Monday, August 27th, 2012
(Opinion piece published in the Arizona Republic, August 25, 2012)
Nonprofit theaters, indeed the performing arts in general, are waging an uphill battle for survival. What are these organizations doing to stay afloat, and what should we as a community do to ensure their vitality?
Kerry Lengel describes a marketplace where the rules of the game have changed and nonprofits must learn new plays to stay afloat. (“Non-profit theaters face ‘new normal’,” August 19, 2012). He’s half right.
The “new normal” that Lengel describes is not so new. It is more of the “same old same old” – echoes of the habits of past recessions where the “tried and true tricks” of austerity that are prevalent today end up as short-term fixes. Nor does the assertion that the “business model is broken” hold water. The problem lies not in the “model” but rather in failures of governance and implementation.
Too many boards of directors – all too often unclear about their responsibilities and accountability, and all too often guided by artistic visionaries who are not necessarily adept managers – are unprepared to adjust to the realities of recession. In flush economic times, they tolerate inefficiencies, ignore the financial red flags in their balance sheets, and succumb to the temptation to overextend beyond their capabilities. When downturns occur, these acts are debilitating if not fatal. The prescribed remedies, as Lengel notes, generally turn to urgent appeals for financial help, demands to do more with less, and calls for collaboration. They play well, but only for the time being, until things ease up and bad habits return.
The reversal of these recurrent misfortunes lies in honoring the “business model” and rigorously monitoring the organization’s progress in achieving its key elements: generating a balanced base of contributed and earned income; developing adequate financial reserves to address special needs or potential disruptions in cash flow; delivering quality productions; and building new audiences.
However, even when the model is purring, the basic economics of nonprofit theater, indeed of the arts in general, require long-term philanthropic and governmental subsidy. The question for patrons, public policy makers, corporations, and nonprofit leaders centers on what strategies are appropriate and feasible to create an environment that encourages preservation of theater as an art form; that invests in infrastructure, incubators, and affordable venues for rehearsals, recitals, and productions. The problem is that when efforts have been made to address these questions – whether the ill-fated Maricopa Partnership for Arts and Culture or the well-intentionedArizonaTown Hallof 2011 – they have failed to gain traction, saying something about the depth and durability of the region’s commitment to its own cultural health.
Yet, like Mr. Lengel, I am optimistic because there are good examples of theater companies (and other performing arts) that belie the nonsense of the “new normal” – Theater Works, Childsplay, Valley Youth Theatre, Desert Stages Theatre. They govern well, live within their means, perform to scale, cultivate their constituencies, and stay true to their artistic vision. They practice the business model the way it needs to be done – despite the odds.
Friday, February 10th, 2012
There is more than meets the eye in the recent actions of the Susan G. Komen charity: An iconic organization that has campaigned vigorously to eliminate breast cancer but recently eliminated funding for breast cancer screenings! To a sister organization, whose mission is all about the empowerment of women! Go figure the logic of that!
So where is the sisterhood?
Then, there’s the apology and the reversal of the decision: the return of funding to Planned Parenthood.
Sorry! But – as in the worlds of politics, faith, and sports, where, periodically, bigots and self-righteous hypocrites recant their slips of foul tongue – you can apologize, but what you said or did in the first place is what you really meant.
What is really meant in this moment of public truth is that the interests of women and their health have been and continue to be subordinated to the rule of politics. Sadly for women, the dirty linen beneath the Komen skirt is a political and marketing agenda that runs afoul of a woman’s well-being.
In its 30 years of operation, with $2 billion under its fundraising belt, a half million dollar salary for its CEO, and an anti-choice right wing activist on its senior management team (now removed!), Komen has become an international monolith in the race for the cure of breast cancer.
But with all this heft, it’s remarkable that we’re no closer to the elusive cure. It makes you wonder if the race is all about the cure or about maximizing market share.
The problem here lies in what happens when charitable intent leads to the development of a major marketing machine ~ when the interests of positioning and organizational self-preservation trump those of the client; when nonprofit monoliths monopolize the market and deprive other legitimate organizations and ideas to contest for the philanthropic dollar; and when political agendas get in the way.
The bottom line is that the issues related to women’s health should rise above politics. Our mothers and sisters and daughters deserve better.
When nonprofits obscure their mission with political motivations or serve as fronts for hidden agendas, they defy their profound duty of stewardship, they injure the public trust, and they disrespect their stakeholders.
Better to lift the veil before you kiss the bride…it is a good thing in the world of charities and caring to look for accountability, authenticity, and measurable results.
Maybe then, for all of us – donors and patients – it’s good that the rouge has been taken off the Pink. Transparency never hurts!
Friday, April 8th, 2011
Published in the April 8th issue of Phoenix Business Journal
How is it that very intelligent individuals, highly accomplished in their own fields of endeavor, enter the board rooms of nonprofit organizations and act so unintelligently?
The Arizona Republic’s recent expose regarding the Fiesta Bowl reminds us that neither is this an idle question nor is the problem an isolated one.
It is not that men and women who serve on boards are not smart or talented or passionate about their cause. It is rather that they require a special intelligence that accounts for the distinct nature of the nonprofit business.
Yet, Boards are often inadequately prepared to understand their profound duty of care as stewards of the public trust and their fundamental roles and responsibilities.
In each case where an organization is at risk or on the verge of insolvency, the board typically is either asleep at the wheel or unversed in the things they need to know to monitor organizational performance. I have yet to see a situation where the red flags of financial irregularity or distress weren’t waving well before the crisis escalated. They were undetected because members didn’t understand the nonprofit business model or how to read its financial statements or feel comfortable about asking the right questions.
For whatever reason they have been recruited or have chosen to serve, their duty is to set aside personal interests and agendas and to act selflessly on behalf of the organization’s mission and the constituencies whom they serve. Board work is not just about doing good, but it’s about doing good well.
Good intentions are no substitute for solid business practices and mindful governance. While we daily celebrate the caring and charitable side of nonprofit business, we must be ever reminded of the fundamental need for vigilance on the business side of caring.
It is this kind of vigilance and stewardship that is promoted by such groundbreaking initiatives as the Arts & Business Council’s Business on Board – an in-depth training program that prepares members of the business community for their leadership roles on nonprofit boards.
It is this kind of vigilance that every nonprofit organization should exercise as they recruit and appoint new members to their boards.
When it’s not profitability but the common good that is at stake in the board room, the stakes are higher. The factors that drive the decisions of boards of directors are different from those they encounter in their for profit enterprises. Lives hang in the balance. Every dollar must be judiciously allocated and leveraged with an eye to how it may impact the education of a child, the caring of the ill, the inspiration of a soul, the protection of a habitat.
The quality of community life thus hinges on the priorities and decisions of individuals who report to no regulatory body. Their ultimate accountability is to the community and, hopefully, to their consciences. If they fail, their names become the fodder of whistleblowers and investigative reports.
We all, therefore, share a collective responsibility to hold boards accountable and to ask them the tough questions about how they are upholding their trust. A lot of work still needs to be done to elevate the quality and effectiveness of governance in entities that play such a vital role in serving our community and enhancing the quality of our lives.
Thus, a word of advice to current and prospective board members: If you’re prepared to be a steward of the public trust and wear this profound duty of care on your sleeve and in your mind, then get on Board. Otherwise, get off.
Thursday, October 7th, 2010
Do you know the Art Museum’s mission statement? Habitat’s mission statement? The Opera’s? The Homeless Shelter’s? The Community College’s? Of course you don’t. And why should you?
Countless – and I mean countless – hours are spent in boardrooms, at retreats, and at managers’ desks calculating and wordsmithing an organization’s mission. Confusing the statement’s purpose with that of the elevator speech or a compelling tag line. And presuming that it has value beyond satisfying a line on a grant application.
Let me share what all of you know but resist admitting: Framing your mission for public consumption is an extraordinary waste of otherwise valuable time. The results of the exercise are generally indistinguishable from those of your counterparts. And, really, most folks don’t care. What the public does want and need to know is your impact. Did you make a difference that was worth the cost?
Think about it. Most of the mission statements that I’ve seen are hardly distinct from the statements of other organizations. They amount to obscure or rosy rhetoric!
Look, it’s not that complicated to say what you’re in business to do and to what end you’re doing it. All nonprofits want to enhance the quality of life. Arts and cultural organizations want to inspire and prompt reflection on the meaning of the human condition. Health aims to heal. Education, to promote intelligence. Programs for the homeless want to end the cycle of homelessness and/or poverty. Indeed, most social service programs want to reverse some kind of insidious or debilitating cycle and return individuals to self-esteem, empowerment, and self-reliance.
But an incredible amount of time is devoted to framing the obvious and working through logic models that end up with the same.
Sure, of course, it’s essential to know your raison d’être. (Translated: reason for being– Consultants love to use this phrase!) But, frankly, knowing it ain’t rocket science. And it ain’t enough.
What is important is this:
A shared language of intention that is for internal guidance and that drives external action.
What is important, in other words, is this: That the leadership of an organization have total clarity and alignment around what it’s doing (its product) for whom (its primary customer) and with what value (intended impact, behavior change, outcome).
Why? Two reasons:
First, because when it comes time for decision making regarding programs and resource allocations, you all need an internal compass to affirm priorities and to determine what fits and what doesn’t. And, please note, you all need this language of intention to allow for adaptability and innovation.
Second, because, when you’re casting about for investments in your cause, you need to have an articulate external expression of the attributes that differentiate you from others and justify support.
Think about it. And, let me know what you think.
Tuesday, August 10th, 2010
In my July 8th article on the Ethical Imperative of Advocacy, I discussed the ethical responsibility of nonprofit organizations and particularly their boards of directors to influence public policy for the common good.
The objective of this article is to enumerate nine principles to guide effective advocacy.
I have had the opportunity over the last thirty years to practice and teach public policy advocacy. I’ve lobbied, testified, and even run for office. In that time, I’ve accumulated this set of principles that I trust will be instructive for nonprofit organizational leaders as you chart your advocacy strategy:
- Legislative success in hard times is a function of effective cultivation and development of relationships with policy makers in flush times.
- Effective advocacy involves focus; clarity and persuasiveness of message; the cultivation and development of a solid core constituency that is ready, willing and able to mobilize on the call for action; persistence and follow-through; and a bit of luck and good timing.
- Success in navigating through the political thicket requires knowing how, when, over whom, and with what force to use power and influence and having the required will, temperament, and courage to stay the course.
- Success in political advocacy involves knowing what you want and what you’re prepared to settle for.
- Success in advocacy requires an agenda that must be broader than drawing more dollars from the public trough.
- No one will ever care as much about the issue that you’re promoting as you do.
- You have to be able to back up your rhetoric with documentable results on the reach, impact, and net social benefit of your programs.
- Every organization has a limited reservoir of political capital, and, therefore must be focused and frugal in expending it. Diffusion of effort and multiple agendas diminish your credibility.
- When you’re competing for limited public dollars in a recessionary environment, expect that the hierarchy of needs will drive resource allocations, with concerns about basic security and public safety trumping investments in prevention, education, and culture. This recognition should in no way diminish your ardor in promoting your cause.
Let me offer an anecdote that reflects the advocate’s challenge in making the case for the common good:
Some years ago, I was facilitating a strategy session on advocacy with leaders of the arts and culture community in Arizona. I arranged a simulation of an appeal by an arts advocate to a legislator for continued and expanded arts funding. The highly eloquent and impassioned advocate made a compelling case to a highly attentive policy maker. At the end of the appeal, the legislator affirmed all the points that the advocate had articulated. He was persuaded in principle about the merits of sustaining the arts. However, he had only one question: From what other pot should he take the money to support the arts? The advocate had no answer. The conversation ended.
There could have and should have been an answer to the legislator’s query. What do you think? Please comment and share this post with others. I’d welcome your contribution to the conversation. In a future article, I’ll offer you my response.
Friday, July 30th, 2010
Succession planning is fundamental to long-term organizational stability. It is an exercise in organizational prudence. It is essential – in anticipation of and particularly during times of transition – that organizational leaders provide assurances to internal and external stakeholders that there is an organized plan for continuity in the quality and flow of the organization’s programs and operations.
Over the last few years, I’ve become an avid advocate of this principle, because I believe that, beyond its own inherent merits, succession planning is one of the keys to a problem that bedevils nonprofit organizations: the breakdown in the effective implementation of organizational strategy.
I recommend a three-track management succession strategy: one, that addresses continuity of management in emergency situations; second, a longer-term strategy for executive succession; third, a plan for professional development and succession in key senior management positions.
This article deals specifically with executive succession planning — contingency/emergency succession and long-term succession — and offers the following template that you can use and tailor to your organization’s circumstances. (In future articles, I will address the essentials of Board succession planning and staff development.)
Contingency/Emergency CEO succession
In the event of an unanticipated event that creates a leadership vacuum — due, for example, to termination, resignation, accident, death, etc., — the need exists
- to determine who is in charge and authorized to make corporate-level decisions, and
- to stabilize operations, minimize disruption, and facilitate transition.
To these ends, I recommend that the contingency plan cover the following points:
- Have identified, for emergency circumstances, an internal principal point of contact and communication — preferably, the human resources manager – to staff and the Board of Directors regarding the CEO’s absence.
- Identify a senior manager who will step forward to be the person in charge.
- Establish that the person in charge and the Chairman of the Board will immediately communicate with the entire organization, including a list of pre-defined key internal and external stakeholders, regarding the plan of action to assure continuity. The plan should identify the role of the person in charge, whom to contact for selected matters, and the time frame for further updates on the status of the executive position.
- Delineate specifically and communicate to staff the responsibilities of the person in charge, to include, for example,
- maintaining the status quo
- authorization to make corporate decisions during the CEO’s absence
- serving as the principle point of contact with the Board and the senior management team
- maintaining regular communication with the Board
- regularly convening the management team to ensure continuity and manage pressing issues
- establishing processes for decision-making regarding time-sensitive matters
- engaging team members to represent the organization in essential meetings and at events that the CEO would likely attend.
Long-term CEO succession planning
In the event that the incumbent CEO formally announces his/her intention to retire, the primary goal of this level of planning and the following measures is to provide for a planned, effectively prepared, and appropriately timed replacement of the CEO.
The transition should be designed to:
- protect and preserve the organization’s culture, mission, and core strategies
- ensure the fit between the successor’s qualifications and the skill sets required to manage and lead the organization in accordance with the organization’s future strategic direction, priorities, and values.
Therefore, I recommend that the Board of Directors
- define the core competencies and perspectives that will be essential for the organization’s future leadership — in effect, the criteria that will constitute “the price of admission to the interview”
- define the value-added competencies that will address the organization’s priorities as envisioned in its strategic plan
- establish a search team based on clearly pre-defined criteria
- define and enumerate the specific steps of the search process, including a determination as to whether outside services will be used, the geographical scope of the search, and the search budget.
- establish the terms of severance for the incumbent.
If you have questions or comments, please let me know. Also, I encourage you to share this article with colleagues and fellow nonprofit leaders.
Monday, July 19th, 2010
- Neither the ability to give nor the perception of need tells people of good will how much to give.
- The single determining factor in soliciting others for their donations to a cause is the standard of giving established by the donors’ peers.
- The level of giving behavior of the community will never rise above the standards set by the identified leadership of that community.
- The quality of your fundraising campaign, therefore, has little to do with the prospects and everything to do with the quality of behavior and commitment of the organization’s leaders, workers, and fundraisers.
- The campaign, in turn, is, in essence, an educational process and should therefore be designed to link the outer circles of the organization’s community with its internal circle of believers and supporters – to articulate giving expectations, to model exemplary giving, and to communicate the return on giving.
I believe in these five fundamental principles. My experience persuades me that adherence to these principles is the key to effective and superior fundraising results.
And, these principles provide the context for unequivocally declaring the imperative of the nonprofit board’s role in fundraising.
For those nonprofit executives who bemoan the failure of their boards to reckon with their role in fundraising or to adequately step up to the fund giving and fundraising plate, here’s my prescribed statement to their members:
“If you care enough, if you truly believe in the cause of the organization on whose board you sit, then you should have neither resistance to give as good and as much as you can nor fear about asking others to join you in supporting your cause. If you cannot fulfill this expectation, then perhaps this board is not the place for you.”
If the cause does not cause the board members’ pulse to hasten or make the hair on the back of their neck stand, then why are they on the board?
As stewards of the public trust in their organization, they should, by definition, protect the public’s investment and have their own skin in the game as an assurance of their commitment to accountability.
That’s what I think. It’s as simple as that.
I’d like to hear your perspective. Please comment, and share with others.
Thursday, July 8th, 2010
Every nonprofit organization has an ethical responsibility – individually and in partnership with its sister organizations – to influence public policy for the common good. There is no more critical time to do so than when the fabric of our social contract is at risk and the integrity of our safety net is compromised. There is no more appropriate agent of this imperative than the organization’s board of directors. It is the inherent role of the nonprofit to be the community conscience.
Nearly four decades ago, Lester Salamon, a prominent expert on the nonprofit sector, wrote, “of all the functions of the nonprofit sector, few are more critical than that of advocacy, of representing alternative perspectives and pressing them on public and private decision makers.”
Every time a legislator takes the scalpel to a budget, it is our job to reveal the associated human costs, the social and economic costs, of that decision. Our cause necessarily transcends the interests of individual organizations; our obligation is to speak on behalf of those whom we serve, to be the voice of humanity in the political process.
For those of us who have waged the battle with legislators to preserve public investments in health, human services, education, and the arts, we know the limits of our case in the face of staggering deficits. Regardless, we are obliged to fight as hard and as strategically as we can to be the voice of conscience, to offer viable options to draconian cutbacks, to speak truth to power.
One of the nasty truths is that we as a society will pay a much larger price and bear larger social costs as a result of cutting the budgets of schools, libraries, health services, mental illness assistance, and arts and cultural programs. This has been well-documented elsewhere, and so I will not belabor the point here.
Rather, in this context, I want to emphasize how essential it is that every board of directors of a nonprofit organization clearly understands that among its core responsibilities is advocacy on behalf of its core values and the interests of its constituencies.
The role is not optional. It is what being stewards of the public trust means.
To this end, the following six steps constitute the essential elements of an advocacy strategy:
- Defining clearly what factors and values are critical to the organization’s success and viability and the well-being of its customers (e.g., patients, students, clients, audiences, trees,whales, etc.)
- Defining those trends and issues which could significantly impact the conduct of the organization’s business
- Developing a public policy agenda that enumerates, prioritizes, and monitors the issues that the organization needs to track and identifies what potential actions it deems worthy of support or opposition
- Cultivating, developing relationships with, and educating key legislators and regulators regarding the public social and economic benefits derived from the organization’s work
- Cultivating, educating, and communicating with one’s constituency so that, when necessary, it is ready for mobilization
- Working in collaboration with coalitions of aligned interests.
Monday, June 28th, 2010
Effective positioning within a highly competitive, volatile, and recessionary marketplace requires that an organization be strategically positioned to manage impending developments – both constructive and adverse – that may significantly affect its operations and programs.
Proactive planning and a firm grounding in the organization’s core values and priorities are essential ingredients in managing real and potential risks to the organization’s well-being and the interests and needs of its clients.
Economic downturns are and need to be periods of strategic retrenchment and critical re-assessment of an organization’s operating premises and priorities.
In an earlier post (February 24th, 2010), I commented on the opportunities these periods represent.
In this post, let me turn my attention to a frequent question asked by my clients:
What is the optimal process for engaging a board/management strategic conversation regarding organizational priorities in the context of the current recession and State reductions in funding?
Here’s my response:
The first fundamental imperative is for the Board and management to be aligned around the values and policies that will dictate decisions regarding program continuity, customer (client/patient/audience/ student/forests etc.) service, and resource allocations.
To this end, the organizational leadership needs to have a high-level strategic conversation, the primary outcome of which should be the development of statements that clearly articulate their driving values. These statements, in effect, are the “we believes,” the non-negotiables, the moral compass that should direct their decisions on service priorities and resource allocations. This is essential when issues of cost versus quality and of triage are on the decision-making table.
Here are a few examples of such value statements:
- Quality will not be sacrificed in the interest of cost.
- Our organization will operate programs that we have the required competencies to manage; that do not duplicate existing community programs; that do not require a disproportionate investment of organizational resources; and for which sources of support have been clearly identified.
- Our organization will operate our programs with positive balances unless there is a compelling reason and conscious plan to do otherwise.
The next step in the strategic conversation involves the clear definition and prioritizing of current issues and challenges, the associated options for action, and their corresponding risks. Specifically, Board and management need to:
- identify issues and risks – i.e., developments that may have a significant effect on the organization, its clients, staff, financial profile, programs and services, and reputation; and
- rate the issues and risks, according to their probability and likely impact or consequences.
I recommend the use of an issue/risk Scoring matrix that allows the board and management to distinguish and assess levels of impact and probability. If you would like a sample of the matrix, please let me know.
Then, the team can assess the following risk and issues management options:
- avoidance – reorganizing or reallocating resources to avoid the risk or manage the issue
- transfer – retaining another entity to assume the responsibility
- mitigation – if avoidance is not possible, determining how the organization can reduce the risk
- acceptance – accommodating to the new development and create plans to manage the new reality.
Hard work, but attention to the process and organizational courage will help to ensure that the organization stays steady in rough waters.
Let me know what you think. If you have questions about the process, let me know.
And, of course, please share this with colleagues and clients.
Saturday, May 22nd, 2010
There are saints among us, who, daily, in places of spirit and caring, in classrooms and on stages, in hospital wards and wildlife preserves, on the streets of our cities and in the neighborhoods of our hearts, give of themselves to teach, inspire, nurse, protect, and cultivate the human spirit and the environment.
They are the collective workforce of the nonprofit sector. They are your neighbors.
Think of them and their acts of giving, and thank them. And, multiply these acts of giving with your own selfless acts of kindness and understanding.
It’s a good day to do so. Tomorrow, and in the days to come, as well.
Share your examples of exemplary “saints.”
What are the key attributes of these “givers” of themselves?