Nonprofits @ Work

by Neel Hajra, President & CEO

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.”