Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

March 28, 2011

Nonprofits need leaders who listen

By Todd Cohen

One of the most urgent and challenging jobs for nonprofits is to find and develop leaders who can help their organizations cope with rapid, continual change.

Thanks to the economic crisis of the past two-and-half years, the charitable marketplace is in a state of persistent turbulence that demands leaders who can see clearly, think ahead and prepare their employees, boards and volunteers to be innovative, flexible and collaborative.

Most nonprofits are small, community-based groups with limited resources and staffs that typically are overworked, underpaid and under-appreciated.

And while hundreds of professional and academic programs now offer management and leadership training for nonprofits, budgets for training have shrunk or been eliminated in these tough economic times.

As a result, many nonprofits must be doubly resourceful and creative in finding ways to build their management and leadership capacity.

That is fitting: As voluntary organizations, nonprofits must count on their own grit and smarts to serve people and places in need while surviving in a fiercely competitive marketplace.

Like public, for-profit, academic and military organizations, nonprofits traditionally have used a management model based on hierarchy and top-down control.

Slowly but surely, however, that model is evolving.

A growing number of organizations are finding that doing business effectively in the face of change and uncertainty requires a different kind of leader.

Increasingly, leadership is becoming less about giving orders and more about building a team by listening, communicating, coaching, motivating and inspiring.

To survive and thrive in a marketplace in which partnering with other organizations has become an important strategic option, a nonprofit first must be able to collaborate internally.

For a glimpse of where leadership is headed, consider Google, the giant technology company.

As The New York Times reported March 12, Google over the past two years analyzed its employees’ performance reviews, feedback surveys and nominations for top-manager awards, correlating phrases, words, praise and complaints.

Based on that effort, “people analytics” teams at the company produced a list of eight good behaviors of managers.

While based on an analysis of metrics from its own business, however, Google’s blueprint for good management is rooted in subjective qualities.

Good managers, Google says, “empower” their teams and do not “micromanage.”
They “express interest in team members’ success and personal well-being,” and they help employees with career development, although they should not be a “sissy” but should “be productive and results-oriented.”

They are good communicators and listen to their team, and they have a “clear vision and strategy” for the team.

And they are good coaches and have “key technical skills” so they can help advise the team.

Technical expertise, in fact, ranked last among the eight good behaviors of good bosses at Google, the Times reported.

“What employees valued most,” the Times said, “were even-keeled bosses who made time for one-on-one meetings, who helped people puzzle through problems by asking questions, not dictating answers, and who took an interest in employees’ lives and careers.”

It is telling that Google developed these guidelines by looking internally and using metrics based on feedback from its own employees, trusting its own experience and instincts instead of unquestioningly following the latest trendy ideas peddled by many foundations, trade groups and consultants about what makes a good leader and manager.

As nonprofits struggle to survive in these troubled times, they need to trust in leaders who trust themselves and their employees to work together to build better organizations to serve people and places in need.

March 21, 2011

NPR mess reflects wider pandering to donors

By Todd Cohen

Regardless of the ideological politics behind it, the funding stink at National Public Radio shows the depths to which nonprofit fundraisers will lower themselves to get a gift.

NPR fundraisers likely stained the agency’s integrity, and put its federal funding at risk, when they reportedly got caught on tape pandering shamelessly to people they believed were prospective donors.

In the political equivalent of entrapment, according to published reports, the people talking to the NPR fundraisers were not donors at all but rather conservative Republicans who are harsh critics of NPR angry that federal dollars support the airing of what they see as the radio network’s long-standing liberal bias.

Recordings of those conversations released by the fake donors helped reinforce the arguments Republicans made in winning the vote in the U.S. House last week to end financing for NPR.

The NPR fundraisers also exposed, unintentionally, a particularly ugly secret about philanthropy: Like their counterparts at NPR, far too many nonprofit fundraisers are quick to grovel to prospective donors.

Under growing pressure from their bosses to bring home the money, nonprofit fundraisers think nothing of parroting the sentiments they believe donors want to hear, regardless of whether those sentiments actually reflect the nonprofit’s mission and values.

That approach to donors takes to an inexcusable and unsupportable extreme the fundraising profession’s current hyper-focus on donors, a focus that represents an important development in fundraising.

For years, consultants and researchers rightly have urged nonprofits to better understand their donors and engage them in the organization.

But saying anything to get a donation prostitutes a nonprofit’s otherwise good work.

It also erodes the trust and credibility essential to attracting and keeping loyal donors.

The key to earning and keeping that trust and credibility lies in communication that is open, honest and authentic.

A nonprofit must be able to tell its story in a clear, candid and compelling way that connects with donors’ values and needs.

That requires understanding donors’ psychology and identity, not playing on their fears and prejudices, or gushing over their ideas, however odd they may seem.

And donors can have ideas that seem truly strange.

Yet, attracted by donors’ wealth like flies to honey, hangers-on and other supplicants neither question nor criticize those ideas.

That, in turn, tends to enable donors in believing everything they say is thoughtful and wise, including whatever random ideas happen to pop into their head unsupported by logic or reality.

By pandering to wealthy people and overlooking their sometimes peculiar personalities and ideas, nonprofits also can end up having to deal continually with donors who believe their gift gives them a license to take a leading role in shaping the direction of the organization’s policies, programs, operations and strategies.

In fact, whatever their values and ideas, or the causes they care about, most donors are people who genuinely want to do good.

The challenge in engaging donors is to respect their values and ideas, not bow down before them, while also helping donors see how the nonprofit’s vision connects with their own.

And if there is no connection at all, or even a troubling disconnect, maybe the nonprofit should not be courting the donor, however heretical that might sound to fundraising professionals whose jobs depend on meeting their annual goals.

What the NPR fundraisers seem to have forgotten in their frantic chase for donations is that actions speak loudly and can have a significant impact on other donors: Responsible and informed donors do not want to support organizations that will say anything if the payoff is a big gift.

That is an important lesson all nonprofit fundraisers should take away from NPR’s unintended exposé of philanthropy’s ugly little secret.

Philanthropic psychology

Using philanthropic and donor identity to increase fundraising will be the focus of a Philanthropy Journal webinar on March 29 featuring Adrian Sargeant and Jen Shang, philanthropy scholars at Indiana University. To learn more about the webinar, and to register, click here.

March 14, 2011

Nonprofits should trust themselves

By Todd Cohen

Nonprofits need to remember not to forget how to think for themselves.

Despite the best intentions, many nonprofits risk losing sight of their mission, losing touch with their customers and donors, and losing confidence in their own ability to develop and run sustainable organizations.

The culprits are foundations, trade groups and consultants that are fixated on metrics and short-term results, and peddle that mindset to nonprofits that are only too willing to check their judgment at the door in exchange for those groups’ philanthropic dollars and self-promoted expertise.

But those dollars come with a tight leash, turning many nonprofits into little more than extensions of foundations, many of them inbred organizations whose own power and perceived wisdom flow from little more than donated or inherited wealth.

As a result, nonprofits must swallow organized philanthropy’s force-fed diet of measurement-driven strategies for serving clients, raising money and running their shops.

Measuring results and thinking strategically can indeed be highly productive for nonprofits.

What is flat wrong, however, is the idea that vision, effectiveness and sustainability depend only on what can be quantified, when in fact success and impact are as much a function of experience, social intelligence and intuitive thinking.

The time is ripe for nonprofits and funders alike to start rethinking the way they think about doing business.

As New York Times columnist David Brooks wrote on March 7, a new way of looking at how we think is emerging.

Brooks says that big policy failures in our society have stemmed from an “overly simplistic view of human nature.”
The prevailing view, not only on policy matters but in many aspects of work and life, he says, is that we are creatures divided into reason, which we can trust, and emotion, which is suspect.

That perceived division, he says, has distorted our culture.

“Many of our public policies are proposed by experts who are comfortable only with correlations that can be measured, appropriated and quantified, and ignore everything else,” Brooks says.

But while Americans “are trapped within this amputated view of human nature,” he says, a “richer and deeper view is coming back into view,” thanks to researchers in fields like neuroscience, psychology, sociology and behavioral economics.

What those researchers are finding, he says, include the insights that much of the best thinking takes place in the unconscious, which makes up most of the mind, and that emotions are not separate or opposed to reason but are its foundation and the basis of the way we assign values.

That research also has shown us that “we are not individuals who form relationships,” Brooks says. “We are social animals, deeply interpenetrated with one another, who emerge out of relationships.”

The charitable marketplace is only as good as the relationships it fosters: The people who work in and support the nonprofit sector are most effective when they learn to work together, listen to one another, and treat their co-workers, boards, donors and collaborating organizations as partners truly willing to share risks, resources and power.

Yet many foundations, trade groups and consultants, and many nonprofits that are convinced they need and depend on them, are becoming increasingly blind to anything but metrics, short-term impact and, increasingly, ideological doctrines, whether right or left.

They also are becoming increasingly tone-deaf to strategic thinking that tempers cold calculation with personal insight and judgment based on experience, relationships, and the realities of the marketplace.

Equally disturbing, too many foundations and trade groups have become consumed with their own turf and power, so while they preach collaboration, they cannot bear not to be in control.

Nonprofits need to free themselves from the rigid, two-faced culture of these philanthropic powerbrokers, trust themselves and find philanthropic partners they can trust in working together to making our communities better places to live and work.

Enhancing nonprofit partnerships

Please join PJ on March 24 for a webinar that will focus on nonprofit partnerships.

Leading the webinar, to begin at 1 p.m. Eastern time, will be Susan Jakes, an extension assistant professor, family and community development specialist, and adjunct professor in psychology at North Carolina State University.

In her work, Jakes partners with communities to design programs that promote systems-and-community-change.

While many nonprofits are open to the idea of partnerships, she says, partnerships in reality can be more of a threat or burden than a source of energy, innovation and resources.

So please join us for our March 24 webinar, when Susan will talk about ways in which partnerships can be a valuable asset to your nonprofit and help magnify your impact and enhance your recognition.

To find out more about the webinar, and to register, click here.

March 7, 2011

Public universities must adapt to market

By Todd Cohen

Public universities face critical choices.

Like nonprofits, public universities are under severe financial strain from the economy’s collapse, forcing them to ask the same tough questions as nonprofits about how to do business in a sustainable way that advances the indispensable role they play in our society and economy.

And just as a growing number of nonprofits are working to remake themselves as social entrepreneurs, public universities are struggling to reinvent themselves as educational entrepreneurs.

To truly fulfill their combined mission of teaching, research and public service, universities must become self-sustaining incubators, hatching new ways of operating, serving multiple constituencies, and producing new revenue streams.

Their challenge is to develop innovative business models for their institutions that test and move into the marketplace the knowledge, competencies and innovation they value in the classroom, in their research and in the services they provide to their communities and states.

Public universities, like any large organizations, can be maddeningly slow to change because of their mind-numbing and innovation-crushing culture of institutional rules, policies, procedures and guidelines, and because of their entrenched and often-insulated workforce that has learned to survive by playing it safe and not taking risks.

Like nonprofits, public universities will survive the immediate financial crisis only if they learn to adapt their corporate culture and the way they do business to the fiercely competitive and continually changing economy and marketplace.

As The New York Times reported March 2, the decline in the share of funds that states provide for higher education has prompted many states and public universities to reassess their relationships and the basic model for supporting higher education.

New ideas that are gestating, the Times reports, include issuing bonds to raise money to build the endowment at a state university; “charter” universities that would get less financing but be free from some state mandates, such as those regulating construction projects; freeing a state university from many state regulations; and cutting a flagship campus loose from the rest of a state university system and making it a public authority.

And, like their nonprofit counterparts, a growing number of universities have started to take a hard look at reorganizing, consolidating or eliminating academic programs and administrative structures.

At issue are the fundamentals of running an organization, whether university or nonprofit.

Those fundamentals include how to identify and best serve a market; how to develop products and services that customers and funders value; how to deliver and market programs and services; and how to engage and communicate clearly and openly with clients, partners, investors and employees.

Employees of any institution often are taken for granted and treated like the hired help or human capital that is expendable.

Despite financial cuts and stress, however, public universities, like nonprofits, cannot afford not to engage their employees and invest in their continuing professional development.

Employees are human capital that is essential to the central nervous system of these organizations, just as public universities and nonprofits are essential to the central nervous system of our democracy.

And just as they increasingly are focusing on and engaging donors, universities and nonprofits need to start focusing on employees and engaging them in rebuilding their business model and delivering their products and services.

Public universities prepare students to think, to question the answers, to understand how our communities and our marketplace work, to become smart workers, effective leaders and engaged citizens, and to give back.

Universities and nonprofits alike face the enormous task of moving beyond their often in-bred culture of entitlement, the idea that they are owed financial support simply because their cause is worthy.

The good news is that a growing number of these organizations are learning through the crucible of the marketplace that they must earn their keep, every day and in new ways, and prove their worth by incubating and delivering programs and services that customers, investors and other stakeholders – including employees -- value.

Public support is critical for public universities.

But with politicians shrinking that support in the face of taxpayers’ quick-fix hysteria, public universities find themselves counting even more heavily on private donors while also targeting customers and partners willing to pay for their services.

And private donors want to see results, and want to be engaged.

Public universities, like nonprofits, cannot afford not to make it their job to become sustainable, entrepreneurial enterprises that make their own luck and pay their own way in an increasingly complex and challenging marketplace.