities that you serve.

However, that being said there are exceptions to this rule. One primary exception I've seen to this rule centers on volunteering and gift-giving during the Holiday Season. Many nonprofits experience a surge at end-of-year simply because people want to be involved in some type of giving or service activity. For example, around the holidays many people and/or organizations desire to:

  • Serve meals at the local homeless shelter
  • Pay for XX number of meals for a holiday dinner
  • Adopt a local child or family for the holidays
Though these are activities people want to get involved in during the holiday season, I still suggest using this strategy sparingly; keeping in mind that the trend is for investors to want to see tangible signs of real community impact. During the rest of the year, when potential donors are less likely to participate in events or activities, you may see greater results with the next two approaches.

2. SHARE YOUR NUMBERS

So if not activities (at least most of the time) what should you communicate to potential donors/investors? To improve the success of your nonprofit's pitches, put yourself in your investor's shoes. What valued results do you think THEY are looking for? What impact garners continued or increased investment? What is the best way to show your results and impact?

 Sharing the raw numbers or data that came about from donations is a good way to speak to the investors who want to know that their money is making a real difference in your community and in the lives of your clients. And not only will their money facilitate change, but it will make more of an impact than if they had invested in the organization down the street instead. Without these numbers, potential donors may question if you are truly making a significant contribution or difference to your constituents when you use hard to quantify outcomes.

There are three types of numbers that can resonate with investors:
Change of Status - This occurs when a person, organization, or community transitions from one state or condition to another. For example, your organization may be successful at moving people from an unemployed to employed status. You may do this by providing job training to 1,000 people per year. However, most funders aren't really interested in paying for job training unless it results in the trainees actually getting jobs. Another example is GED classes so that disadvantaged people can graduate from high school, where the measurement for success when expressed as a total number or ratio of those who graduated is very simple and straightforward.

If your organization is producing these positive outcomes, share them and show that you are a good investment. Showing how individuals or communities have changed as a direct effect of donations helps create a higher sense of impact and value for your organization's work.

Return on Investment (ROI) – ROI is performance measurement used to evaluate the efficiency of an investment and to compare it with others. Used extensively in commercial businesses, nonprofits can use ROI to show investors that they are good financial stewards, and that investor dollars will have a greater impact within their organization than with competing nonprofit agencies.

It's not uncommon for many nonprofits to document a 2x, 3x or even greater return on the money invested into their organization. For example, if you can show potential investors that for every dollar they invest with your organization the community will receive $3 of benefit compared to $2 provided by an alternate provider - you look like the better investment and become more likely to receive additional donations. ROI shows your ability to fully leverage the dollars invested into your programs.

Though ROI can be quite popular with potential donors, especially those who are financially-inclined, calculating this number presents its own unique set of challenges. This number can often be ambiguous and difficult to identify. If possible it's recommended that you use an outside source or otherwise ensure that the data you use if from a reliable source, to maintain your credibility.

Systemic Change - This often occurs as a result of collaboration within large-scale community initiatives, when several providers join together to move the needle on a social issue at the community level. It's like change of status for an entire community or group of people. To create a systemic change, it is important to build partnerships that center around a community issue. Participate in the effort for change by being a good and active partner, providing leadership where you can, and promote the results you (and the collaboration) are achieving. Some examples of systemic changes may be positive trends in: poverty rate, crime rate, homelessness, school readiness, graduation rates, number of individuals in training programs, employment numbers, access to healthcare, home ownership, and many others.
 3. STORY TIME

Everyone loves a great story – the feeling of getting lost in a story and having your imagination along for the ride. When a storyteller does a good job the reader can picture the scenes, hear the voices, and experience the emotions of the characters. There are books that make you laugh, cry, change the way you think or motivate you to take action. Likewise, you've probably read books that left you uninspired and looking forward to the end.

Generating emotions and creating an experience is the effect many nonprofit marketers desire when they tell their stories. They share testimonials in hopes of inspiring and compelling people to engage with their, but unfortunately a story doesn't prove to grant makers and funders that the results are repeatable. But stories do have their place and can be valuable to your cause, so there's value in collecting them.

Put It All Together

If each approach above can be effective in engaging clients and investors, which should you choose? Ideally, you should be combining the three approaches as the most effective way to market your impact and your organization.

I recommend that you build up a "vault" of stories and testimonials and add to it on an on-going basis. Pick several stories that clearly demonstrate the change(s) you are after and then share them frequently with those connected to your organization. This will help to create organizational folklore that can be shared and celebrated with others. Then document and promote your high-impact outcomes over time. These outcomes should provide statistical support for your stories that this wasn't a one-time win. Show that our outcomes can, and have been, duplicated time and time again. And use activities, when appropriate, to engage others. This can also be used to enhance your stories or answer questions about how you produce your outcomes.

The shift from charity to investment requires that we change the way we communicate. Marketing your impact with these three approaches shows you are really making a difference. It helps you capture mind share, and as a result money share. Review your marketing materials this month to see how you're doing, and get help if you need it. Ultimately it's the change we are making that most effectively makes our case to investors. Therefore, I recommend that you determine (and share) the difference you are making, back it up with actual numbers, tell a story that shows your impact on one family or individual, while supporting your numbers with the activities that you conduct, and begin sharing all of this with current and potential investors.

Posted by Tiffany Applegate on May 18, 2012 at 2:30 PM
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Categories: Community Engagement | Fundraising | Marketing
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May 18, 2012


“No duty the Executive had to perform was so trying as to put the right man

in the right place.” Thomas Jefferson


Selecting a Nonprofit LeaderLeadership transitions are inevitable. For one reason or another, it’s only a matter of time before the board discovers it needs to recruit a new chief executive officer. Some CEOs accept other positions, others retire. Still others are not doing the kind of job the organization requires and need to be replaced.

While each organization’s situation is unique, the need for strong leadership has never been greater. Competition, financial constraints, political and social considerations and uncertainty about the future are among many issues that have transformed the lives of today’s nonprofit executive. CEOs are expected to be leaders, strategic thinkers, world-class marketers and financial managers—all while ensuring high-quality delivery of agency services.

How does the nonprofit organization prepare for one of the toughest decisions it must make, the selection of a new CEO?

The process of selecting a new CEO is certainly complex, and obviously has a tremendous impact on the future of the organization, but this doesn’t mean you shouldn’t enjoy a very positive attitude toward the search experience. It can be an exciting and challenging time for the board and organization. This is a great opportunity to embark on a new journey - or reflect on the organization’s past, present and future, for existing nonprofits.

One thing to keep in mind as you begin your search - you should postpone or proceed with the utmost caution on new ventures, programs and services, as well as promotions and discussions on new affiliations until you have selected your CEO. Making important decisions that do not take into account your CEOs opinions or ideas, or undermines his or her influence, is not a good way to begin the relationship.

Create The Search Committee

The first major step in finding your next leader is the formation of a search committee, with well-defined roles and responsibilities of the members. Individuals must be capable of objective decision making, and often includes the immediate past board chairperson, the current chairperson and/or the chairperson-elect. A committee size of about seven people seems to be most optimal for many groups; larger groups can become slow and unwieldy, while smaller ones might not represent a cross section of views. An outside perspective from someone familiar with the search process can also be invaluable on your committee, just one of the reasons that a consultant can be so vital during this process as well as other external voices.

The committee members evaluate the organization’s leadership needs, establish criteria for evaluating candidates, interview candidates, select a candidate and extend an offer.

A consultant or “outsider” as noted can offer an organization the expertise and objectivity it needs to manage a search from beginning to end and match the position, organization and community with the right person.

An organizational assessment is usually the first step in the process. During this time the consultant becomes familiar with the organization’s mission, operations, strategic direction, challenges and opportunities. Questions that need answers include what kind of experience and education should the CEO have, what skill mix they need to bring to the position, and many others.

Taking the time to consider the nonprofit’s mission, values and the future challenges it will face are also crucial (though as we will note, some of these considerations are not as important as you might imagine).

Immediately following the assessment, the search consultant meets with the search committee to provide feedback, validate and gain consensus on the candidate profile and advise the committee of problems that might interfere with the search. Potential barriers include compensation, structure, the board’s perception of its role, unrealistic expectations of the CEO, etc. The consultant works with the committee to provide solutions to any problem areas to ensure the organization is well-positioned to attract the very best talent.

After the assessment the process of searching for candidates begins, which often starts with internal candidates. Studies show that internal candidates perform better on average than outside ones with the same expertise, so looking inside the organization should be consideration. 

Internal or external, each is measured directly against the needs identified in the organizational assessment, which once again is why it’s so important. The search committee, with the consultant’s guidance, narrows the list of candidates for personal interviews based upon the profile, experience and skill set of each candidate.

The consultant should recommend an approach to interviewing that is right for your organization. For example, consider inviting candidates for a preliminary meeting with the search committee. If there is mutual interest after the initial “chemistry check” interview, follow up with a second, more comprehensive visit. Also know that you are “selling” your nonprofit agency too, so maximize the opportunity. Remember, candidates will be evaluating you as well. 

Upon interviews and narrowing the field to just a few prime candidates, the committee may want to conduct a secret ballot or develop total scores on a weighted system. Or it may prefer an open process where each committee member describes his or her ranking and provides a rationale for the decision. After this process, a candidate should emerge that is the best fit.

Making an offer and negotiating compensation and other parts of the benefits package (which may also include a severance agreement) should be done with the utmost confidentiality. These negotiations should never jeopardize either the search process or professional careers of course, and this can be the point in the process where an outside consultant can provide some of the best value.

Having a Succession Plan

These suggestions and recommendations are based on an organization filling their need for a new CEO when the need has arisen.

However, all organizations know their CEO position will need to be filled at some predetermined time in the future, and sometimes they have someone in mind for the position when it comes available.

This can be due to the current CEO grooming their successor, or the result of a proactive board who is engaged in the process and forward planning. (Every organization should also be continually recruiting and staying in contact with attractive prospects for their board) Having a succession plan does NOT mean that all the previous steps in the process are unnecessary, however. Ultimately the board must decide if the candidate(s) being considered are right for the position. But having an idea of who could potentially fill the role of CEO in the future is a wise one. 

All organizations should have a succession plan. The process of developing this plan is beyond the scope of this article but will be address in the future. 

Why Culture Can Be Less Important Than It Seems

It may sound surprising, but it’s often wise to downplay conversations about culture and “fit” at the beginning of the search process. Instead, be on the lookout for indications of mental toughness and someone people will trust. People will follow even the most demanding leader provided they trust him or her, so a board may be well-served by tempering its conversations about culture.

Some of the most outstanding leaders of our time are (or were) very demanding in their role.  Winston Churchill was a very challenging man, demanding much of those around him. Other great leaders of this mold include Vince Lombardi, the legendary coach of the Green Bay Packers; Steve Jobs, Founder and past CEO of Apple; and Martin Luther King, Jr., the most recognized leader of the civil rights movement.

All were demanding and at times critical when they needed to be, but these leaders all have something else in common. They were all very clear in what they wanted to accomplish and what it took to get there. When thinking of these leaders do you think of dissatisfied and discouraged employees (or players, citizens, or followers)? Or do you think of teams of people inspired to follow their leader through tough times?

There's nothing easy about being a CEO of ANY organization. It can be a lonely and tiring position at times. And while emotional intelligence and being someone who cares is a prerequisite for a CEO of a nonprofit, organizations of all types exist within an increasingly super-competitive landscape today. And building the best organizations often involves making tough calls that have the potential to hurt others. That's the simple truth in today’s marketplace – for the corporation, the small business owner and the nonprofit alike. Having someone who can take responsibility for these decisions is crucial.

“The price of greatness is responsibility.” Winston Churchill

Selection of the right CEO completes the first step in ensuring the continued success of your organization. Maintaining that success is a complex formula and will require continuous attention.

As you plan for the future, your CEO naturally will be expected to provide vision, direction, inspiration, influence and integrity to the organization —in sum, leadership. That leadership is a manifestation of character, and everything the leader does is a reflection of that individual. More than any other one person, the CEO will personify the organization…which is why making the right choice is so crucial.

STEPS IN THE SEARCH PROCESS

Succession Planning Occurs

CEO Vacancy Occurs

Board Appoints Search Committee

Consultant Evaluates Organization; Committee, With Consultant, Establish Position Criteria 

Based On Criteria, Consultant Screen Candidates, Interview Candidates, Conducts Detailed Evaluations, Checks Credentials/References

Consultant Recommends Candidates; Search Committee Selects Candidates to Interview

Search Committee Conducts Candidate Interview(s)

Committee Selects Finalist

Offer Made and Terms Negotiated

New Leadership/Transition Begins


Up Next: Essential #3 – Support and Evaluate the Chief Executive

Posted by Tiffany Applegate on May 18, 2012 at 2:19 PM
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Categories: Board Governance
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