Big challenges for nonprofits, foundations

Foundations and nonprofits need to get their house in order.

A thriving charitable marketplace is critical to address the urgent social problems America faces, but that marketplace itself faces huge challenges.

Those challenges, spelled out in three new reports, include the need for more effective nonprofit boards, more investment in nonprofit leadership, and more diversity in philanthropy.

While it faces an imminent crisis because of massive turnover expected in staff leadership, for example, the nonprofit sector gets poor grades for the job it is doing to provide leadership training and professional development opportunities to aspiring nonprofit executive directors, according to a report by the Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University in Grand Rapids, Mich.

Emerging leaders want and need mentors but worry about making nonprofit work a life-long career because of low pay, burnout, the burden of student loans, and lack of professional development, and generational differences in organizational expectations, the report says.

A second report, by Rockefeller Philanthropy Advisers, says that with public pressure growing “for foundations to be more responsive to underserved and diverse communities,” foundation leaders should “reconsider the many ways to incorporate diverse perspectives into solving our greatest challenge.”

While foundations have made “much progress” in staff and board diversity, and modest progress in the share of grant dollars targeting minority populations, the report says, the number of grants and grant dollars targeting minority populations did not increase in direct proportion to increases in staff and board diversity.

A third report, by the Urban Institute, finds that most heads of mid-size nonprofits give poor marks to their trustees for fundraising and monitoring board performance.

The study calls for more support for board development and for initiatives designed to bring more diversity to the leadership ranks of the nonprofit sector.

To fix the urgent social problems we face, foundations and nonprofits need to fix their own internal problems.

With foundation investment, for example, nonprofits must develop sustainable business and fundraising strategies; build and engage effective boards; find and keep smart leaders and groom the next generation of leaders; unleash the power for productive collaboration; and work to fix flawed policies underlying the symptom sand causes of social problems.

Without greater investment to equip foundations and nonprofits to be more effective, the charitable marketplace will fall short of its underlying mission of making our communities better places to live and work.

Foundations can be more active shareholders

Private foundations in the U.S. are missing a huge opportunity to put their money where their mission is.

With endowments totaling over $600 billion, much it invested in publicly-held companies, most of those foundations focus more attention on the five percent of their assets they pay out in grants than on the investment of all their assets.

And research shows most foundations delegate the voting of their proxies to investment managers, and that those managers typically vote those proxies based on recommendations of the management of the companies in which the foundations hold stock.

But a growing number of foundations are taking a more active approach to their role as shareholders, aiming to align their proxy voting with their philanthropic mission.

Building on their previous publication, “Unlocking the Power of the Proxy,” As You Sow and Rockefeller Philanthropy Advisors now have published “Proxy Season Preview 2008” to inform proxy voting by foundations.

As the two groups say, by failing to take a more active shareholder role, “foundations miss the opportunity to influence corporate policy, and may unknowingly support actions that conflict with their own guiding principles.”

The new publication explains social and governance resolutions being considered by corporations; looks at key issues and trends; provides updates on votes in recent years on specific issues; identifies key investors and organizations filing proxy resolutions; lists companies that have scheduled shareholder votes; and lists resources and reports to help foundations learn about the activities of peer organizations.

Foundations control a lot of stock in publicly-held companies and, through their proxy voting, can help shape the way those companies do business.

By investing more time and attention to their role as shareholders, foundations can make a bigger impact on the critical issues they spend so much time and attention trying to address through their grantmaking.

Nonprofits must lead for change

Change is essential, and tough.

Working at the heart of constant and rapid change, nonprofits themselves are in the change business.

Their job is to address the symptoms and causes of urgent social problems.

To make change happen, nonprofits must change the way they do business, both inside their own organizations and with partners whose collaboration is needed for social progress.

Ultimately, change depends on leadership, which is rare in a marketplace in which fear, self-interest, competition and a preoccupation with management techniques drive organizations.

Effective leaders, in contrast, lead by inspiring and engaging the vision, leadership and collaboration of co-workers in their organizations and partners in their communities, says Anita Brown-Graham, director of the Institute for Emerging Issues at North Carolina State University and a trustee of the Z. Smith Reynolds Foundation in Winston-Salem.

Speaking at a Lunch ‘n’ Learn workshop in Charlotte sponsored by the Philanthropy Journal, Brown-Graham urged nonprofit leaders to work to shape change rather than waiting for change to shape them.

Citing Jim Collins’ “Good to Great: Why Some Companies Make the Leap…and Others Don’t,” she said what distinguishes great companies from good ones is a corporate culture of vision and innovation, rather than simply a visionary CEO.

That kind of leadership is critical to address the social problems we face, and requires a new way of thinking about leading.

Rooted in their passion, Brown-Graham says, leaders create a sense of urgency among the people who need to be involved in making change happen.

Those leaders build a team with the “credibility, skills, connections and formal authority” essential for guiding change, she says, and that team must operate with “trust and emotional commitment.”

For the team to be effective, leaders must show they mean business through action not words, and must repeat the story of the vision and process as often as they need to.

Members of the team must truly be part of change initiatives, and must be able to see, through short-term “wins,” that they are having an impact and that the larger goal is within reach.

And faced with a culture of resistance and fear, Brown-Graham says, leaders must continually push for change and nurture the new culture they are trying to create, using existing tools, such as promotions and incentives, to engage employees and organizational partners.

And even when wins occur, she says, leaders must be vigilant about making sure changes “stick” and are not erased by backsliding into the old way of doing business.

Social progress depends on change, which depends on leaders with the vision and courage to create a culture in their organizations and communities that will inspire and engage true partners in shaping change.

Tapping philanthropy’s true value

Consumed with managing their survival in what can be a brutally competitive charitable marketplace, nonprofits are failing to lead or thrive.

Nonprofits should be addressing urgent needs, attacking their roots and brokering change by unleashing the power of giving and collaboration.

Instead, while parading as servant leaders and team players, many nonprofits practice bare-knuckle brawling, clawing for turf and knee-capping any and all rivals or potential rivals.

Enabling the failure of leadership that infects the nonprofit world are foundations that, while preaching innovation and collaboration, continue to reward nonprofits that talk a great game about the need for collaborating but in practice lack the vision and courage to truly work together to make change happen.

Nonprofits and foundations need to change the way they do business.

Facing an exodus of nonprofit executives who are overworked, underpaid, starved of board support and opportunities for career advancement, and increasingly nearing retirement, the charitable world must make a massive investment in developing existing leaders and identifying, recruiting and cultivating new leaders.

Nonprofits need leaders who not only can manage their organizations effectively but also can provide the vision to see ahead, seeing the crucial connection between organizational success and the partnerships needed to address larger social problems.

Which nonprofits, and which nonprofit leaders, are willing to leave their egos and organizational power-grubbing out of the search for shared solutions to the urgent problems our communities face?

And which nonprofits have the vision and courage to create partnerships in which they and all their partners truly are willing to make the sacrifices and build the strategic alliances and market-driven solutions critical to making our communities better places to live and work?

In the charitable marketplace, those with wealth and power are quick to preach the gospel of collaboration but slow to give up any of that wealth and power in the interest of working together to address common problems.

Fixing what is wrong in our communities will require fixing what is wrong in the charitable marketplace, and that will take leaders honest enough and brave enough to collaborate productively while competing vigorously, all the while staying true to the value and power both of collaboration and competition.

Connecting with PJ

As nonprofits’ online news and resource partner, the Philanthropy Journal strives to be easy to use and reach.

If you need us or have questions about who we are or what we do, visit the “About” page on our redesigned website at www.philanthropyjournal.org.

There you will find a list of our staff, including short bios and contact information for each PJ staff member.

You also will find information about how to advertise on PJ and in our email newsletters, how to become a sponsor, how to subscribe to our email newsletters, and how to sign up for automatic updates about news and other articles we publish.

You can subscribe to our free email newsletters, including the weekly “News Briefing” and the biweekly “Resources + Jobs”.

Delivered each Monday, “News Briefing” features links to news stories on our site, and to “In Brief” announcements about nonprofit people and organizations, and charitable gifts and grants.

Delivered every other Wednesday, “Resources + Jobs” features links to how-to articles about charitable fundraising and giving, management and leadership, and marketing and communications.

You also can subscribe to email alerts about PJ special events, including our online webinars and our Lunch ‘n’ Learn workshops.

And you can read what readers say about us, see the answers to questions that readers frequently ask, and sign up for RSS feeds that will automatically alert you when we publish news and how-to articles on our site.

Our redesigned website builds on our news roots but also reflects our effort to address the preference our readers have voiced for more information to help them do their job as nonprofit professionals.

Please let us know how we can serve you better, and please let your colleagues know about PJ.

PJ a resource portal for nonprofits

Building on our news coverage of nonprofits and charitable giving, the Philanthropy Journal has expanded to become an online hub for information, resources and job listings for nonprofit professionals.

Developed in partnership with experts on nonprofits and philanthropy, the “Resources” section of our redesigned website at www.philanthropyjournal.org includes how-to articles and information on the topics of fundraising and giving, management and leadership, and marketing and communications.

In addition to original articles our staff writes, the Resources section includes question-and-answer features with experts, articles written by experts, and summaries of articles published elsewhere on the web, with links to those articles.

The Resources section also includes a calendar of professional-development conferences and workshops throughout the U.S. and abroad, and a “Directory of Resources” that features products and services for nonprofits.

Six times a year, PJ publishes special reports that focus on topics such as technology, fundraising and planned giving, and you can find those special reports in our Resources section.

Our “Jobs” section includes job listings for nonprofit professionals, plus articles on human-resources issues.

PJ’s goal is to provide news and information that nonprofit professionals need to do their jobs effectively.

Please let us know about issues that are important to you, and please suggest topics we should write about, as well as experts who can help address those topics.

Finding nonprofit news on PJ

The redesigned home page of the Philanthropy Journal at www.philanthropyjournal.org is a window into the broad range of content our redesigned website features.

The content on PJ focuses on nonprofit news, resources and jobs.

We also have pages for nonprofit news and information focusing on our home state of North Carolina, and for basic information about PJ.

News in PJ includes articles about developments and trends in the nonprofits world, plus short announcements about nonprofit organizations and people (“Nonprofit News: In Brief”) and charitable gifts and grants (“Giving News: In Brief”).

You can find news at the top of our home page, which you can find by clicking on the PJ logo on any page.

At the top of the home page, on the left, is the day’s main news story, and on the right are headlines for other top stories.

Each day, we also publish a “Nonprofit news roundup” that summarizes and links to top nonprofit stories reported elsewhere, and you can find the roundup among the “Top Stories” headlines at the top right of the home page.

By clicking on the “News” tab on the left-hand side of the navigation bar just below the PJ logo, you can visit our news page, where you will find even more news stories and announcements, as well as guest opinion columns, letters to the editor, and the Inside Philanthropy blog I write (and that you are reading now.)

For news and announcements about North Carolina nonprofits and giving, visit our North Carolina page.

The North Carolina page also includes calendars of fundraising and professional-development events throughout the state, and a separate section on Women & Giving that features news about giving by women, profiles about women givers and women’s giving circles, articles about effective giving, and stories about causes women support.

To submit news and announcements to PJ, send them to me at tcohen@ajf.org or to Ret Boney, PJ’s deputy editor, at rboney@ajf.org.