Learn how to SUCCESSFULLY plan and write grants!
|  | Buy NOW
|
| The more you know... |  | Check out the classes and workshops offered by Janet at
Janet Levine Consulting |
|
Greetings!
It's an argument we often have, my friend and I. She is passionate and convinced that nonprofits should not be held to ordinary standards and, therefore, should not be concerned with issues like sustainability. I am equally passionate and believe that they not only should but must. As with most things, I suspect we are both right and wrong, but with my usual pig-headedness, I think I am more right. For starters, I don't understand her annoyance when people-generally Board members-want nonprofits to be more businesslike. We are, after all, businesses. In fact, most of us are nonprofit corporations, which simply means that the profits we really ought to have at the end of every year go back into the corporation rather than, as in for-profit corporations, be redistributed to shareholders. As for that pesky sustainability-this overused word simply means that what you do and are is supportable, maintainable, viable. I don't see any downside to any organization in these. I fear that much of this divide is caused by an erroneous belief that nonprofit folks are driven by passion for their cause, while those in the for profit world are only driven by greed. But I know lots of people who work in that world who are just as passionate about what they do as any nonprofit worker. Accountabilities may be different, but frankly, the bottom line should hold some sway for all of us. For nonprofits, that means moving beyond crisis fundraising or hoping the government will continue to provide support. Neither is defensible any more, and we really do need to consider the many ways we can improve our bottom lines. Those lines are important because only if we have adequate funding can we really meet our various and important missions. Equally important, only with adequate financial strength can we afford to pay our hardworking staff members competitive wages and reasonable benefits. My attention tends to be on fundraising, so most of my work focuses on helping organizations build comprehensive fund development programs. I want my clients to look beyond grants, a gala, a few direct mail appeals. I want their gaze to look beyond the end of this year and think long-term, for years and decades and even beyond. While there are many exceptions, most nonprofits, only get 12-14% of their budgets from charitable sources. Fundraising, therefore, cannot be the only consideration. Boards need to look at programs, not only for what they do but at what they are accomplishing and at what cost. And they must also look at other ways their organizations can be fiscally sound. That might mean providing services for a fee, running some sort of retail business such as a thrift shop, increasing program charges. It can be doing what you are doing, just being smarter and more effective. Too often, budget crunches mean cuts. With consideration, it may mean adding one or two things that haven't been offered before. Social enterprise is becoming hotter and hotter-Social Enterprise Magazine Online defines this as "mission oriented revenue or job creating projects undertaken by individual social entrepreneurs, nonprofit organizations, or nonprofits in association with for profits." Do you now-or should you have-a seat at this table? What does/might that look like? Ours is an ever-evolving world, but many nonprofit organizations have been slow to change. And because they keep doing what they've done, they tend to stand still or, worse, begin to slide downward. Over the next year, this newsletter will be grappling with some of these issues. If you have a point of view or better still, great information, please become part of the conversation. Write an article, or tell me what you think and be included in an article.
The recent (current?) recession is not, I think, just a bump in our road. It is, rather, a new road that will make us go in different directions. That can be a frightening idea. It can also lead to rejuvenation, renewed commitment, the proverbial better mousetrap. It is all up to us.
*************** Fundraising capacity not where you want it to be? Need help in making Board members comfortable with fundraising?
Contact Janet Levine Consulting for a
free 30-minute meeting
|
|
Are Your Bylaws Helpful or Hurtful?
Mitch Dorger, EMBA, Win-Win Senior Consultant
From a legal standpoint, an organization's bylaws are one of the most important, if not the most important, document there is relating to the organization. It contains the legal description of what the organization is, how it is organized and how it operates. More importantly, failure to follow the provisions of the bylaws can have devastating legal consequences for an organization and perhaps even for individual board members.
Despite their importance, bylaws are often neglected and misunderstood. For many nonprofit organizations, the bylaws are just some old document, hidden away in a book on the executive director's desk. They are not read, the provisions are not known, and if they do happen to be read, they are written in such legalese that the normal person cannot understand them. If this description sounds like your organization, then let this be your wake up call!
It is imperative that Board members know what the bylaws say and then work to ensure they are followed by the organization. They should also be reviewed periodically to make sure they are consistent with the corporation law in your state and that they accurately reflect the way the organization operates. Do not do this without legal help. As mentioned, bylaws are a legal document. Moreover, they are subordinate to the corporation law of the state - which can change. I recommend that any bylaws review be conducted by a board committee in conjunction with the organization's legal advisor. Do this annually or no less often than every two years.
As a general rule, bylaws should be written with four basic guidelines in mind. The first is consistency. Bylaws must be consistent with Federal, State and local laws and with the provisions of the organization's articles of incorporation. They must also be internally consistent. Nothing creates more confusion than to have bylaw provisions that conflict. The second guideline is permission, not requirements. Avoid specific requirements in the bylaws and specific structures, activities, and deadlines. These only create problems if they are not followed. Write bylaws in a way that permits actions but does not require them. The third guideline is importance. Keep the bylaws at a level that reflect the most important activities and rules for the organization -- do not bog them down in details or minutia like meeting management procedures, etc. The fourth general guideline is currency. Make sure the provisions of the bylaws are current with the mission and activities of the organization and with the changing realities of the times.
The internet is full of advice from experts on what to include and what to avoid in bylaws. Here is my take on some of the specifics that are important to consider in preparing or reviewing your bylaws.
- Mission. Do the bylaws reflect the current mission of the organization? You would be surprised at how many times an organization's mission as stated in the bylaws does not coincide with actual practice. Sometimes missions become outdated or sometimes an organization moves away from its original mission. It is not a good situation when the organization's stated mission is not consistent with what it is actually doing. It may even lead to problems with tax exempt status if the original mission stated in the bylaws is also the basis of the organization's tax exemption and that is no longer what the organization stands for.
- Members. Nonprofit corporations are not required to have members, but if you do have them, you need to ensure that the rights of the members are clearly delineated and that member rights are not being ignored or abused by the board. Boards have been known to have members sue them for violating their rights and/or benefits.
- Rules of Order. If yours is one of the thousands of organizations whose bylaws adopt Roberts Rules of Order for the organization, you should understand that when you adopt Roberts, you have just added hundreds of pages of parliamentary minutia to your bylaws. In the last year, I have heard a number of recommendations from attorneys that organization move away from Roberts Rules of Order and create their own procedures which are simpler, more understandable and more straightforward.
- Adverse Actions. Boards occasionally face situations that call for adverse actions of some sort, including director or member removal. It is imperative that procedures in the bylaws specify how such adverse actions will be conducted and how they will incorporate any due process required by your state. Then the organization must follow the procedures specified. If not followed, bylaws create the basis of a legal challenge to actions taken. At the same time, don't make these rules so detailed and cumbersome that no one wants to undertake an action that should be taken simply because it is too hard to do. The rule ought to be "simple but fair" when dealing with bylaw provisions concerning adverse actions.
- Officer Duties. Make sure the descriptions of the officer duties are accurate and current. Do not include a bunch of extraneous duties to make the positions sound important and do not include duties that the officer really does not do. For example, I found one set of bylaws that stated that the Treasurer would deposit all checks. The organization had a full accounting staff, and the Treasurer had not deposited checks in over 50 years. So why keep that language in there? If there is a prescribed duty, and it is not being done, someone may challenge the performance of that officer. Also spend some time accurately describing the job responsibilities of the senior volunteer vis-a-vis the senior member of the staff. Some organizations like to designate the senior volunteer as the chief executive officer of the corporation when in reality that individual does not have the skills, time or wherewithal to carry out the assigned responsibilities. This can lead to poor relations between the ceo and the board chair if duties are not appropriately defined. (READ MORE)
|
|
Strategically Planning
I realize this is heresy, but I find myself questioning the value of most strategic planning. If I parse that phrase, strategic meaning according to The Free Dictionary "
Important or essential in relation to a plan of action" and planning, "A scheme, program, or method worked out beforehand for the accomplishment of an objective," then the usefulness of it is clear. But the reality of most strategic planning processes that I've observed, been part of, heard about, makes me, frankly, a bit queasy.
In 2007, Patrick Basset, President of the National Association of Independent Schools (NAIS) , in the NAIS book The Strategic Process, noted "We are moving from 'strategic planning' as an isolated event with a fixed, published plan to 'strategy-making" and an ongoing 'strategic posture....'" In order to accomplish this, NAIS was recommending:
- A stated 5 year vision
- A 12-month plan to get started
- Two and three year "reality checks."
That makes more sense. It infuses strategic planning into what an organization is doing, rather than keeping it separate, as if only the process was what mattered.
Educational organizations are particularly guilty of treating planning as, well, an academic exercise. But non-educational organizations are not immune. To make sure that your plans are viable, there are a few things you can do.
The first thing is to make sure that all your plans have a price tag. If I were doing a training, I would at this point, repeat the underlined words.
The second must-have for any plan is a series of specific steps to get you from point A to points B and beyond. I have seen so many plans that are beautiful to behold-and unrealistic to the max.
Not long ago, I was retained by a very small organization The first thing they showed me was their strategic plan. It was gorgeous. Seriously. But it had no relationship to reality.
According to this document, in three years this organization will have grown to over 40 employees, with offices in five cities. Right now, mind you, there is one underpaid staff member (the Executive Director) and five board members, only three of whom are what I would call engaged.
While I love the idea of aiming for the sun so if you fall short you fall among the stars, I more love the idea of reaching for something that is within your grasp-albeit with a stretch.
Along with reality, it's always good to be able to articulate why this vision is the right vision. Why did this organization need to grow so large? What were the outcomes they hoped to achieve? Could these be reached in other ways? In order to answer these questions, of course, you must be very clear of where your organization truly is. Too often, I find, organizations throw out number without understanding what those numbers mean.
I have sat at more meetings where a nonprofit professional is insisting that their organization raises, it doesn't matter, pick a number, when the financials I am looking at clearly show that this is not even close. I'm never sure who they think they are fooling-certainly not me. I don't have a stake in that game.
More egregious are the number of organizations who are completely unclear what their programs cost-and/or the costs are, in any case, reasonable. (READ MORE)
|
Dual Natures
This January, two new hybrids were introduced in California. Not cars. Corporations. The first is the "flexible purpose" corporation. The second is the "benefit" corporation. Both are for-profit companies that have social purposes.
Flexible purpose corporations can specific one or more "special purpose(s)" that have a social objective in their Articles of Incorporation. These purposes may be considered by directors as they make decisions. If pursuing these special purposes keeps the company profits from being maximized, the directors are shielded from liability.
Benefit corporations, which also protect directors from not maximizing shareholder return, must have general social welfare goals and social objectives that factor into the decisions made by their directors.
Some nonprofit executives, according to an article in the New York Times worry that their already stretched fundraising operations may suffer as potential donors decide that becoming investors is a more attractive alternative.
It will be interesting to see if the for-profit sector does better than the non-profit has in marrying money making with good works.
For more than a decade, many non-profits have been flirting with "social enterprise" as a way to increase revenue. Organizations that have adopted a social enterprise model attempt to bring together their non-profit mission with business practices and metrics. Mainly, this has been done by the non-profit starting a for-profit arm, with the intent that the profits from the latter would fuel the former. However, most studies show that this has been a less than successful experiment.
In 2010, researchers at the Wilson Center for Social Entrepreneurship at Pace University found that non-profits who did look to social enterprise as a solution created a while new set of problems. Rebecca Tekula's study,Social Enterprise: Innovation or Mission Distraction?, found that, indeed, mission distraction was the price most of these organization's paid.
According to Dr. Tekula, as the for-profit businesses of the non-profit organizations made money, "the share of a contributed dollar that went to actual services went down." Moreover, she noted that these organizations "were not investing profits in their mission-related services." Instead, she wrote, "profits were reinvested in he business, and losses were subsidized with funds that might have gone to clients."
Other studies have found similar problems.
By and large, hybrid organizations have not appeared to benefit either side of the fence. Mission drift seems to be the norm. As Carmen Nobel writes in the Harvard Business School's newsletter, Working Knowledge, "[T]he main problem with the model is that hybrid organizations run the risk of suffering from so-called mission drift--meaning that they stray from their original goals--usually by focusing on profits to the detriment of the social good, but sometimes vice versa."
How will the "new" hybrids fair? While the jury is out on these LC3 companies, there are a lot of skeptics who agree with Will Rosenzwieg.
One of the founders of the company Republic of Tea and now with Physic Ventures, Rosenzwieg says, "I think you really have to make a choice and be a business or a nonprofit. It's hard to be both."
|
|
Have Your Say
 Inquiring minds do want to know--what is on your mind?
Send me your article (200-2,000 words) on any topic of interest to those who work for or with nonprofit organizations.
|
|
Are your fundraising results down? Board members bored? Or are thinking about a campaign? Whatever your capacity building needs, Janet Levine Consulting can help. Email or give me a call at 310-990-9151 to schedule a free 30-minute consultation.
|
|
|
