Nonprofits Also Create Jobs

When we think of successful nonprofits, we think of the benefits they create for society: how many children they serve; how many hungry people they feed; or how many acres of wetlands have been preserved. We rarely consider the societal benefit of jobs created. Yet, the nonprofit sector provides 10% of the jobs in the United States. Recently, when interviewing a number of executives of large nonprofits about the health of their organizations, I was struck by how often they had jobs on their minds. During economically tough times, a major focus of theirs was to provide employment, and to keep people employed. While they knew that their first responsibility as a nonprofit was to achieve the organization's mission, they also saw their responsibility to keep their workers working, and thus sustain the benefits this employment provided to the broader community.

In seeking to retain jobs while maintaining or increasing mission impact, they got creative. Some looked for new businesses they could enter. Some looked for merger candidates. Others banked on future opportunities as yet undefined, spending down assets to keep their work and their workforce going.

Through these interviews, I was struck by the balance these leaders were seeking to achieve. Their decisions were not easy. They cared about their organization's mission --and -- they were compassionate and attentive to the needs of their workforce and sought to maintain jobs in a tough economy. Knowing that their employees were critical to the their organization's ability to achieve its mission, they found ways to retain those employees. I saw nonprofits not only benefiting society through their mission, they were also benefiting society by creating jobs.

A recent article here in the Nonprofit Quarterly provides an interesting overview of the economic impact of the growing nonprofit sector, with relevance to this blog post.

The Messy Business of Social Movement Funding

I recently worked for a foundation that had admirable aspirations of creating large scale social change, potentially through a social movement. As we researched the business of social movement building, it proved to be a topic mired in caveats. In speaking with various funders throughout the country, we found that organizations’ timelines for shifting toward social movement building is a great unknown. Funders seeking to fuel this kind of change are in various stages along their journey, as shown by the graphic below. Some organizations have been on this trajectory for decades, while others are just beginning. But in every case, the tactical shift to building social movements as a means to fueling societal change certainly did not happen overnight.

Messy business picture v3 5Nov14
Messy business picture v3 5Nov14

One of the primary hesitations from these funders is their resistance to leading the social movement. The big question that these funders are grappling with is “how do we make a movement happen, without being the movement?” The funders understand that a social movement cannot be dependent on one organization, but to be successful, a movement must take on a life of its own, with the vision and energy coming from the community. Foundations can fuel the movement via funds, capacity building and strategic support during the ebbing periods, but cannot be the movement itself.

Funders’ apprehension to the term “social movement building” itself also stood out. The majority of funders with whom we talked noted that this language can be counter-productive. Even if they internally understand they are using the tactics of social movement building, they use language such as collaboration, networks and ecosystem to represent their approach, while avoiding the potentially stigmatized label.

It seems that a sizeable number of funders are more thoughtfully seeking long-term, deep social changes, requiring the tactics of social movement funding. An admirable goal, foundations should be prepared for a very long-term, difficult-to-define, ever-evolving journey.

We’re Growing... But Not Yet

Growth makes for an inspiring organizational story. Boards of Directors and staff can be mobilized around growth. But if work must be done in the near term in order to prepare for growth later, the story may be less than inspiring. People may ask, "If we can't make growth happen now, why expect it in several years?" I faced just this situation recently. One of our clients had just come off a highly successful run of completing innovative projects and raising a large amount of funding to support general operations. However, most of their major projects were nearly complete, and a campaign for unrestricted revenue was ending. These efforts seeded a huge potential for new, innovative program work and an increase in revenue, but that potential was unlikely to be realized until after several years of less outwardly visible initiatives—to plan and begin working on new educational projects, to align work internally and to improve their internal functioning. This organization therefore faced a major challenge: how to communicate with their Board about why growth wouldn't be realized right away, while still telling an inspiring story.

This nonprofit found a way to mobilize their Board members. Rather than avoiding a discussion about two years of flat budgets, the Executive Director explained exactly how the organization was preparing for growth in the future. She shared their new fundraising tactics. She described how increased coordination among staff groups would leading to higher organizational effectiveness.  She worked with her staff to develop a balanced scorecard for the organization, and committed to sharing the results regularly with the Board. And, she asked her Board to help realize the growth by forming committees around a new set of products; reaching out to bring their friends to events; and helping to find new trustees with expertise in needed areas.

As a result, Board members were galvanized and excited. Rather than being disappointed that growth would wait for several years, they were inspired to help realize future success. They understood how they could contribute, and could see clear links between the organization’s plans and the outcomes predicted.

From Magic to Manuals: a Hard but Worthwhile Transition for Social Innovators

In their early days of ground-breaking social innovation, many of the innovators I have known worked out of their proverbial garage, without much in the way of strategy or funding or staff. What they often did have was a gut-sense, growing day by day, that they were on to something big.

They may not have been able to name the critical elements of their approach – whatever those elements were had a kind of magic to them – but they saw the resulting breakthroughs (as did I, working and watching alongside of them)…

We saw street kids who society had given up on re-enrolling in high school. We saw parents reading for the first time with their young children. And we saw once-neglected seniors being well cared for by their neighbors and children.

In their early days, when they had some anecdotes but no data, I have seen social innovators do well to rely on intuition, opportunism, and adrenalin to hone their approach and advance their ideas.

But fast-forward a few years to a day when the social innovation had hard data behind it, demonstrating its transformative impact. At that point, the demands on the innovator looked very different.

Where agility and opportunism once served the innovator well, now commitment to a well-considered growth strategy was needed to win support and ensure impact.

Where the almost magical quality of the program was once a part of its appeal, now the innovator needed to treat any magic as a liability that must be codified or “manualized” so the program could be broadly replicated.

Where financial considerations may not have driven the work initially, now the innovator had to make them a significant part of the equation if the innovation was to realize its full potential for impact.

I have seen these transitions be challenging and sometimes even painful for social innovators to embrace. But if the opportunity for scaling the impact is real, these transitions can be worth the cost.

Losses Loom Larger...

Do you care more about losing a dollar or gaining a dollar? If you are like most of us, losing that dollar will make you more upset than gaining that dollar will make you happy. So, you probably care more about losing a dollar. This phenomenon is known as loss aversion, or the tendency to strongly prefer avoiding losses to acquiring gains. In fact, research suggests that our emotional reaction to a loss is about twice as intense as our joy at a comparable gain.

I have seen this behavioral economic theory play out in many venues. Most recently, I found myself using it to explain why a nonprofit organization with whom Wellspring was working chose not to pursue what, by all practical measures, seemed to be an attractive merger. In this recent project, our client was looking at options for a merger with a specific partner, a much larger organization in the same field that could offer – amongst other things – financial stability.

We went through the necessary diligence process to test the attractiveness of the merger, and, after a series of meetings, both leadership teams decided that there was strong alignment and identified significant opportunities for programmatic synergies. It just seemed to work.

So why didn’t it?

In the last meeting, there was a clear sense that our client was struggling with a looming sense of loss. Though the leaders saw the benefits that a merger with this partner could bring to the field overall, as well as to this organization’s financial situation, our client could not get over the loss it would feel if its brand, programs, people and/or leadership position in the field were possibly lost, or, more likely, transformed by the merged organization.

So, despite the partner’s best efforts to assure our client that its legacy would continue, the merger did not happen.

Clearly, there were a variety of factors that led to this “no-go” outcome. However, I do believe that our client’s looming sense of loss was a key contributing factor. The potential gains were clear: financial stability and exciting program synergies that would lead to greater impact. However, those were outweighed in our client’s mind by the even more powerful potential losses, especially the brand as standalone.

Ultimately, the decision not to merge may have been the right one for a host of reasons. Having said this, it is not surprising that our client focused more of its attention on the potential losses as opposed to the potential gains. We should recognize that, while we are all subject to these behavioral biases, it may be helpful to work through them by approaching our decisions with analytic rigor and, when appropriate, an outside perspective.

Keep Your Eye on the Goal

Keep your eyes on the goal
Keep your eyes on the goal

I think it's human nature for people involved with a successful, strong organization to want it to grow or to see growth as a measure of success.  In the non-profit arena, however, growth may or may not be the right objective, particularly if there are others serving the same or similar space.  I’ve found it interesting and heart-warming to see organizations that have made decisions that serve the larger good, even when those decisions did not enlarge their organizations. We recently worked with Hole in the Wall Gang Camp which offers summer overnight camp and year-round programming for thousands of seriously ill children in the Northeast.  Founded by Paul Newman and with a legacy of offering incredibly powerful and transformative experiences for kids, their fundraising and investment management ability has put them in a solid financial position.  In serving the greater good, they have consistently used some of their funds to support sister camps which offer similar summer camp programs for seriously ill children.  In the end, what matters to Hole in the Wall is getting more kids with life-threatening illnesses to camp, wherever they happen to be.

Another organization which made a similar kind of decision is Citymeals-on-Wheels, which delivers meals to homebound elderly New Yorkers primarily on weekends and holidays.  During our work with them, we realized that despite their great work, there was still a huge unmet demand for food for the elderly who could not otherwise access it.  Clearly they would make efforts to fill that gap, but a key insight during the work was that a large number of people who were eligible for food stamps weren’t using them.  In their population, this could likely be because they couldn’t get to the store or other places to access the benefits; in other words, funding was available for these New Yorkers’ food but was going unused for this population.  So, in addition to their own programmatic efforts, they invested effort to enable more of the homebound elderly to access food stamp benefits and therefore get the food they needed. This investment didn’t accrue benefit to the bottom line for Citymeals, but had the potential to make a huge difference in reducing the number of elderly residents of New York City going hungry.

A third organization that comes to mind is the Roadrunner Food Bank of New Mexico, the largest food bank in the state.  With a list of 40,000 residents being served by the organization throughout New Mexico, they were reaching a huge number of people in need.   Roadrunner Food Bank’s executive director realized that this connection to these clients was an asset that agencies in public health, family planning, etc. were spending a lot of time and money to recreate.  And that if there were a way to collaborate effectively with these agencies, the well-being of her clients would be better served.  As a result, they are in the beginning stages of exploring the collaboration possibilities to improve service and benefits throughout New Mexico.

Organizations have 

natural tendency to think about how to do more of what they do, as opposed to taking a look at all the players in the field and assessing what the need is.

Amidst a sea of socially-minded organizations, the challenge for today’s non-profits is to keep their eye

s

 on the larger goal even when it means doing that which is not as self-serving.

What is the Right Organizational Structure for Us?

Org chart 24Mar14-001
Org chart 24Mar14-001

Over the years, I have worked with Chief Executives seeking to get their organization's structure right. They have grappled with questions such as: Should we have a COO to oversee operations? Do we need Regional Directors to run areas of the country? What control should the national office have over local offices? To whom should the Development Director report? One way to answer such questions is to use objective criteria. For instance, a span of control greater than 6 or 7 is a stretch. Or, work conducted by senior people should be delegated down to those more junior wherever possible.

However, objective criteria alone cannot specify an organization's structure. There is the human factor to consider -- we all come with our idiosyncrasies. Take the case of a brilliant Program Director who is expecting a promotion to the COO position, but isn't strong in management and delegation skills. Moving someone else into the COO role could cause the Program Director to leave, while the promotion might cause him to flounder. A third option of assigning an excellent Project Manager to work with the Program Director in his new role could lead to success. Consideration of human factors -- the specific capabilities of the people involved -- leads to an improved solution.

An organizational structure solution may also be temporal -- its value having a shelf life. Because a given structure tends to optimize for some factors while attenuating others, using one structure for too long may cause problems to arise. To address this, organizations may alternate between different structural approaches. For instance, in a national organization with affiliates and a central office, a period of tighter central-office control aimed at reining in quality infractions may be followed by a more laissez-faire approach from the central office to stimulate local innovation. Organizational structures may oscillate over five-to-ten-year periods, first optimizing for one thing, then another. 

Finally, it is useful to remember that a structural solution can only go so far in solving an organization's problems.  People may need to be replaced, or training may be in order. Conversely, when an organization's staff is excellent, one of several different organizational structures may work just fine.

Counting What Counts

File:Boys Playing Basketball in Youth Park 20100314.jpg
File:Boys Playing Basketball in Youth Park 20100314.jpg

When working with the Department of Youth and Community Development in New York City, I heard an interesting story. A youth development program had been launched and kids were actively engaged in after school activities such as basketball and homework help. More kids were coming. Parents were involved. A good thing, right?

But when the rate of gang activity in the neighborhood was tracked, violence levels had increased. Digging further, it turned out that the after school program was functioning as a gang recruiting ground - older kids were enrolling the younger kids.

When the after school activities were re-structured to keep age groups separated, gang activity decreased.

More kids in a program doesn't automatically mean that you're having the impact that you want. By assessing outcomes, program structure can be adjusted to lead to the best results.

Don't Fundraise for Your Means, Fundraise for Your Ends

Money stars
Money stars

Would you donate money to help improve the skills of a teacher? Or, would you be more motivated to donate so the children in that teacher's classroom would get a better education, and would be more likely to stay in school?

Would you donate money to help a scientist track the pounds of carbon released into the atmosphere? Or, would you be more motivated to donate so that better carbon emission data from that scientist would influence public policy leading to reduced carbon emissions, and thus slow global warming?

Glynwood Center, a nonprofit dedicated to sustainable land use was raising money for a program that brought  together land developers, town officials and land owners to decide on the best use of open space. When the organization asked donors to "Help us bring people together to decide on the best use of open farmland," funding support was meager. When Glynwood Center changed its message to "Help us save farmland," their funding increased dramatically.

Habitat for Humanity in Wilmington Delaware would report the number of homes built each year to its funders. When  the organization added information about the reduction in crime rates and increased employment due to their new homes, funders were more interested in providing support.

Tell your donors about the ends you are furthering -- the benefits to individuals, to society or the environment. The dollars are more likely to roll in.

Is My Organization Creating Benefit? Four types of rationale

City_Harvest_Truck
City_Harvest_Truck

I expect it is important for you to know if your organization is creating social benefit. I think about this a lot, both with the clients we serve, and for our consulting firm. Donors, funders, constituents, and employees also want to know.

Here are four different types of rationale to ascertain the benefit created by an organization. While a higher level of proof may be more desirable, it is not feasible to fully prove benefit for all activities. Thus, all four rationale can be acceptable tools to inform leaders and decision-makers.

  1. An observable, causal relationship - When City Harvest collected 46 million pounds of food from the food industry and distributed them to hungry people, there was an observable, causal relationship: hungry people have been fed. City Harvest can declare the benefit it achieves based on such numbers.
  2. Evidence-based research indicating a causal relationship - The Parent Child Home Program conducted longitudinal research showing that children who had been through their program graduated from high school at higher rates than control groups. This demonstrated a high likelihood that other children going through the program would have their chance of graduating from high school  increased. The Parent Child Home Program can use this longitudinal research as convincing evidence of its benefits.
  3. A theory of change - When Garrison Institute brings together environmentalists, industrialists and government officials and uses meditation to help them find new solutions to environmental issues, Garrison Institute believes that this will help stem environmental degradation. Because this result is difficult to measure given the vast array of factors impacting the environment, Garrison Institute relies on its theory of change to guide its choices and verify the value of this work.
  4. A personal desire - Ethel Donaghue established the Donaghue Foundation with a vision of "continual improvement in people’s health as a result of research being converted to practical benefit." In doing so, she made a choice about where to focus her resources, based on a personal desire. Given that Ethel Donaghue passed away in 1989 leaving her foundation as a permanent legacy, at this point no proof is needed to determine if Ethel's vision is where the foundation should invest.

How Do Kids Build Character? See The Character Lab

Recently we had the opportunity to work with The Character Lab and their remarkable team: co-founders Dr. Angela Duckworth professor and researcher at the University of Pennsylvania, Dave Levin, co-founder of KIPP, and Dominic Randolph, Head of Riverdale Country School in New York City, along with Executive Director Brittany Butler. The organization's mission is to develop, disseminate, and support research-based approaches to building character that enable kids to learn and flourish. The organization's work is part of a growing trend to recognize character as one of the key factors for success in kid's learning and development. What then are the elements of character? In their Character Growth Card, The Character Lab posits that the following seven characteristics can be used to assess character in middle-school children, and help teachers provide students with formative and helpful feedback. Reading these also sparked my imagination and interest in how they apply to my own life, and to those around me.

GRIT

  • Finished whatever s/he began
  • Worked independently with focus
  • Tried very hard even after experiencing failure
  • Stayed committed to goals
  • Kept working hard even when s/he felt like quitting

OPTIMISM

  • Believed that effort would improve his/her future
  • When bad things happened, s/he thought about things s/he could do to avoid similar bad things in the future
  • Stayed motivated, even when things didn’t go well
  • Believed that s/he could improve on things they weren’t good at

SELF CONTROL (school work)

  • Came to class prepared
  • Remembered and followed directions
  • Got to work right away rather than procrastinating
  • Paid attention and resisted distractions

SELF CONTROL (interpersonal)

  • Remained calm even when criticized or otherwise provoked
  • Allowed others to speak without interrupting
  • Was polite to adults and peers
  • Kept temper in check

GRATITUDE

  • Recognized what other people did for them
  • Showed appreciation for opportunities
  • Expressed appreciation by saying thank you
  • Did something nice for someone else as a way of saying thank you

SOCIAL INTELLIGENCE

  • Was able to find solutions during conflicts with others
  • Demonstrated respect for the feelings of others
  • Adapted to different social situations

CURIOSITY

  • Was eager to explore new things
  • Asked questions to deepen understanding
  • Took an active interest in learning

ZEST

  • Actively participated
  • Showed enthusiasm
  • Approached new situations with excitement and energy

The Character Lab is working to develop evidence-based research results to further test the validity and usefulness of these character designations. They also plan to aggregate a set of effective practices from other research-validated approaches.

Capital is More than Money: Four Types of Capital

Recently, during a meeting  with the Hyams Foundation I learned about Matthew Wesley's idea of four types of capital: Human, Cultural, Social and Financial. Rather than considering financial capital alone, all four types of capital should be included when charting a successful future. Matthew Wesley applies the concept to families who have remained successful across many generations. At the Hyams Foundation we found the concepts to be applicable to organizations and philanthropic institutions as well.

Financial Capital refers to the financial assets an entity has to invest in its future. Capital is different from income. High revenues can be offset by higher expenses, eroding financial capital. It is financial capital in reserves, unspent, that bolster an organization.

Human Capital is the resources that individuals and groups have, such as education, emotional resilience, physical health, and self-esteem. This capital can be built over time, and can also be eroded through poverty, natural disasters or other misfortune.

Social Capital relates to the development and maintenance of social networks, helping us to attain our goals while we help others attain theirs. The pattern of social networks has been changing dramatically in recent years with the advent of the virtual world.

Cultural Capital relates to the mindsets, the ethos carried by a group as it moves along its path. Culture is commonly conveyed through stories which demonstrate "how we do things around here." Culture can be a powerful foundation for an organization's equilibrium, and if eroded can cause the organization to falter or even fail.

In thinking about your organization, consider all the forms of capital that influence its success.  Human, social and cultural capital can be as powerful as financial capital in securing the future.

Ten Ways to Change a System

Network diagram v2
Network diagram v2

This morning, my husband and I hunkered down on the squat wooden chairs in our son’s first grade classroom and had a conference with his new teacher. From our first interactions it was clear she has a keen intelligence and a gentle bearing, and she has me reflecting on my own extraordinary teachers, from childhood to today. Inevitably, I think of Dana Meadows, a scientist, writer, and systems thinker who was a professor of mine in college and who fundamentally shaped my life path. Dana was a brilliant scientist who built computer models to generate insight into how complex systems function – and who fearlessly brought her heart as well as her brain to the undertaking. She was a pioneer in the field of system dynamics, yet she took the time to invite my whole class to her house to watch the movie Gandhi and snack on carrots from her garden.

Since blogs these days seem to be replete with top ten lists, here is one from Dana:

"Places to Intervene in a System” (in increasing order of effectiveness) 10. Constants, parameters, numbers. (such as subsidies, taxes, standards) 9. Material stocks and flows 8. Regulating negative feedback loops 7. Driving positive feedback loops. 6. Information flows (who does and does not have access to what kinds of information). 5. The rules of the system (incentives, punishment, constraints). 4. The power of to add, change, evolve, or self-organize system structure. 3. The goals of the system. 2. The mindset or paradigm out of which the system – its goals, structures, rules, delays, parameters - arise 1. The mindset or paradigm out of which the goals, rules, feedback structure arise.

To decode much of this, you will want to her full article Leverage Points: Places to Intervene in a System. But for those among you on the hunt for magic buttons to get change fast, be forewarned. These are the final lines of the article:

“Magical leverage points are not easily accessible, even if we know where they are and which direction to push on them. There are no cheap tickets to mastery. You have to work at it, whether that means rigorously analyzing a system or rigorously casting off your own paradigms and throwing yourself into the humility of Not Knowing. In the end, it seems that power has less to do with pushing leverage points than it does with strategically, profoundly, madly letting go.”

Be rigorous, be humble, and let go strategically. These are lessons from an exceptional teacher that I expect to be learning for some time to come.

Five Points to Consider Regarding Organizational Structure

Are you reorganizing your organization? Are you seeking an organizational tune up? Here are five points to keep in mind:

  1. There is no "ideal" organization structure. Organizations often oscillate over time,first maximizing one thing then another. An organization may centralize its control for a while, then decentralize. It may establish regional offices, then eliminate them. It may use matrix management, then move to a simpler form of reporting. Look for the best structure at this moment in your organization's history, recognizing that every structure optimizes for some factors, and sub-optimizes for others.
  2. The right organization structure is always a combination between what you want in the abstract, and the people you've got. First specify your desired organizational characteristics, design an organization structure to achieve these, then factor in what is possible given the people on hand to do the work. 
  3. Organizations are inherently messy, chaotic entities. After all, they are not machines, but are made up of living beings. Don't expect to get everything running perfectly smoothly.
  4. Each individual in your organization has his or her own priorities that vary from the priorities of the organization as a whole. The trick is to align the two. The greater the overlap between the individuals' priorities and the organizations' priorities, the stronger the organization will be. But don't expect 100% overlap -- it doesn't happen
  5. Maintain a ratio of effort expended on external problem solving well in excess of internal problem solving. In other words -- spend a lot more effort meeting the needs of the people your organization serves vs. engaging in inter-departmental tussles. While keeping your house in order is important, the ultimate ends the organization is there to achieve are paramount, and should remain your first order of business.