NONPROFIT CHALLENGES

Interesting article in the Wall Street Journal the other day -  http://online.wsj.com/article/SB122963299671419401.html

This article jumped off the page for me. I raised the issue in a blog post awhile back in May of 2008 - 

 see…. http://oculusdirect.com/blog/2008/05/

To see this article raise this issue means a great deal to me and should to you as well. The nonprofit sector can no longer be complacent - especially, regarding how we are measured not just by ourselves but our donors and those pesky rating agencies like Charity Navigator.

We need to take a stand and develop a new and innovative method for measuring our effectiveness - not by dollars raised or a convoluted SOP 98-2 process that can be jury-rigged to fit the outcome we want. Why are we all sitting by and letting this happen? It’s kind of like the lazzi-fare attitude that Wall Street faced for so many years. Everyone seemed to be in on the little secret that there was a house of cards being built but no one really cared as long as everyone continued to prosper from the deceit.

Is the nonprofit sector much different? Really? We are perfectly content producing what we feel are legitimate numbers and percentages and do our best to “comply” with the rating systems and perhaps acquire the BBB seal of approval. But if you are like many in the industry there is something gnawing at you - yet you don’t know what to do because there is an ocean of movement going in one direction.

Well, one by one, we can take a new direction that someday might become the norm for measuring nonprofits. The paradigm shift that needs to happen involves completely rethinking how we measure success.

Lets begin taking a hard look at this and figure out a way, method, that will logically and effectively measure if we have accomplished our mission and goals or not. Whether its serving people in soup kitchen, or drilling bore holes, or funding a cure for diabetes,  or educating people, or building an art museum, or filling some other social or cultural need, we need to quantify what we have done in real terms not simply financial terms.

I don’t have the answer - perhaps you do - but the best thing we can do is to begin the conversation - NOW before its too late…. and we are another casualty like the investment community.

I am sure you are just as appalled as I am with regard to the Madoff scandal, Ponzi Scheme, swindle or whatever you want to call it. But no matter what you call it there seems to be change in the wind - not just on Wall Street but also in how we live our lives and what we should consider important.

How can we see so much wealth, or presumed wealth, evaporate into thin air. Where did it go? Were we in a bad dream for the last several years and now wake up to face a different reality like NEO in The Matrix?

I am truly saddened to know that several charities have literally had to close their doors because of this one man - Madoff. Yet I keep thinking there is a bigger lesson to learn from all of this. None of us know if it will get worse or get better and perhaps we may even look back upon the last several years with abhorrence as to how we lived our life and the misguided values we embraced. Regardless of our perspective everything is different now.

See Chronicle article http://philanthropy.com/news/updates/index.php?id=6582 

Bottom-line is we were collectively mesmerized by money, success, the fast-lane and reaching new and greater financial heights and acquiring more and more things.

I hope that one of the outcomes of this Madoff debacle, along with the stock market cratering, the recession, bankruptcies and so forth - will be a resurgence of a renewed consideration for the “person” and not just “things”. We need to circle back and embrace the human condition and not materialism. This is simplistic I realize and possibly idealistic - but doesn’t all of this nonsense make you want to go home and spend some time with your family and hug your wife and kids and appreciate what you have? Doesn’t it now seem like material things are simply just that and consequently have no intrinsic value. There is nothing endearing about a fancy car or a fancy house - yes, its impressive but the aura of it doesn’t live forever. What lives forever is family and integrity and honesty and character and honor and memories.

Anyway, to the point I really want to make - I think this is the change we have been looking for in the nonprofit world. We have been chasing money for far too long. This is an unavoidable reality but we need to be chasing passion more than just money. The outcome of the last twelve months will be a re-calibration of priorities which will direct people to a renewed sense of community and a sense of duty with regard to those around them and for the greater good. People will realize that materialism was a sham and that there is much more to life. They will find a new passion in helping and doing things for others, their families, and the world. Nonporfits will be the beneficiary of this new perspective of the world.

A close friend of mine is a shining example of someone that is professionally very successful yet never turns down a chance to help people and support others way beyond the call of duty. He has a tremendous passion for life and those around him, especially his family. He is in the process of training (finding time in his busy schedule must be daunting) for a 24 hour 400 mile bike ride to raise money to find a cure for Lupus (his daughter suffers from the disease). http://lifewithoutlupus.org

This is the future of fundraising. Individuals making personal commitments because they believe in a cause and have the passion to help make a difference. Its going to be people like Chris Paradysz that help people in new and extraordinary ways.

Now that’s a million dollar question that we would all like the answer for wouldn’t we? The problem is this question is as elusive and subjective as asking a Wall Street professional when will we  “hit the bottom”. They talk about “capitulation” and “testing the bottom” and the elusive “we could certainly see continued volatility for the next 2-3 quarters in 2009″.

No matter how you slice it no one has the answer - not even Warren Buffet or Congress or Barack Obama or your local stock broker. It’s any one’s guess. The inexperienced have just as much chance as being right as the experienced. Why? Because we are in totally uncharted territory - both locally, nationally, and globally.

The same holds true for the nonprofit sector. No one has the answer if the economy will adversely affect your individual nonprofit organization or not. There are simply too many variables and too many unknowns.

So with that being said we mustn’t panic. The sure signs of panic include: laying off dedicated and knowledgeable employees; stopping fundraising activities, cutting back on donor recognition tactics, not sleeping at night, yelling and screaming and pulling your hair out. None of these are good and none will bring you an increase in funds.

What we need to do is remain calm and take a step back. Get up above the tree-top so we can evaluate the situation and make intelligent decisions based on accurate data - not feelings and certainly not fear.

My six point plan would look like this:

1. Cut costs where possible because if there is fat in the operation this is the time to look for it and cut it out. But you can never cut into revenue generating expenses nor can you cut into stewardship related costs.
2. Maintain or increase stewardship initiatives because this will ensure that you retain your best supporters and will reinforce the behavior of those that are willing to see you through the hard times. These are your advocates that cannot be thrown to the curb. Thank them and re-thank them often. You can’t go overboard with recognition and affirmation.
3. Strengthen the relationships with your BEST supporters by continuing the communication process with them at the same levels as before the downturn. This is not the area to skimp. Make the right investment with the right group and your best supporters is certainly the right group…
4. Reduce your communication with the least profitable donors because you will not see a positive return on this investment. Don’t worry about alienating them. You won’t. You can send them a few mailings or other communciation during the downturn just to stay connected but remember you can always reestablish the relationship once the economy picks up at which time they are more likely to support you.
5. Do not stop acquisition programs completely otherwise you will die a slow and painful death. But you should look closely at the acquisition programs you have in place by conducting a comprehensive analytical study. Be smarter about how you acquire donors but don’t stop.
6. And lastly, you must find ways to keep an upbeat staff and office environment. Build a team spirit and encourage out-of-the box innovative thinking. You don’t need to sit around and sing kumbaya but you can certainly find ways to lock arms and build a strong fortress around your organization that can and will survive the downturn - regardless of how long it lasts.

Good luck.

If you work in the nonprofit sector innovation and transformation don’t have to be oxymoron’s when used in conjunction with the word nonprofit. Although many of us don’t associate innovation and transformation with charitable organizations, the fact of the matter is that we should.

Why?? Simply put - if we aren’t advocating a culture of innovation we are missing an opportunity to achieve organizational success and at the same time we are putting our charity in harms way.

In order for any charity of any size to succeed this day and age, and in this economic downturn, it is imperative that we embrace innovation at all levels of the organization. By embracing innovation we begin a process of reinventing our organization and positioning it for future growth and success. If you think of APPLE (I realize it’s not a nonprofit but a successful for-profit organization that embraces innovation) you will see an organization that continually pushes the envelope of innovation.

At APPLE mediocrity is not acceptable. Nor is the status quo. and this is no different for us in the nonprofit sector - Why? - Because the economy stinks, people are losing theirs jobs, there is less and less money to go around, people are holding back on spending, and the economic downturn looks like its here to stay until at least the thrid or forth quarter of 2009 if not longer. If we keep doing things like we have been we won’t be successful - that’s the bottom-line…

Let’s learn from APPLE - they look for ways to reach a certain customer base. One that has an affinity to the brand and the product and what “Apple” stands for. And its not the customer base everyone else is seeking. They seek out customers that want something “different” and customers that look at the world differently then the rest of us. They march to the beat of a different drummer. In a sense, that’s the brand they exploit in their ads which tell us to “think different“.

And through it all they have become one of the most successful companies and most recognizable brands of the last 100 years. They keep surprising everyone including Microsoft - their nemesis. Their innovation has transformed them into a great company. This innovative and transformational change is easy to spot when we see it but much hard to master at  the organizational and company level. But this can’t intimidate us - we have to look for ways to differentiate ourselves from the competition.

So is there a lesson for nonprofits somewhere in there??

I think so… and it can be summed up in one word: Innovation and saying no to mediocrity…