Tag Archive: management

Starting a Nonprofit Is Like Choosing a Halloween Costume

One of the awesome pumpkins carved during NEW's 5th Annual Family Pumpkin Carving night at the NEW Center


Every year, in late October, I torment myself. It’s two days before the big Halloween party and I’ve put off my costume until now. Sure, my wife and I talked about it. We even came up with a few ideas. We had plans as far back as September.  We just didn’t do anything about them. Over the last eight years, I think my wife and I were happy with one or two of our costumes. I’m guessing this is pretty universal. People love ideas, but don’t always take action on them.

The same can easily be said about starting a nonprofit. I’d be willing to bet that almost everyone has a great idea to make the world a better place.  We’ve each got a thought in our head that could help to inspire, educate or benefit humanity. We simply don’t all take action on them. In the spirit of the season, I’ve put together a few helpful ideas for both of these conundrums: “What should I be for Halloween?” And, “How can I change the world?”

1. Make Sure You’re Comfortable – First of all, no one wants to be dressed as a “sexy watermelon” when it’s 30 degrees and raining. Choose layers that allow you to go from the cold outdoors of trick or treating to the warm inside of a party. Plus, most adults now understand that putting “sexy” in front of something doesn’t automatically qualify it as a costume.
The same should be said about starting a nonprofit. Be comfortable in your mission. Make sure it’s something you’re really passionate about and be comfortable with the idea of success. Also, make sure to “layer” the ideas you have to raise funds and take action on your mission. Having a few different ways of completing your mission allows you to keep moving forward whether the economy is hot or cold.

2. Don’t Force Yourself to Explain It Constantly – My cousin showed up to this year’s party dressed as Frieda Kahlo. I’m a fan of Latin American feminist heroes and that unibrow certainly gives a big clue as to who it is. But, my cousin spent most of the party explaining that she wasn’t dressed as a Ukrainian hipster.
When a nonprofit calls itself a food bank or a cancer research foundation, you know exactly what you’re dealing with. Wear your mission on your sleeve and make sure it’s easy to explain to everyone you meet. In other words, keep it simple. People will respond better to a group they understand.

3. Don’t Get in Over Your Head – Someday soon, my son will want me to make him a fully functional Transformer costume. I’m crafty, but I’m not a special effects artist. I’ll do my best to put something together that he thinks is still “cool” but doesn’t cost me a quarter of a million dollars in CGI graphics. The trick is to ask what part of the costume he thinks is the best and work from there.
In the same way, we don’t necessarily want to claim our nonprofit mission to be “End World Hunger” or “World Peace”. While these can be part of the greater goal (like a Transformer), there is probably one aspect of the ultimate goal that you could focus on most effectively. Let’s try to facilitate world peace by educating on the topic of tolerance locally, hopefully expanding over time.

4. If You’re Going to Do Something Popular, Be Creative – Every Halloween party is likely to have a handful of mafia gangsters, pirates, and superheroes. The least you can do is modify your popular costume to make it a bit more unique. Are you a policeman or a 1970s TV detective? Are you a ghost or the ghost of Albert Einstein?
There are many nonprofits that try to help the poor and cure diseases. This doesn’t mean that there isn’t room for a few more. Just understand that if you’re going to do something similar to what another group already does, you need to set your creative bar higher. How do you help people or raise money that is markedly different from the rest of the pack? Do you ask for money to keep the homeless warm or do you have an army of expert quilters that repurpose old clothing into warm blankets?

5. Don’t Be Afraid to Ask the Experts – If you don’t know how to sew, ask a friend who does. No one will think less of you or your Marie Antoinette costume just because had help making it.
Groups like NEW (shameless plug) are a great source for information on how to start your own nonprofit. They’ve got access to all the information you’ll need and the experience necessary to make sure you’re set up for success. With an expert craftsperson by your side, no costume or mission statement is impossible.

6. You Can’t Always Do it on Your Own – Face it, you’re going to look pretty silly showing up to a party alone dressed as Colonel Mustard. Why not make a few calls and show up with Ms. Peacock and Professor Plum as well? You’ll see that your costume is better explained and multidimensional.

If you’re going to start a nonprofit, it would serve you well to have a coalition before you start filling out paperwork and hosting spaghetti dinners. Having an initial board of directors in place before incorporating will ensure a focused and properly thought out mission. It’s always a good idea to get a second or third set of eyes before finally getting down to business.
Most importantly, make sure not to keep putting it off. You’ll end up with a head full of ideas covered by a sheet. Good luck and have a Happy Halloween!

Written by  Robb Drzewicki


Apropos to this week’s National Volunteer Week 2011, and our most recent Spring Into Service event, this week’s blog will cover the topic of volunteer engagement and its contribution to the success of your organization. 

A volunteer is defined as a person who voluntarily expresses a willingness to undertake a service.  In the nonprofit world, recruiting, retaining and managing volunteers is a challenge but volunteers are a great resource that.  If implemented correctly, your volunteer engagement program can create success and will also build a network of supporters promoting the work that your organization does. 

Who Are They, These Kind, Giving, Community-Member-Volunteers?

Community members that voluntarily give assistance to your organization will represent a variety of characteristics (age, orientation to your organization, professional career/specialty), but they will be similar in that they all made the decision to take time to help your organization succeed in the work that you do.  Here are a few different examples of types of volunteers you might hear from or see at your volunteer events:

1)    The Community Volunteer: this volunteer is someone (or a group of someones) who come to support your organization at larger, volunteer-based community events—theater production, meal event, race, building renovation projects such as painting or organizing offices, classrooms or libraries, etc.  They might have found you through community bulletin boards or through an online search Like United Way’s Volunteer Solutions site.  These volunteers can be one-time volunteers or you might see them often.  Both are a consistent contributor to the success of your events in the short term, and to the success of your organization in the long term.

2)    The Long Term Volunteer: this volunteer is someone who has the desire to commit his or her help to your organization for an extended amount of time.  Often this volunteer will be assigned a project like database management, file organization, and other organization-specific projects.  These projects are created by the organization and the volunteer together making sure to have shared goals and expectations.

3)    Your Board! Your board members in particular are the ambassadors of your organization’s mission and vision and serve the purpose of propelling you and your organization towards all the success and recognition that it deserves.  It is important to note that the type of volunteering that board members do for your organization will depend on the age and maturity of your organization, your organization’s internal processes, staff size and mutual expectations between the board and your Executive Director.

Of course, all of your volunteers are ambassadors to your organization and this is extremely important to note as we move into the next section.

A Guide to Working With Volunteers

Above all and any guidelines to utilize when considering incorporating volunteers into your organization’s next fundraiser/5K/dinner event/community speaker/forum/roundtable etc, know this above all else: volunteers are not free help.  There is a structure that must be built around your volunteer engagement program(s) to ensure that both your organization and your volunteers are content with the work being done and the relationships being established.

1)    Empower Your Volunteers: HandsOn Network has tons of resources for developing volunteer programs for your organization that ensures consistency in the interaction between organization staff and volunteer community.  Enabling volunteers to do the volunteer work without too much micro-management is best.  An event that is staffed by volunteers needs to be properly planned to the point where volunteers can feel empowered to do what is asked of them independently (of course, there will always be questions and there must be staff available for this purpose).  Additionally, it is always a good idea to identify volunteers that are consistently helpful, independent, focused and committed to the work that is being done through your nonprofit.  These volunteers can be encouraged to take on a leadership role for future events, and might even have insight on how to run volunteer programs for your organization. 

HandsOn Network has a publication for developing volunteer leaders that can be used as an aid in this process of empowering your volunteers. 

2)    Thank Your Volunteers: This is an integral piece of volunteer program coordination at all levels of volunteer management.  Always keep a record of volunteers who worked at your event or who gave their time to your organization in any way.  Thank yous can be as simple as a card or even an e-mail, and can be as extravagant as a gift bag (gift certificates, t-shirts, mugs, etc.) dependent on the event, your budget, and your volunteer population.

Follow these guidelines, and your volunteer community will increase and recruiting and retaining volunteers will become a more simple and directed process that will lead to a broader community understanding of your organization’s mission, vision and purpose.


Ilana Schuman-Stoler is an employee at Nonprofit Enterprise at Work at our Ann Arbor office as a Program Assistant.  Feel free to contact Ilana regarding any of the advice, tools or service mentioned in this post by email at ilana@new.org or via phone at 734-998-0160 ext. 221

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Last week we read about lifelong donors and the importance of cultivating such a donor base.  This week, we continue the conversation with resident resource specialist, Ann Gladwin about relationships and the secret to building them:

The Story

I had a nice chat with Marshall Howard the other day.  His book “Let’s Have Lunch Together” has been instrumental in my take on fundraising–though Mr. Howard still had to set me straight about the story.   The story is me, not the mission of the organization. That’s hard for most of us to grasp; we want to extol the virtues of our nonprofit’s impact on the community:  Look at the great strides we’re making… the number of people served!  According to Mr. Howard, this ‘story’ might rate a 6 out of 10–what about the remaining 4? 

I started to understand that it’s my relationship to the person I’m asking for support that is crucial.  Do they connect with the mission?  Perhaps, but it’s the fact that I asked them that is important.  And they are responding to me; I can ask a stranger for a donation to my cause, but I’m not likely to get results no matter for what I’m asking.  Ask someone I know for support?  Much more likely. 

Wow – that’s powerful!

Real Life Example

Mark Zuckerberg’s gift to Newark, New Jersey public schools serves as a real life example for this theory.   

Mr. Zuckerberg, 26, who grew up in Westchester County and now lives in California, has no particular connection to Newark. But in July, he and Mr. Booker met at a conference and began a continuing conversation about the mayor’s plans for the city, according to people familiar with their relationship.

From The New York Times

There’s that key word again, relationship.  I would treat it as a synonym for success.  

Get Connected

Another proponent of relationship building is Terry Axelrod, founder of Benevon (and guest writer on our blog last week).  She will present a Get Connected workshop for NEW in Detroit on Wednesday, April 27 (9am-10:30am).  This “Relationship Building for Fundraising” is yours to attend for free.  Sign up today!

Also visit Marshall Howard.com to find a multitude of free resources, including his blog. Get a fresh look at a tried and true method for bringing people into your organization.   


Ann Gladwin is Resource Specialist for Nonprofit Enterprise at Work at our Ann Arbor office.  Feel free to contact Ann regarding any of the advice, tools or service mentioned in this post by email at agladwin@new.org or via phone at 734-998-0160 ext. 218.

You can contact Ann with questions on any aspect of nonprofit management.  Call for an appointment to use the Foundation Directory Online at either the Ann Arbor or Detroit office of NEW.

About NEW
NEW’s mission is to help nonprofits succeed by strengthening nonprofit management and offering solutions to issues facing our nonprofit community.

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By Diana Kern, Vice President of NEW

My favorite line in the nonprofit world is, “If you’ve seen one nonprofit board, you’ve seen one nonprofit board.”  Having served on many nonprofit boards and working with over 50 boards a year in southeast Michigan I see a lot of variations.  Depending on the mission, the board chair, the revenue situation, the strength of the board’s committees and many other assorted factors, I witness effective and productive boards, unengaged and completely detached boards, and all types in between.


Boards that stand out for me are ones that:

  • Have board chairs that create cultures of accountability (meeting attendance, committee work, returning emails, etc.)
  • Have passion for the mission
  • Partner with their top executive and think about ways to relieve pressure from that person
  • Make a meaningful, unrestricted annual donation
  • Are real ambassadors for the services, programs and mission of the nonprofit in their personal spheres of influence
  • Focus on their own productivity, succession and ability to affect mission accomplishment
  • Embrace training and education

What Area Executive Directors Say

In 2009 I engaged in an informal survey of executive directors in southeast Michigan.  I asked them, “Besides fundraising, what is the most important thing you need from your board members today.” Keeping in mind this was at the height of the recession and all of executive directors I spoke to wanted boards that would embrace fundraising, what I heard was really interesting.


They ranked their top three needs in the following order:

  • Passion for the mission
  • Be engaged (come to meetings, read your board packet before you come, provide vision)
  • Be an ambassador


In some cases I had executive directors tell me in confidence that they work around their boards because they provide no real value to mission.   I also had executive directors that are burned out from having to lead their boards through every step.   Sadly, I had many tell me that many of their board members do not even make a personal annual gift to the nonprofit.

Board’s rank a C+

The BoardSource Nonprofit Governance Index 2010, a survey of approximately 1,750 nonprofits from across the country, reported that chief executives give their boards a C+ on overall performance.  I don’t know about you, but if I ever came home with a C+ I would have had to spend evenings and weekends hitting the books!  Where did board members get the most failing grades?   They got poor marks for commitment, engagement and attendance, being ambassadors in the community, engaging in their own self-assessments, recruiting their own peers (building succession for the board) and of course, fundraising.  Interestingly, this national study mirrored my informal responses from southeast Michigan.

[The full report can be downloaded here ]

If you think about it, many of us have professions that require continuing education classes annually so we can continue to be at the top of our games.  However, to be a nonprofit board member you can just move from one board to the next, year after year, with no training.  You might have no idea what it means to be a good board member, what the best practices are today for boards or what the IRS and others are suggesting supports quality governance and transparency yet you could be responsible for oversight of thousands or millions of donor dollars.


Board Members Ask Yourself a Question

As a board member myself, I try to focus on how I can add value.   How do I add value to the board and how do I add value to the executive director?  Showing up to a meeting once a month, signing a conflict of interest statement, and writing a $100 check every year is not the behavior of quality board member in my opinion.    I also focus on avoiding micromanaging but I embrace my role as gatekeeper of the mission with the oversight requirements necessary.


The BoardSource Index also reported that 70% of nonprofit boards now have term limits.  I am a firm believer in terms limits, but that is a story for an entire other blog on another day.   However, when I join a board and I know that I have six years maximum to provide service I ask my self this question. “When I leave this board in six years can I leave knowing I left the nonprofit and board in a better position than when I got there?”  If I can’t, I think long and hard about accepting the volunteer role.   Being a board member today involves some heavy lifting if you take the role seriously.



Diana Kern is the Vice President at Nonprofit Enterprise at Work.  Diana received the Randolph W. White Memorial Award for Community Service in 2003 for her dedication to ser ving the housing community and she is a certified trainer with the Institute of Real Estate Management.   Feel free to contact Diana regarding any of the advice, tools or services mentioned in this post by email at dkern@new.org or via phone at 734-998-0160 extension 230

About NEW
NEW’s mission is to help nonprofits succeed by strengthening nonprofit management and offering solutions to issues facing our nonprofit community.

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We Our Tenant Community!

Love at first sight

The NEW Center in Ann Arbor is located just outside of town, on a beautiful stretch of the Huron River. Our office looks out at running paths, train tracks and is proudly perched on the entryway to the city of Ann Arbor from M-14.  Once a junkyard (see pictures below), the land was re-purposed in 1993 and dedicated to the nonprofit sector by the McKinley Foundation.  Originally, the idea was to have a large building serve as an incubator for nonprofits to build their base and funding and to move on from there to other office spaces or buildings in the area.  Nonprofit Enterprise at Work was identified to recruit local nonprofits to try working from the Center in a new office space-meets-community concept.

NEW (Nonprofit Enterprise at Work) began to develop a strong dedication to supporting the nonprofits in the building and their daily operations through this unique role.  With a shared kitchen and conference rooms, nonprofits decided to make The NEW Center their permanent home.  NEW’s capacities grew out of this role through the realization that not only is shared space good for resource sharing, but that the resources themselves—tailored computer networks, board development programs, resources for nonprofit management and other general nonprofit consulting services, were of great value to the community, and the NEW staff was excited about the prospect of doing this work with a larger scope.  Additionally, nonprofits enjoyed significant savings on things like utilities and other, sometimes unidentifiable amenities—like Artrain, a tenant since 1993, perched on the railroad track adjacent to our lot!

Multi-Tenant Nonprofit Centers (MTNCs)

The NEW Center was one of the first Multi-Tenant Nonprofit Centers, but we are not alone in what we do.  Multi-Tenant Nonprofit Centers (MTNCs) have been around since 2003, and serve to house multiple organizations and provide healthy, efficient, quality, mission-enhancing workspaces.  There are many shared space nonprofit centers around the country, from California where Tides offers space for nonprofits to “come together, share ideas and work to make their visions real,” to Boston where the The Nonprofit Center in Boston, “supports the needs of its tenants with high-quality on-site property management, building engineering, security, cleaning and recycling services.”  Other shared space centers around the country include Makom Hadash in New York and the Denver Shared Spaces Project and there is even a conference coming up in May, 2011 that features sessions on how to build capacity for such a space!


We LOVE Our Tenants

At the NEW Center in Ann Arbor, we currently provide space and support up to twenty organizations and we have a unique relationship with each one.  Our current tenants include:

The NEW Center is a hub for board meetings, trainings and is a technologically equipped office space.  Additionally, The NEW Center provides a hub for a variety of community events like Huron River Watershed Council’s annual River Roundup.  From services right in our backyard to helping our national and global communities, The NEW Center is always popping with people coming and going and we love to be party to and to support such a community.


Ilana Schuman-Stoler is an employee at Nonprofit Enterprise at Work at our Ann Arbor office as a Program Assistant.  Feel free to contact Ilana regarding any of the advice, tools or service mentioned in this post by email at ilana@new.org or via phone at 734-998-0160 ext. 221

About NEW
NEW’s mission is to help nonprofits succeed by strengthening nonprofit management and offering solutions to issues facing our nonprofit community.

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by Neel Hajra, President/CEO

"I am so full of knowledge and perfection that you will bleed if you touch me"

"I am so full of knowledge and perfection that you will bleed if you touch me" (thanks to www.flickr.com/photos/zenilorac/)

Like many young professionals, my first instinct when meeting new people is to “puff up” my credibility by appearing hyper-capable and not admitting any ignorance (especially with those who might discriminate based on my relative youth). After all, we’ve all heard the amusing codewords for age-based condescension (“I have a child your age!,” or “You were probably in diapers when I started working in this field,” or “Nice idea – I did that 15 years ago”, and so on).

Credibility is an important element of social capital, and too often young professionals are short-changed by others. However, my attitude toward admitting my shortcomings has evolved, even for initial encounters. Here’s why:

  • It’s impossible to learn when you’re trying to be super(wo)man: For every ageist that condescends, there are many more who are really happy to share their wisdom and experience in a positive way. If you strive to better yourself, admitting a lack of knowledge can sometimes be a path to immediate growth.
  • Humility is appealing: Believe it or not, most people don’t want to deal with perfect people :) Taking a humble approach to what you do and don’t know can result in a closer personal connection.
  • Exposing vulnerability provides strategic insight: This is my favorite realization. It’s SO interesting to watch how people react when I admit I don’t know something. Do they try to “partner” with me to get me up to speed? Do they hop on their high horse and lecture me? Do they make a snide comment? Do they admit their own shortcomings and ask my perspective? Do they have enough awareness to gauge MY reaction to their response? A single interaction like this helps me understand whether I’m seen as peer or a pauper, and also helps me estimate the potential for working with this person going forward.

But Neel,” you say, “it’s hard enough being a young professional. If I show my vulnerability too soon, the sharks will chew me up!” (okay, no one’s actually said that to me, but you get the idea). Here’s how you manage the risk of exposing your imperfections:

  • Establish credibility by showing what you DO know: I’m not saying you just tell someone you’re an idiot :) Start from a position of strength by focusing on issues where you’re knowledgeable. This gives you leeway to transition to a more honest discussion of what you don’t know.
  • Test the Waters: There are, of course, degrees to admitting a lack of knowledge/ability. Start with a hint and shape the rest of your conversation based on the initial reaction.
  • Be situational: Is this your ONE chance to impress a luminary or funder? Is this a short and focused interaction with a lot riding on it? Well, in those cases, maybe it doesn’t make sense to appear less-than-perfect.
  • Show that you’re a learner: If you admit lack of knowledge and someone fills in the gap for you, show that person that you’re able to apply the knowledge during the rest of the conversation. That’s way more impressive than being a know-it-all :)

We all know how to leverage our strengths to achieve desired results. I think it’s more fun to leverage our weaknesses for positive outcomes :)

by Neel Hajra, President & CEO

This goes toward my ailing 403(b)

This goes toward my ailing 403(b)

First, some fluff:

  • I asked the concierge to check with Lost & Found about my misplaced jacket. They couldn’t find the Lost & Found lady. So, do two losts make a found? (answer: yes – they found the jacket, but not the lady)
  • On the last night of the conference I joined a large contingent at Detroit’s MGM Grand Casino. The picture says 1,000 words.

Alright, on to the good stuff. On Thursday night Geoffrey Canada (of Harlem Children’s Zone fame) received the John W. Gardner Leadership Award. He proceeded to give one of the great acceptance speeches I’ve ever heard. Inspiring. Insightful. Hilarious. Real.

On Friday morning I had the opportunity to attend a follow-up, CEO-only group conversation with Mr. Canada. Amazing again, but in a totally different way. The conversation was much more about Geoffrey as a CEO, instead of Geoffrey as a visionary leader. Here’s a really high level summary of some of the topics that were discussed:

  • Scaling operations: Geoff felt strongly that one “must sacrifice perfection for scale.” He also noted that it’s a constant struggle to maintain culture among a large organization. A lot of his daily duties involve finding out “why someone didn’t do what he said he would do.” Scaling requires constant re-training and constant corrections in order to maintain mission. This NEVER ends.
  • Fundraising: Like most executives, Geoff hates fundraising. Isn’t it nice to know that even the greatest of the great fundraisers don’t necessarily like it??
  • Staff retention: Mr. Canada felt that executive management has to be very constant, with extremely low turnover. HCZ achieves this through many tools, including the use of annual and five year bonus plans. Salaried staff has to be fairly constant – about 15% annual turnover or less. He accepts high turnover among part time employees due to the nature of the work (hard!) and workforce (many first-time jobholders that might not be ready for the high standards of HCZ).
  • Working with Boards: Geoff worked to convert his inherited board into a fundraising board (through planned and natural turnover). The transition continued as HCZ went from a $5 million to $70 million annual operation over a decade – board members that couldn’t secure six or seven figure contributions were given the opportunity to step down (and did). He feels that the Board Chair is critical in showing leadership for a fundraising board.
  • Innovation: He noted briefly that fundraising was critical because “public money would never have allowed for the creation of the Harlem Children’s Zone.” It’s a profoundly important observation that the nonprofit sector generates innovations and impact that other sectors cannot.
  • Corporate Giving (and philanthropy in general): He takes foundations to task for expecting outsized results from “small philanthropy”. He notes that no one expects an undercapitalized for-profit to succeed, and yet that’s exactly what’s expected of most nonprofits. “The philanthropic community needs to step up!”
  • Succession: Great story – when Mr. Canada and his board chair were asked by an important funder what would happen if Geoff were hit by the proverbial bus, his board chair simply replied: “we’re F**ked”). That set into action some very deliberate succession planning, and some very interesting observations. In the for-profit world, companies simply pay a group of potential successors a ton of money to keep them from moving to other opportunities. Can’t do that in the nonprofit world! Instead, Geoff has set a specific timetable for his departure – by the time he turns 60 in a few years, he will have transitioned away from day-to-day operations. Also interesting is that his role will be replaced by several managers, each with certain deep expertise (e.g., finance, psychology, education, etc.). I also loved his characterization of typical succession: Executive Directors stay too long, which causes organizations to wane. So when a new E.D. comes along, every blames that person for the declining fortunes of the nonprofit, even though it started with the prior E.D.!
  • Planning and Implementation: The nonprofit sector has gotten much better at planning, but still is weak on implementation. HCZ relied on a seven year (!) business plan, developed with Bridgespan. A decade later, “90% of it was right”. The plan actually envisioned their stratospheric growth, including the fact that the cost of living adjustment in year 7 represented half of the total budget in year one!!! Geoff wanted to take that “absurd” number out, but was convinced that he had to leave it in if they truly wanted to achieve their vision.
  • Data Infrastructure: Mr. Canada was surprisingly passionate about a fairly boring subject: data collection and interpretation. He feels that it’s a critical part of the success of most nonprofits, yet foundations refuse to invest in this kind of infrastructure. Without it, there’s no true accountability to achieving mission.
  • Collaboration: He stated that most “nonprofits misunderstand deals that work.” On the for-profit side, there’s an immense amount of investment in understanding brand, market share, value, and many other considerations. Nonprofits don’t have the capacity to do this, but CAN improve their collaboration through transparency and clearly defined expected outcomes. He tied this back to accountability – if you can’t mutually define clear and measurable outcomes, the deal’s not worth doing.
  • Replication: The Obama administration plans to replicate HCZ in many other communities. This is the classic model of the nonprofit sector innovating, and the public sector providing capital for replication and sustainability. Geoff’s main concern is that the first 5-6 replications MUST succeed, otherwise everyone will lose faith in the potential for replicability. He said that the “biggest mistake” made by communities wanting to replicate HCZ is that “they don’t read our business plan.” The key is to have a strong business plan, and then “manage to it.”

Why Nonprofit Managers Are Better

by Neel Hajra

Thanks to www.lumaxart.com

Thanks to www.lumaxart.com

Did the absurd over-statement in the title capture your attention? Good, because it’s meant to counter the equally absurd paternalism of many for-profit managers :) Having spent a few formative years at Ford Motor Company providing legal support to business executives and teams, I’m acutely aware of the fantastic talent and capability of top for-profit leaders. There is so much the nonprofit sector can learn from best practices on the for-profit side. However, don’t think this means that for-profits managers are “better.” In fact, now that I’ve jumped the fence to the non-profit world, I appreciate that a good nonprofit manager often brings more to the table than a good for-profit manager. Why? There are many reasons, but I’ll focus on (and simplify) two important ones:

Success Costs Money (instead of making it)

One thing I miss about the for-profit world is that in most cases, if you offer a great product or service, people buy it and you make money. It’s simple, if not easy.

On the nonprofit side, in most cases, the better your service, the more money you LOSE. This bears repeating: great work = greater losses (with some obvious exceptions where the service recipients can actually afford to pay for the full cost and marginal profit of services, such as hospitals and universities and some social enterprises). Achieving success as a nonprofit manager requires overcoming an inherently negative financial model, in addition to all of the challenges of running a business in the first place.

At this point, some for-profit managers are probably objecting that nonprofits get “free money” in the form of donations and tax benefits and “free labor” through volunteers. Well, the cost of philanthropic capital (i.e., donations) is usually HIGHER than a for-profit’s cost of capital through loans and other financing vehicles. “Free labor” is a laughable concept… volunteers are far from free, and pose as many challenges as they solve. The tax benefits are a valid (if over-stated) point, but are easily outweighed by the basis for tax-exemption, namely: mission…

The “Mission” Bottom Line Is Much More Complex Than the Financial Bottom Line

Ah, sometimes I yearn for the days when I was a part of a global company of 350,000 employees that all had one common ultimate goal: make money! This single bottom line provided clarity and a common language.

Nonprofits add a second bottom line that takes precedence over everything else: mission. Mission adds all sorts of additional compexities. How do you measure mission? Well, that’s the trillion dollar question. Mission is interpreted differently by every single stakeholder group. Staff, board, volunteers, service recipients, funders, regulators, the public, etc., all have different interpretations on what mission means. Unlike the financial bottom line, there is NO common language or universal metric for achieving mission.

The result? Nonprofit leaders can’t take the usual ‘command and control‘ approach to running their organization – you can’t do that when the goal is an inherently fluid one that requires constant calibration and review. Rather, each nonprofit leader is a pied piper that has to cajole, sway, and garner loose internal and external support and alignment. This is a constant process that overlays the ever-demanding financial bottom line. I won’t even get into the lack of a rational capital market in the nonprofit world – that will have to wait for another day.

“Can’t We All Just Get Along?”

Unlike many of my nonprofit peers, I think that the for-profit world has a much deeper talent base (money has a way of attracting talent!). And of course, the for-profit sector faces a greater level of competition for a given service area – intense competition breeds AMAZING efficiencies and best practices that the nonprofit sector needs to adopt. My point is simply that each sector has something to learn from the other in terms of skills, practices, and strategies. Hey, I have a crazy idea: Let’s set aside the paternalism of the for-profit sector (and the holier-than-thou-ism of the nonprofit sector) and work together to make our world a better place!

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