After Plan Approval, “We Own It”


A Board Chair recently gave one of the best pep talks I’ve heard to rally a Board around a new strategic plan. He was speaking to a group of Board members with strong dissenting opinions, but members who also care deeply about the success of the organization.

In my last blog post, The Key to a Great Workout, I talk about how the strategic planning process can be challenging. It requires wrestling with tough questions about market threats and, at times, competing interests. This Chair acknowledged to the Board that during the planning process it was important to confront the status quo, ask hard questions, and have a point of view.

Yet, the Chair noted, at the point of plan adoption, it is no longer the time for dissent. He asked for the Board’s commitment to “own it”, reminding them of their responsibility to be advocates for the organization and its future direction – as laid out in the approved Strategic Plan. He appealed to the Board members to “support the plan with all your weight, and work fully toward its success.”

The strength of a Board often comes from the diversity of thought that members bring; yet, differing perspectives can lead to dissent. A strategic plan will likely come out stronger if there is room for opposition in the planning process. But, after approval, it’s time to put individual points of view aside in order to rally around the plan and work together for its successful implementation.

Mission Today vs. Financial Stability Tomorrow


In business, as in personal finance, savings are essential to financial health. An asset cushion acts as a buffer against both unexpected expense growth (e.g., damage to physical assets, spikes in population need, etc.) and unexpected revenue loss (e.g., economic recession, shifts in foundation funding, etc.) Yet, some social sector organizations—particularly ones with little to no non-essential spending—may need to sacrifice some of their impact today for financial stability tomorrow.  How can an organization achieve the right balance between spending on mission and saving for the future?

While a general rule of thumb is to have between three and four months of operating reserves saved to ensure financial security, this guideline does not apply to all social sector organizations. For institutions such as universities, foundations or churches, assets—often in the form of an endowment—serve as both a cushion and a source of revenue from investment returns. Though they may have large reserves, these organizations often need to be prudent when drawing on reserves because doing so impacts them twice over: it will reduce both their defense against expenses increases and their investment income. Furthermore, these organizations have sometimes been around for a century and plan to continue their work for centuries more. In these cases, determining the trade-off between mission today and financial stability tomorrow can become a complex exploration.


For example, I am currently working with an organization to consider how decisions made today will impact its financial health 100 years from now. Although the unknowns that could impact the organization’s finances in the next century are plentiful, thinking this far out is a useful exercise to focus the organization’s priorities. If a core part of an organization’s mission is to flourish for the next century—and there is a great value in that—then some programmatic expansion in the present may necessarily be curtailed in order to save for the future.

Some organizations we work with worry that having large reserves will elicit questions from donors and stakeholders about whether that money could be better spent on fulfilling the mission today. An exercise like the 100-year model described above can help allay these concerns in two ways. First, it provides an organization’s leadership with an opportunity to weigh, and ultimately take a stand on, what the ideal balance between current and future impact should be for their organization. Secondly, a model itself can make it easier to articulate how small changes in the size and growth rate of expenses in the short-term can have a compounding impact on the future of the organization.

Just as each individual benefits from achieving her own informed, unique financial equilibrium, organizations with the long-term in mind can reap rewards by exploring the balance between spending on mission today and saving for financial stability tomorrow.

It’s Not Either Or

Earlier in my career I was a partner at The Boston Consulting Group, an international management consultancy. We would get hired by corporations to solve business problems, like how to reduce the cost of telephone cable connectors, or to produce orange juice more efficiently.

Often, in trying to solve a problem, it would seem like the only solution was an “either-or.” Lower cost telephone cable connectors would have a higher failure rate. Greater orange juice efficiency would compromise the taste.

But my boss, a master problem solver, had a phrase: “Break the compromise.” He would drive us to find the solution that wasn’t either-or.

Our telephone cable connector client was turning out new product in nine weeks, and was convinced it couldn’t be done faster. Then we found a Japanese company that was turning out new product in two-and-a-half weeks. We were amazed.

Working with our client, we redesigned their process to remove extra steps and redundancies that no one had noticed. As a result, our client was able to develop new product in three weeks, dramatically cutting the cost while maintaining low failure rates.

At our orange juice client, we found that waste was occurring when bad oranges were culled from the manufacturing line. But orange growers were paid by the pound as their trucks rolled over the scales coming into the plant. Only a sample was taken to assure the overall fruit quality was good, and invariably some of the oranges in those trucks were bad.

By changing the scheme and tracking the fruit culled during manufacturing back to each truck, the manufacturer could pay the grower for good oranges only. This caused the growers to become more selective with what they put on their trucks. As a result, the manufacturing throughput increased, reducing unit cost while maintaining orange juice quality.

In retrospect, these solutions sound simple. But it required jettisoning our expectations and seeking a solution where at first none seemed possible.

These days, whenever I face an either-or, I look for a solution that breaks the compromise.

Do We See Economies of Scale in the Nonprofit Sector?

I recently worked with a human services agency that operates with two separately incorporated, but legally affiliated organizations. The two organizations have separate identities and programs, but share administrative services (e.g., development, facilities, IT, HR and finance). As part of our work, we set out to answer a critical question: Do shared services save money?


We did a lot of research to get to the bottom of this question, and I want to share what we found. Our research was focused on a particular client, of a particular size, in a particular industry and geography, but the general findings are more broadly applicable.


Bottom line: There appear to be cost savings from shared services, but they are modest.


Because this was a complex problem without a definitive source, we triangulated across multiple data sources to get our answer. We spoke with experts in the field, reviewed published research and ran our own analyses. We were not comfortable drawing conclusions from any one data point. But when we compared the findings from each of the sources, we arrived at a conclusive answer for our client: Sharing services saves a modest amount of money, likely on the order of 2% of total organizational expenses.


Here are some of the key data points and sources used:

·         Sharing overhead typically results in savings of 1 to 2 percent of total expenses, according to an interview with a Partner at a firm that specializes in nonprofit mergers

·         According to a study that assessed overhead rates for over 10,000 New York City nonprofits, human services organizations of comparable size to our client had a 1.2 to 3.3 percentage point drop in the ratio of administrative expense to total expense when revenue doubled.

·         In a review of 40 New York City human services organizations, we found no clear pattern of correlation between an organization’s size and the percent of total expenses spent on overhead

·         The incremental personnel cost incurred by forgoing shared services for our client was estimated to be ~1.3M, which is ~2% of their total expenses (this was calculated by estimating new staff lines that would need to be created to fill staffing gaps)


As nonprofits seek ways to increase effectiveness while operating in a lean environment, many have explored the concept of shared services or even full organizational mergers to cut administrative costs. Organizations should be applauded for this kind of creative thinking, but they should also be aware of the facts: In most cases, shared services result in modest cost savings. Organizations might save on department head salaries (e.g., having 1 IT Director instead of 2), but most of the back office functions increase linearly with the size of the organization. Clearly, each organization is unique and must weigh the costs and benefits of pursuing these options. What may feel like a modest amount of cost savings to one organization may be significant to another. Either way, I would advise organizations to run their own calculations to understand the potential costs and benefits, and be wary of situations where economies of scale are the single motivating factor for a significant organizational shift.

Why can't we be friends: the importance of listening in today's political climate


As a strategy consultant, I do a lot of careful listening.  I listen to all types of people our clients serve: I listen to nonprofit leaders to understand their challenges, to industry experts to learn best practices, to elementary school teachers, to first-generation college students, to wrongfully incarcerated individuals, all so that I can understand their needs and help our clients address them.


This deliberate listening is core to our work at Wellspring; it is fundamental to our ability to support nonprofits in achieving their missions. And yet, the other day I failed to listen.


It happened during a Friday-night conversation over healthcare, when listening was not on my agenda and proving my deeply-held beliefs was. I slung data point after data point at my friend, mounting a case for why I was right and he was wrong. And as I did, I never stopped to hear his point of view. I never tried to understand his perspective or why it was different than my own.


This inability to engage with and talk through difference is symptomatic of a challenge plaguing our nation.  We see it everywhere - across political parties, within news outlets, and yes, in our personal lives. But as individuals committed to the social sector, we cannot afford not to listen. As consultants, like myself, or leaders, funders, and direct service providers in the nonprofit field, carrying out our work demands that we forge bridges and build allies across communities of difference.  But we cannot do this if we do not listen first.


I am embarrassed that I missed an opportunity to learn from someone with different perspective than I, and, in turn, to help him understand mine. It’s a mistake that I do not plan to make again. I hope you will consider joining me in this commitment and help close the widening gap of difference across our nation today.

Management Insight from the ACLU: Making Smart Investments In Capacity

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An Interview with Geri Rozanski, Director, Affiliate Support & Nationwide Initiatives at the ACLU

Geri Rozanski had a question. With large volumes of extra funding coming into the national center of her organization, how could this funding be effectively passed on to local affiliate organizations to get the best results? 

Geri worked at the American Civil Liberties Union (ACLU), where she was the Director of Affiliate Support & Nationwide Initiatives at its national headquarters in New York City. And while national headquarters played an important role, much of the ACLU’s work was carried out by its affiliate organizations at the state level, each separately incorporated, and each having its own Board and Executive Director. As the ACLU’s Director of Affiliate Support & Nationwide Initiatives, Geri’s role was to support and provide guidance on work carried out at these affiliates.

In the aftermath of 9/11, concern about threats to civil liberties grew among the ACLU’s individual donors and institutional funders, causing a large influx of funding to the organization’s national office. At the same time, important civil liberties legal cases were arising at the state level, often in the poorer states: Immigration cases in New Mexico, poverty-related cases in Mississippi, and cases related to Native American tribes in North Dakota. Yet the ACLU’s policy at the time was to expect affiliates to do most of their fundraising locally. Poor states therefore had small, poorly-funded ACLU affiliates which often lacked the ability to mount compelling legal challenges.

The ACLU saw an opportunity to move more nationally-received funds out to state affiliates. The question was how to do this most effectively, and to the right locations. If done ineptly, the funding could be wasted. Without sufficient planning, extra funding from national might simply cause an affiliate to ease up on its own fundraising, leading to no net gains. Or, extra funding might get spent on programs and activities that were poorly conceived and hastily implemented.

Geri Rozanski took up this charge, and developed an innovative and effective multi-year approach to transfer funding received at the national office to state-level affiliates. She named this program the Strategic Affiliates Initiative. Wellspring Consulting worked with Geri on the initial design of this program. Recently we followed up with her to hear how things were going. She reflected on the success of the program, and shared seven insights on how to effectively make strategic funding investments in recipient organizations.

Insight #1: Start right away investing in basic resources

“After 9/11, as the extra funding was coming in, we began investing in state-level affiliate offices right away. We helped affiliates add basic resources – for instance, by helping them add a staff attorneys or improving their technology. Before strategically investing in some affiliates over others, we first had to be fair to all, to ensure that even smaller affiliates had to capacity to do the work they needed to do.

We also started with low-hanging fruit. For instance, if an affiliate had no lawyer, we gave money to make that possible. Every affiliate needs at least one lawyer to do their work.

Through this first set of investments, we learned about each affiliate: how they would manage change, how quick their hiring could be, and where they experienced implementation hiccups. So, when we started the Strategic Affiliates Initiative, we already had a lot to go on. Our projected rate of investment in the affiliates looked daring, but there was nothing crazy about it.”

Insight #2: Piloting investment strategies and fostering accountability can motivate funders

“As we were preparing to launch the Strategic Affiliates Initiative we tested investing in several state offices and saw a terrific return on investment. All the things we hoped would happen, happened. Then, because we had demonstrated early success, our funders were able to believe in our idea.

It turned out that most of the funding was coming from donors who lived in states different from where we most needed to invest. For instance, we’d have a donor in California, but it made most sense to send their money to Texas.  In order to get the donors to trust the investment we were asking them to make, we needed the affiliate to be accountable. We did this through business plans that defined how an affiliate would grow, and tracked the growth of each affiliate we were investing in against the business plan.

Insight #3: Have clear criteria for where and how to invest

“We could have invested the national money in lots of places, but to decide where to invest we developed clear criteria. I thought these criteria should be very transparent across the ACLU.

The criteria had 2 screens. The first screen assessed the state where the affiliate was located. We looked for states where demographics were in flux and there was an opportunity in the legislature or courts for the ACLU to do more work. We also looked for states where we could have a multi-issue agenda. It was not a political investment—the states were not necessarily red, blue or purple—we were looking for states where we could best advance our work.

The second screen assessed the affiliate on their ability to benefit from an investment. This included and affiliate Executive Director and Board President who were ambitious and would be disciplined about developing a plan and sticking to it. We also looked for affiliate leaders who would be willing to collaborate with the national office, and who could be strategic in developing their growth vision.  Based on both screens, we initially identified about 15 affiliates for investment.”

Insight #3: Roll out investments over time, and name a person to lead the initiative

“In order to manage the program effectively, we decided our investment in affiliates would be sequenced over time. Some of my colleagues thought we should invest in all 15 affiliates at once, but I didn’t think that would be feasible. I felt it was important to get each affiliate ready to receive their investment, and to invest in tiers, one group after another.

We also identified a person to lead the Strategic Affiliates Initiative who had been involved in its initial design, who heard what I was concerned about, and understood where I saw possible barriers as well as opportunities. Having this leader in place made the launch smoother.”

Insight #4: Create a detailed plan and a shared understanding of what you seek to accomplish with partners

“To make sure the affiliates and our national office were each in agreement about what was expected from the investment, we created a document for each affiliate that delineated the process: every action step, who was responsible for what, and a timeline. In most cases, I would start by talking to the affiliate’s leadership and make them understand that this would be a lot of work, and that they were going to be managing change. They were not just hiring people to add to the affiliate. Their job as leader would also be different. Once they understood this and were ready to go, the Leader of the Strategic Affiliates Initiative would meet with the affiliate’s staff and start to create a business plan. Together they looked at what would be sustainable over time, what the potential for fundraising in the state was, and other opportunities or risks relevant to the planned growth. Once that was clarified, we would draw up a memorandum of understanding that I would sign along with the Executive Director and Board President of each affiliate in which we were investing. ”

Insight #5: Change the question to stimulate creative thinking

 “In the very initial conversations with affiliate Executive Directors, their thinking about expansion wasn’t very creative. All they would say was that they needed more lawyers. But when I switched the question to “If you were going to build the ACLU from scratch in your state, what would it look like?” I got much more creative thinking. Changing the question was helpful. Once they had the experience of thinking bigger and what that could do for them, the Executive Directors became very bold in their thinking.

Insight #6: Be collaborative and build trust

I wasn’t asking affiliate Executive Directors to do something I thought was important for the national office or for me. I wanted them to be as excellent as they wanted, to help them achieve their goals. I was sensitive to their needs. After some time I became a trusted partner. And while we always would respect a donor’s intent, we found ways to be flexible in order to help the affiliate.

Insight #7: Don’t be afraid to hire consultants to help

“I think there are some organizations that are proud of the fact that they never use consultants. I rarely use them, but this was one of those times when I found consultants very helpful. If you are going to invest $39M, which is what we spent, you’d better know what you don’t know. I know how to build advocacy, but rapid growth in multiple states? I am good at what I do, and have great staff, but we needed help. A good consultant will understand your mission, be invested in your success, and help you get the job done well.”

The Fixers

When the front page of the New York Times is a bit too gloomy, I like to turn to the Fixes column, a corner of the Opinion Pages where David Bornstein and Tina Rosenberg write about solutions to social problems. In their columns, Bornstein and Rosenberg profile the innovative ideas, people and organizations that are solving—in ways big and small—seemingly intractable problems, such as teen pregnancy, epidemics, and addiction. Bornstein and Rosenberg also run the Solutions Journalism Network, which trains journalists to write solutions-oriented pieces. With Fixes as their loudspeaker and the Solutions Journalism Network as their coaching platform, Bornstein and Rosenberg are infusing a profession that is known for its alarmism with a sense of balanced optimism.


Their intention is not simply to make readers feel good; rather, they are harnessing the investigatory power of journalism to encourage organizations and governments to rethink and redouble efforts to solve critical problems. And they are doing this by highlighting the people and organizations that are making the most headway. As Rosenberg said in a recent interview with On the Media, “if you can show that a problem isn't inevitable because someone [has a solution], then that problem is no longer inevitable. Then it becomes inexcusable.”


I am not a journalist, but Bornstein and Rosenberg’s approach feels similar to what my colleagues and I do at Wellspring in two respects. First, because we work with our clients to gain a clear-eyed sense of the obstacles to positive impact. Second, because we learn from the organizations and experts who are finding solutions.


As part of this second step, I interview academics, executive directors, and program experts at the forefront of innovation in our clients’ fields. These interviews spark the same optimism that fills me when I read Fixes: for every seemingly inevitable problem, there is a committed cadre (sometimes an army) of dedicated, thoughtful organizations and individuals who are solving it in unexpected ways and giving their time to share their insights with others. I am often struck by the generosity with which the people I interview give of their time and hard-earned insights.


If you’re inspired to read something from Fixes, here is one of my favorites: “Ideas Help No One on a Shelf. Take Them to the World.”

Managing Through Change: Part III - Mobilizing Advocates to Fight for Government Funding An Interview with Donald Romanik, Former Vice President for Legal and Governmental Affairs at Oak Hill

Oak Hill is a leading provider of services and residences for the severely disabled in Connecticut. It operates a main campus in Hartford with dozens of group homes around the state. A few years ago, Oak Hill faced a familiar challenge for many nonprofits—shrinking government support even as need remained high.

Oak Hill’s service population included some of the highest need people with intellectual and physical disabilities in the state, and Oak Hill was one of the only providers equipped to care for these difficult cases. Oak Hill had been covering budget shortfalls with their endowment, but realized that this couldn’t be a long term solution. They looked at ways to decrease cost, but found that it would require them to stop serving the highest need populations and even shut down some of their residential facilities. This would have been a disaster for the individuals whom they served, and their families, as no other provider was equipped to provide the kind of care at which Oak Hill excelled. Rather than bend to these pressures, Oak Hill took a different tack, and successfully mobilized the families they served to advocate for additional state funding.

Recently we spoke with Donald Romanik, former General Counsel at Oak Hill. He shared five insights on how to successfully pursue additional funding through advocacy

Insight #1 – Focusing on revenue can be the answer when cost cutting or other efficiencies aren’t an option

Donald Romanik: “Our Director at the time had the philosophy that bigger was better. It was also a time of deinstitutionalization and privatization, so the state was looking for capacity among the providers they funded. We were opening homes at an incredible rate, but supplementing the cost of the programs over the reimbursement we got with our endowment. We had a nice endowment that most of our sister organizations did not have, and that worked for a while. But eventually, the Board said the endowment was not there to subsidize chronic underfunding. We looked at cutting cost and being more efficient. But we decided it was not only about that—it was about the value we were bringing to the table. We were the provider of last resort. The state called us when no one else could take someone. So we told the state they needed to increase their rates. We were the largest, but also one of the most expensive providers, because we were unionized. Part of the issue was convincing the government we were worth the price differential.”

Insight # 2 – To secure additional funding, empower families to advocate for their loved ones

Donald Romanik: “To convince the government of our value, we hit on the idea of involving the families of our residents. This was really the first time that we got families involved. There had always been a reluctance to involve parents in advocacy because of an almost paternalistic belief— that we were there to take care of their poor disabled child. But, we realized it was a way to empower parents as advocates for their kids. Legislators are used to seeing the administrations of organizations like ours asking for money. But when someone comes and says ‘I am a proud parent of a resident at an Oak Hill facility’, they stop and look. Those are their constituents, not the usual suspects.”

Insight #3 – Choose the right families for the most effective advocacy efforts

Donald Romanik: “You need to choose the right people to be involved in advocacy. They should be constituents who not only appreciate the services and needs of their own family member but also understand the broader mission, the idea of the common good, and the role of government. Also, identify people who can articulate their views in a very personal and compelling fashion.”

Insight #4 – Give families a variety of entry points for advocacy

Donald Romanik: “We gave the families various entry points. The easiest entry point was to provide a template for a letter to their legislator—they could sign it and add a little note. The next level was to ask them to call their legislator, giving them a script they could use. Additionally, some people were politically active in local districts and were comfortable coming to rallies at the capital or testifying at public hearings.  This was all before social media. In this day and age, there are a lot more user-friendly ways to engage people. You can ask a parent to do a 30-second video where they say how great Oak Hill is while sitting next to their daughter in a group home, then post it on your website or Facebook page. Organizations need to take full advantage of the myriad communication opportunities that are available now.”

Insight #5 – Keep pushing and do it right

Donald Romanik: “Remember that you are competing. Government funding is a zero sum game with a limited pie. And, you can’t assume people know you exist and are doing good work. You have to tell legislators once, twice, three times in different ways. Bombard them with emails, texts and social media, but do it in a respectful way. For this to be successful, you also need leadership at the top and participation at every level of the organization—rank and file people, employees, parents, etc. It is time consuming and can be frustrating, but it is really critical to the mission of the organization and, more importantly, to providing services and supports to core constituencies.”

Managing Through Change: Part II - How Do You Respond To Your Own Success?

An Interview with Richard McCarthy, Executive Director of Slow Food USA

Slow Food is a grassroots organization founded by Carlo Petrini in Italy in 1986 and has since spread to over 150 countries. Offering an alternative to fast food, it strives to preserve traditional and regional cuisine and encourages farming characteristic of the local ecosystem.

In recent years, Slow Food USA faced an enviable but daunting challenge. The organization’s priorities, once radical, had become increasingly mainstream. How could Slow Food USA continue to be vital and relevant? Additionally, Slow Food had historically been supported by a large grass-roots membership. But the attraction of membership was waning in the United States among members of all types of membership organizations. How could the organization adapt its revenue model in response?

Recently we spoke with Richard McCarthy, Slow Food USA’s Executive Director, about how the organization navigated these challenge to find a new path forward that focused on convening and inspiring their audiences.

Wellspring: How would you characterize the challenges that Slow Food USA Faced?

Richard McCarthy: “The context for Slow Food USA was what happens when you start to succeed. The ideas that Slow Food pioneered and our unique belief system have evolved into a complex ecosystem of competing organizations in part because of our success. Our ideas are no longer marginal and crazy. They are now main-stream. We are a brand, and a body of ideas. By recognizing that, we clarified that our role should be a nexus, not a club.”

Wellspring: Slow Food USA had historically been a membership-based organization. How would you describe the challenges Slow Food faced with its membership model?

Richard McCarthy: “With changes in technology and social media, individuals’ expectations of how they interact with groups have changed. Mobilizing civil society in America has become a real challenge because people have too little unstructured time left. We work too hard and travel too much. There isn’t enough economic security and time, so an old-school member organization based on strong social ties is really difficult to enact in the US. Now, people tend to move into and out of organizations, to touch them and occasionally engage. Getting people to make a deep commitment to strong social ties is asking a lot.”

Wellspring: You looked at other organizations’ models during strategic planning with us. What stood out as most useful or interesting?

Richard McCarthy: “The real a-ha moments for us were learning about Alcoholics Anonymous and Burning Man. Alcoholics Anonymous is an extraordinary organization—it’s global, very flat, and based on a set of values that are replicated all over the world with little assistance from a central body. We realized that’s how Slow Food functions—we’ve never had a centralized and fully capitalized mother ship. That gave us insight into considering the nature of our organization, which has strong values and loose structure. Regarding Burning Man, people don’t engage with their events for rational economic reasons— Burning Man’s crazy idea is a visible, tactile, authentic experience. Their example helped us to realize what people look for in Slow Food— a tactile, meaningful experiences where details matter. This pointed to the core of what our future could be.”

Wellspring: What was one of the most exciting moments during the strategic planning work?                   

Richard McCarthy: “Fairly early on in the process, we came out with an understanding that we inspire people. While measuring inspiration is not easy, it landed in our laps that, ‘oh my god, this is what we do.’ When people described why they came into our organization, inspiration always came up. That is different than most people’s interaction with social change—it’s often from fear or anger. Inspiration is not that typical. Realizing that we did this well was quite exciting. We found a strength that we had not valued previously and identified a path that was within our reach and allowed us to harness that strength.”

Wellspring: You decided to pursue a model of convening people and organizations nationally. Why?

Richard McCarthy: “Convening a vast array of other organizations and people relieves us from having to be active in every space. For instance, if one group is good on food and labor issues, we can rely on them as partners without having to have an answer for everything in that space. We can support others, and maybe even lead from behind. The business model for civil society is really vulnerable. It would be so much easier to let big organizations do their thing because their scale would help them perpetuate. But at the other end of the spectrum, there can be a balkanized society of organizations. You want a biodiversity of organizations, but not so much internal competition that we end up cannibalizing each other.”

Wellspring: What advice would you have for leaders facing similar challenges?

Richard McCarthy: “One of the under-recognized and underutilized fuels for organizations is passion. Passion is the glue that often keeps organizations going during difficult times. If there isn’t much passion, then no strategic plan can facilitate a shift. So in some ways, passion matters more than the soundness of the business model.”

Wellspring: What thoughts or advice do you have for organizations focused on issues like food, in these times where there are a number of politically charged issues taking precedence in the media and national conversation?

Richard McCarthy: At moments like this, where the conversation is not about excitement that a new garden is going in at the While House but rather building a wall around our country that keeps out people who grow, harvest, and serve food, it is easy to be distracted and feel like we have to join someone else’s conversation. I think it requires extraordinary discipline to ignore that white noise. In such times, it is important to revisit the mission to see if it is still relevant and still makes sense— and that the right outcomes are being measured. If things are not aligned, an organization can go astray.”

Wellspring: What would you want others to know about strategic planning and pursuing new paths forward?

Richard McCarthy: “It was an extraordinary process. It ate up a lot of time, but at moments it was fascinating. What was most difficult was maintaining a public face during the process— we were still open for business, but were questioning why we exist. Also, it took our historic network of members and chapters a long time to adjust because they weren’t living the strategic planning process every day. Making a culture shift and building the staff and skills for a new organization is a lot of heavy lifting.”

Managing Through Change: Part I - Leading in an Uncertain Environment

An Interview with Scott Giles, President and CEO of the Vermont Student Assistance Corporation

The Vermont Student Assistance Corporation (VSAC), is a nonprofit public corporation providing citizens of the state with information and financial resources to attend college. The organization has awarded over $600 million in grants and scholarships, and has served over 400,000 students since its inception in 1965.

When Wellspring first worked with VSAC their role was to raise capital in the bond markets, and repackage the money into loans offered to students. After the Obama administration took office, the federal government moved to take over the management of student loans, calling it the Direct Loan Program. The federal government offered to make organizations like VSAC into “loan servicers,” thereby managing communications and payments for loans they would no longer own. VSAC faced some difficult choices. Should they participate in the Direct Loan Program as loan servicers? Were there other lines of business they should move into?

Before these changes, VSAC’s work had been well-funded and they had grown into a major employer in the area. They also ran programs that helped students make the best financial aid choices. VSAC questioned how best to respond to the changes in their external environment, and what their response would mean for the structure of their programs and organization.

Recently we spoke with Scott Giles, President and CEO of VSAC, who shared seven guidelines drawn from how VSAC successfully managed through this change and uncertainty.

Guideline #1 – Invest heavily in relationships with organizations who share your interests

Scott Giles: “There were signs that people wanted to make this change [from federally guaranteed to Direct Loans], and we were engaged in a pretty heady political conversation about the two competing programs. We [VSAC and related organizations in other states] were members of several trade associations. We had invested the time and effort with political leaders in our state and in DC as important stakeholders. I think that working with other organizations facing the same challenges is particularly important during these times of change. We invested as much time in building and nurturing relationships with other organizations as we did with customers or more traditional nonprofit stakeholders. Therefore our state representatives, the Department of Education, and other political players knew the value that our organization provided, and why what happened to us mattered. But it was a big challenge to motivate our counterparts. Connecting with political leaders is work, and it can seem like it is taking away from the bottom line.”

Guideline #2 – Develop multiple “fall back” options even as you advocate for your current programs

Scott Giles: “At the end of the day, the legislation that eliminated our program happened within a week. But because we had made the investment in talking with our delegation, we had our “plan B” already in place, which was to contract with the federal government to service loans. At the same time, we were thinking about what to do if plan B didn’t work out. We looked at diversifying and not putting all our eggs into one plan B. At the time, this approach was controversial, but in terms of where we are today, it turned out to be a good thing. The initial plan B was loan servicing, which we are in the process of exiting, and plan C was our nonfederal loan program, which has really taken off.”

Guideline #3 – Set benchmarks and decision points to assess progress and navigate uncertainty

Scott Giles: “Early on, VSAC thought Direct Loan Servicing was the path forward. But the work we did in strategic planning highlighted for us that there were significant uncertainties about the success of that program. At the same time we were working through how to do Direct Loan Servicing, we were exploring other possibilities that lay within our competencies. From a planning perspective, it was critically important to have decision points and set clear benchmarks to know if a plan was successful as it was being implemented. If we weren’t achieving specific goals, we knew when it was time to question whether the investment made sense. The strategic plan helped us lay that framework.”

Guideline #4 – Be analytical and thorough when making decisions in times of uncertainty

Scott Giles: “To manage in times that are chaotic, do planning that is very analytical in the beginning. Clarify assumptions and data points, and build a strategy based on these, along with tactics to implement the strategy. We did this with our strategic plan. Then, go back and question those assumptions on a regular basis because the world is changing. We avoided problems because we re-examined our assumptions every six months. If we hadn’t done that, we wouldn’t have noticed problems until it was too late to do anything.”

Guideline #5 – Dedicate time and effort to understand different scenarios

“We used an interesting process to decide whether to continue pursuing Direct Loan Servicing. This was a major strategic question with major impact on our organization and our staff. We wanted to make sure we were making the best decision for the organization. I broke our staff leadership into 2 teams. I had people who were neutral or who wanted out of Direct Loan Servicing build a case for staying in. I had those who were more interested in staying build the case for getting out. They worked on their cases for a month, and we all contributed to make sure the data was right. Then, we came back together to fight it out, with each side poking holes in each other’s arguments. After that, we looked to see if we had consensus, and we did. To us, except for the staff impact, the decision to exit was clear.

For the Board, we presented the two cases in full, but didn’t tell them what our initial recommendation was. We let the Board argue it out. Our Board Chair asked whether I was nervous that they would reach a different conclusion from the leadership team. But the way I saw it, if you don’t prepare your Board well enough, they can end up making decisions without all the relevant information. I wanted to give them all the information— if they reached a different conclusion, it would be because they saw something our leadership team didn’t see. In the end, they were unanimous in their decision and agreed with staff leadership’s thinking.”

Guideline #6 – Be transparent and lead not only for the organization as it stands today, but also for the organization you will lead in the future

We had been reviewing our benchmarks and evidence was suggesting that we might need to exit Direct Loan Servicing.  We knew the organization wasn’t ready.  We committed to transparency and openly shared our milestones and our concerns.  It was an uncomfortable way to lead—my peers thought we were crazy and we risked losing good staff.  We laid out the issues in staff meetings—the challenges, the questions, that data we were collecting, the milestones, and what would happen if we didn’t hit the milestones—both to the organization—and to staff.  We even let them know when we thought a decision to stay or leave would be made. Everyone stuck with us.

 To go through that transition, we were not just leading the organization we had that day. We were also leading the organization we were going to create. The audience was both our current staff and our future staff. If we hadn’t prepared our staff for a big strategic move like the one we were about to make, which required losing positions, the team that remained would have no trust.

Once we left the Board conversation with a decision, we immediately laid out the issues in a full staff meeting—the challenges, the questions, the data we were collecting, the milestones, and what would happen next. This was a very emotional meeting but when we made the announcement that we were exiting Direct Loan servicing, no one was surprised, and no one questioned it. Doing things this way was uncomfortable for the organization and uncomfortable for ourselves as leaders, but it sustained the staff’s trust in leadership because we didn’t surprise them, our decisions made sense to them, and they had an understanding of where we were going and what their role would be.”

Guideline #7 – Accept not having answers as a leader in the face of uncertainty

Scott Giles: “I had to learn the hard way to allow a grieving process to take place and not pretend I had answers when I didn’t. Most of us as leaders have gotten to where we are by solving problems and being able to present compelling visions of the future. The visions we prize the most have the greatest certainty. During periods of change, that works for you if you are right but against you if you are wrong. There is a line to walk. You need to be compelling and inspirational enough for people to pull in the right direction. But, if you act too certain, the next time you have to shift dramatically your vision gets called into question. The desire to go in and fix everything to give people confidence and security is a mistake.”

Moving Forward in Uncertain Times

In November of 2016, the Boston Globe reported on a pervasive sense of concern and uncertainty in the nonprofit sector as President Trump took office. The Globe reported Jim Klocke, CEO of the Massachusetts Nonprofit Network, as saying, “People are apprehensive, people are wondering what’s going to happen on a whole bunch of fronts. There’s an awful lot of concern out there.”

Six months later, the full effect of the new administration on the nonprofit sector remains unclear. But despite continued uncertainty, many of the nonprofits we serve want to move forward. To inform their planning at a time when the future is particularly hard to predict, they are looking to a variety of data sources and using the data in creative ways.

Here are three data sources our clients have drawn on to shape their assumptions and inform their plans for the future:

1.      One client looked to recommendations from the Heritage Foundation to the Trump administration on how to reduce the size and scope of government. Based in part on Heritage recommendations, our client chose not to hinge their growth plan on partnerships with agencies that Heritage had tagged for major cuts in government funding. The Washington Post confirmed the wisdom of this when it reported that the budget Trump released this spring bore a “striking resemblance” to the Heritage Foundation’s model.

2.      For another client, Wellspring conducted research on the scale and pace of budgetary changes after the election of another conservative American president who was determined to make big change, fast – Ronald Reagan. Under Reagan, cuts to social services came quickly, affecting nonprofit funding by the second year of the administration. Our client used this history as a guide for what they might expect under Trump. Now, they are proactively preparing for cuts on a similar timeline as what social service agencies saw under Reagan and are working to ramp up private funding in time to fill the gap.

3.      Several of our clients are learning from results of a survey of 162 foundation CEOs published by the Center for Effective Philanthropy. The survey assessed how foundations are altering their grantmaking as a result of the election of Donald Trump. It found that three quarters of foundation CEOs are making or plan to make changes in their work as a result of the election. The most frequently reported areas for increased emphasis were collaborating with other funders, advocacy and policy at the local or state level, and convening grantees. Only 1% expected their grantmaking to decrease, while 14% expected it to increase. Many respondents expected to increase funding in areas hard-hit by political change. Our clients are drawing on these insights to inform their conversations with funders.

Nonprofits need not be paralyzed by periods of uncertainty. If they look in the right places, they can find data that can inform their plans and prepare them to meet the future, whatever it looks like.

But What If? Hopeful in the Face of Reality

Poverty. War. Hunger. Climate change. Justice in freedom. Illiteracy. Overpopulation. The income gap… On many a day, I take stock of the state of the world and panic. Given the reality of these inextricable challenges, I sometimes wonder if it has to be this way, by necessity. Must this be our social paradigm because, like a law of physics, it is an underlying, fundamental principle of our world?

Thus I was struck with inspiration when I read Alan Lightman’s The Accidental Universe: The World You Thought You Knew, where the author-physicist explains that the universe in which we live may in fact be only one of infinitely many alternate universes. Indeed, the same fundamental principles of physics from which the laws of nature derive may lead to many different, self-consistent universes with significantly different properties of matter and energy from our own:

“The situation could be likened to a school of intelligent fish who one day began wondering why their world is completely filled with water. Many of the fish, the theorists, hope to prove that the entire cosmos necessarily has to be filled with water. For years, they put their minds to the task but can never quite seem to prove their assertion. Then, a wizened group of fish postulates that maybe they are fooling themselves.  Maybe there are,  they suggest,  many other worlds, some of them completely dry,  and everything in between.”

This “multiverse” concept is revolutionary for theoretical physicists, and the chapter reads a bit like science-fiction, teetering on the edges of philosophy, religion and science. The implications of this theory (if it turns out to be true) are enormous:

“If the multiverse idea is correct, then the historic mission of physics to explain all the properties of our universe in terms of fundamental principles—to explain why the properties of our universe must necessarily be what they are—is futile, a beautiful philosophical dream that simply isn’t true. Our universe is what it is because we are here."

I read this with a mixture of mind-blowing awe and great relief. The fundamental principles of our universe may not be as fundamental as we believe them to be. It is possible that the underlying tenets of our economy and culture remain fixed (competition is good, capitalism is sacred, individualism is revered, etc.) and that a social paradigm drastically different than our current one exists within this axiomatic system.

If it does not have to be this way, how else can it be? I don’t know. But simply knowing that an alternative reality is plausible, I am hopeful.   

The Key to a Great Workout


The New Year brings gyms and workout classes filled to the brim with people who have set a new year’s resolution to get in shape. As a workout fiend myself, I love going to workout classes that are fun, but also tough and little painful. The fun keeps me engaged, but it’s the discomfort in the process that makes me stronger.

When debriefing a recent strategic planning project with our client, the CEO joked that the strategic planning process had been “mostly fun, and a little painful.” Our consulting team had brought up some tough questions that were uncomfortable for the organization’s leadership to confront, but ultimately important to figure out as the organization looks to the future. And the leadership’s efforts to think through those challenges will make the organization stronger.

The parallelism struck me. The point of strategic planning is to make an organization stronger in the long-term. It’s fun to think about the future, especially the opportunities. But, it can also be uncomfortable to face challenges and threats to the current way of doing business. For me, it’s fun to be active, but I’m not getting stronger if I’m not challenging myself. As workout instructors are always encouraging their classes, it’s the tough moments when we most want to quit that we are making the most progress towards our goals. And, upon finishing a workout, I always feel accomplished and glad I did work through the hardest parts. Our work can be like that of the instructors, and my hope is that every organization feels that sense of accomplishment and progress through strategic planning.