Monday, June 22, 2009

Bracing for Change - An Update on Dealing with Tumultuous Times

In November I blogged about a presentation given by Todd Polyniak of Sax Macy Fromm, an accounting firm in Clifton, NJ. That article "How Can We Possibly Stay Afloat in These Tumultuous Times?" is one of my most read blog articles and it is in the Nonprofit Good Practice Guide database.
Sax Macy Fromm

How Can We Possibly Stay Afloat in These Tumultuous Times?

NonProfit Good Practice Guide

Last week I attended another breakfast presentation and heard Todd give his update entitled “Bracing for Change.” This article provides a summary of Todd's preentation with some editorial comment by me along the way.

Todd started out with highlights of change over the last 24 months including political milestones, highpoint and lowpoint news stories and some economic indicators bringing us to where we are today with 9.4% unemployment and corporate meltdowns. He comes to the conclusion that many others are coming too… some things have changed permanently and require us to take a fresh look at how we face the world. He expressed concern about a leadership crisis among nonprofits with leaders feeling directionless and scared and employees having low morale. This is not different than at many for profit businesses. Todd offers 6 steps for a “new way of seeing normal.”

Respond with a Plan
Doing nothing and doing something rash will both be risky. So for the first step, Todd advises planning. You’ll always find me in agreement with this approach.

Assess Exposure
•Consider alternative scenarios and not just two all or nothing options*
•Quantify the impact of the various scenarios
•Assess the vulnerabilities of your competition
*(I highly recommend David LaPiana's new book, "The Nonprofit Strategy Revolution" for assessing alternatives)

Damage Control
•Protect your financial fundamentals (Remember Todd is an accountant)
•Protect your existing core programs
•Understand and maximize your value and competitive advantage (If Hildy Gottlieb is reading this she is screaming but David LaPiana is cheering)

Gain Long Term Advantage
•Invest for the future – Perhaps hire some great talent now in the job market
•Pursue opportunistic and transformative mergers and acquisitions
•Rethink the way you do business

Take Action
•Strategically focus on the most important things – Set Priorities
•Don’t get caught fighting the last war instead of this one

Break Roadblocks
•Address lack of commitment by the Board
•Address the need to take action quickly

Todd went on to reference Guidestar’s 10/08 survey citing decreasing contributions and increased demand for services. There was nodding heads in the audience with these comments. He noted the budget cutting happening in nonprofits but encouraged, as he did in November, that the best approach is to defend your top line. He strongly advocated for contacting donors by phone, thanking them, asking how they are doing and asking for support for an emergency fund (optional). He suggested setting numerical goals to make these contacts. I find this refreshing and basic sound advice.

Todd recommended that nonprofits review their Investment Policy Statement as it may make sense to update it. He made a powerful plug for reviewing the approval process and content of your 990 calling for you to “bulletproof you image.” (I’ll be writing more about that in a subsequent post).

Todd shifted gears and discussed human resource strategies you should embrace if you are downsizing including care for survivors, provide predictability, increase understanding, yield some control, and show compassion. At my son’s employer they reduced the factory workers to a 32 hour week and found that some working mothers preferred a shorter day, eliminating childcare hours at one end of the day to a four day week. Being willing to adjust workers hours according to their desired schedules helped morale quite a bit.

Todd then quoted the Fred Factor principles. He dove into the need for individuals to build relationships, continually create value for others and regularly re-invent ourselves.

Well this post is long enough and so I’ll call it a wrap. Thanks, Todd for providing the material for another important post.

Wednesday, June 10, 2009

Giving USA 2009 Report - What’s the Impact of the Economy on Giving in 2008 and Some Thoughts for 2009

Giving USA released its 2009 report today and I participated in the online discussion with the researchers hosted by the Chronicle of Philanthropy at Noon today. Like other bloggers, I am blogging today about the report. First of all I don’t see any surprises here. The Giving USA Report is like the bible of giving data and really gets a lot of press attention but the findings are really similar to lesser status studies done in the last six months. The scope and credibility of this report confirms what we thought we knew (Just in case that was important to you.)

Here are the major findings:

Giving did decline in 2008 by -2% or -5.7% adjusted for inflation –that’s over $6 B, not a small piece of change. This is the first decline since 1987 and the biggest percentage decline since 1974. The biggest percentage decline was in corporate giving followed by individuals and bequests. Foundation giving actually increased by 3%. Some foundation giving is really individual giving as foundations set up by living individuals is becoming more popular. Before we get too alarmed lets note that it is only the second year ever that giving topped $300B.

Two thirds of charities experienced a lower level of donations in 2008 but the only surprise was that this included human services. Previously we thought there would be increased giving in this sector. Giving USA did a separate analysis of the Human Services Sector sector this year and here are the key findings:

•54% of human services organizations reported an increased demand in 2008
•60% of these charities are cutting staff and budgets for 2009-06-10
•74% of youth development charities report being underfunded or severely underfunded and unable to meet current demand – this was the largest hit group
•53% of those serving basic needs (food, shelter) report being underfunded
You can read the full press release for more details or buy the full report at:
Giving USA 2009 Press Release

The Chronicle of Philanthropy discussion was concentrated on what to do in 2009 and there was lots of common sense, down-to-earth advice. For example, concentrate on individual giving and building relationships. Engage Boards in being involved with individual giving. Ted Druat of Convio answered the question about trends in online giving quoting a recent Convio study. First quarter 2009 is up 8% over first quarter 2008 and up 5% over fourth quarter 2008. Although its still small this is one more reinforcement that online giving cannot continue to be brushed off as not relevant.

There was good advice about general operating support. Donors want to give to something specific, and nonprofits are packaging the GOS as part of the cost of projects/programs. This makes sense to me and I think it is what should have been done all a long. The ED and payroll processor are part of the cost of the program and the relative amount of overhead should be part of the program cost. Recent studies all previously discussed in this blog were referenced in the discussion including the e-benchmarks, American Express, and Target Analytics studies.

Sean Stannard-Stockton at the Tactical Philanthropy blog made the best summary I’ve seen of the report: “the contraction was less than many people feared and the total amount given was within the range of the level of giving seen over the past few years...... Charitable giving behaved more or less as it normally does when the economy sours. This is, by most measures, the worst recession in a very long time and so we’re seeing charitable giving get hit. But it is only declining in line with the way it normally behaves.

Things are tough, but there was no apocalypse."

You can read Sean's whole post at:
"How Much Did Americans Really Give in 2008" at Tactical Philanthropy

Monday, June 01, 2009

Hiring Trends (That’s Right – Hiring) in the Nonprofit Sector – An Informative New Report

Although nonprofits just like other employers have had layoffs and part timing of previously full time employees there are still 24,000 expected openings for senior management jobs in the nonprofit sector this year.

This blog post provides a summary of the findings of a study completed by the Bridgespan Group and commissioned by the American Express Foundation on this topic. When I stepped back to look at this objectively I realized that I am working with three nonprofits who are planning to hire senior management staff – even as two of them face budget cutting.

The study provides an update to one completed in 2007 identifying the impending impact of retiring baby boomers on nonprofit leadership. This updated study confirms that the leadership deficit has become more pronounced in the past few years. The findings are based on interviews with 433 EDs of organizations with revenues of $1 Million or more and they are grouped into four key messages. The report includes the factual results of the survey and Bridgespan’s interpretive guidance. The guidance is directed at nonprofits seeking new leaders and individuals seeking to make a change from the for profit to the nonprofit sector.

Here are the highlights organized per the four messages :

Message No. 1: The leadership deficit in nonprofit organizations
remains large

The 2007 study estimated that there were 77000 senior level opening in the nonprofit sector in 2008 and that even with the bad economy there will be 24000 in 2009. Importantly, 22 percent of the positions filled in 2008 were newly created, largely due to growth and increasing organizational complexity.

Message No. 2: Functional skills matter (and are transferable across sectors)
Specific functional experience is the most highly rated criteria for hiring, with 79 percent of respondents rating it as “very important.” General management skills that are highly valued include multidisciplinary project management skills, experience of doing more with fewer resources, and flexibility/adaptability. These are skills especially transferable from the for profit sector. Participants responded that 50 to 75 percent of the roles they will need to fill in the near future require traditional business skills (finance, general management, marketing/communications, planning, evaluation, operations, technology, and human resources).

Message No. 3: Cultural fit is the deal breaker
75 percent, gave “fit with the culture of our organization” as very important to the hiring decision and Bridgespan says that from its experience this is indeed very important to the success of a person in a nonprofit job. They recommend that any candidate considering a move to the nonprofit sector be thoughtful about their own values and management styles, and about how they will integrate into a nonprofit culture. Working in the nonprofit sector will usually mean accepting a lower compensation and lack of meaningful career growth opportunities within the organization. If those conditions are important to an individual then the nonprofit sector is not the best place to look for a career change. The report recommends that when assessing candidates, nonprofits take a look at where the candidate has spent his/her discretionary time in the past and how that may matter for a cultural fit.

Message 4: Job boards, networks and search professionals most effectively connect talent to jobs

A surprise was that 49% of organizations are using job boards versus 44% using external networking to identify their candidates. Respondents said that print advertising was the least effective tool. Only 13 percent used executive search firms, but found them highly effective. When employers scan job board applicants without nonprofit experience, they want to see nonprofit board and volunteer positions on a resume as a way to communicate readiness to bridge to the sector and a candidate’s alignment with the values and/or mission of the nonprofit.

In summary, Nonprofit leaders are interested in candidates from the for profit sector but will be looking closely at critical skills, cultural fit and sincere interest in working for the organization. They are wary of candidates who appear to just be looking for a job.

Marion’s Comments
Based on my work and my personal journey from a Fortune 50 company to a second career working with nonprofits I agree completely with the report and I think it offers great advice both for nonprofits to broaden its search considerations and to those in the for profit sector seeking to make a change to the nonprofit sector. If this topic is relevant to you, I suggest that you look over all the resources at Bridgestar and download the full report. There is an excellent resource/toolkit section on this website.

Visit Bridgestar - an Initiative of Bridgespan