Did you catch the Oscars?
Regardless of what you think about the awardees, you will probably agree that like always, the production team had pulled off another flawless show.
I mean, think of the thousand things that could have gone wrong. The mic on the host could have stopped working in the middle of the musical number. A prop could have come loose and tumbled on the stage. One of the overhead cameras might go dark...you get the picture.
Which is why, the most stressed out guy during the award ceremony has to be the director.
Don't believe me? Check out this behind the scenes video (~ 4 minutes) shot in the production area as the Oscars were being telecast live.
Because Oscars are once in a year event the director can survive the stress and live to tell the tale.No one, though, can function daily at these levels of stress without getting burned out.
The nonprofit management quagmire
For many nonprofit managers though, this video will evoke feelings of déjà-vu.
These are the poorly managed nonprofits, with the leadership team flying blind and putting out fires as and when they see them.
In these nonprofits, there is no forward planning, no clarity on goals- both long and short term- and minimal flow of actionable information. The right hand does not know what the left hand is doing, chaos reigns supreme, and the organization goes out of business.
We are standing about two inches away from a huge screen, and it's noisy and crowded and it's changing with every second.And it's only by stepping back, and then further back, and holding still, that we can begin to see what the canvas means and catch the larger picture- Pico Iyer, The Art of Stillness
This is worrisome as nonprofits are a vital component of the American society and the economy. According to theGiving USA 2014report, around 1.4 million nonprofits provide jobs to 11% of the US working population and contribute 9% of total wages.
Therefore, it's crucial that nonprofits be run in a professional manner so that they can continue working, grow and meet their goals.
Nuts and bolts of nonprofit management
As a leader, you will grapple with multiple issues on a daily basis while managing your nonprofit. You cannot handle these challenges, which will have strategic and tactical dimensions unless you have put suitable systems and process in place.
Manage your nonprofit smoothly by following these guidelines about:
1. Raising funds and managing money
One of the most important issues keeping nonprofit leaders up at night is funding. This year though, the outlook on donations is likely to be rosier, with a study out of Indiana University predicting that philanthropic giving is going to increase 4.8% from last year.
Furthermore, the Giving USA 2014 report points out that:
- Americans donated $335.17 billion to charity in 2013, which is around 2% of the US GDP.
- The share of corporations in the donor pie is only 5%.
- Nonprofits working in arts, health, environment, and education are seeing a constant uptick in donations, as recessionary pressures have eased.
Check out some highlights of the report.
When nonprofits are small they can get by with “serendipitous” funding, where money comes in without any following a definite strategy. However, according to Stanford Social Innovation Review (SSIR), as a nonprofit exceeds $3million in annual revenue, it will benefit by adopting a funding model (SSIR identifies 10 models) which targets specific types of donors compatible with its mission.
Streamline your nonprofit's management with our free strategic and operational planning template
But big or small, some actionable ideas and suggestions for all nonprofits around funding are:
- Be financially transparent. Put up your Form 990 on your website, break down your operating costs and provide answers to frequently asked questions about funding, much like the nonprofit running the Burning Man has done.
- Provide proper context while offering information. You don't want to be in American Red Cross' shoes when its claim about spending 91 cents on the dollar for services was proven to be inaccurate by a press investigation.
- Follow IRS norms concerning nonprofits and self-regulatory guidelines like the Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations. Some of the guidelines deal with boardroom best practices, executive pay, donations and overhead.
- Take your fundraising to the next level by practicing the art of effective storytelling, by focusing on solutions and "howdunit". Such stories also make for great press.
- Appoint a treasurer, use cloud based software to manage accounts and payroll, perform cost analysis, write a budget, and improve your cash flow. This link leads to a humongous list of resources on financial management for nonprofits.
- Follow grant writing best practices. Check out this slide deck for a brief primer
2. Team building and organizational culture
Nonprofits are generally underfunded, and this reduces their hiring options.
Because money can't be the primary motivator for most nonprofits, your mission and organizational culture will have to do the job of selling your organization to top talent. As you develop your nonprofit, think about:
- Your shared values- How do you spend your funds? Are you focusing on short term or long term goals? What kind of behavior is considered acceptable for employees?
- The mission and vision- What is the big picture, what kind of impact do you want your nonprofit to make etc? The mission and the vision determine the kind of people attracted to your organization.
- Interpersonal relationships - How do you communicate with employees, donors, and other stakeholders? Who's eligible for hiring, what causes someone to be fired? How do you reward and incentivize? What appraisal mechanisms are put in place?
According to a John Hopkins survey, nonprofit leaders cited seven values which they considered to be important to their organizations. However, as the survey showed, some values were considered more important than others.
Apart from contributing to organizational culture, nonprofit leaders are also responsible for building an effective team and nurturing future leaders. Based on the goals of the organization, they should keep a look out for the right kind of talent and provide enough opportunities for people to reach their full potential.
Fostering a culture of innovation can help. Innovative organizations have highly engaged employees and their impact is much higher than organizations which are steeped in a business as usual mentality.
Innovation is an especially valuable trait for a nonprofit to cultivate because resources are often limited and there are many problems that can’t be tackled with the normal approach. There are several methodologies for fostering creativity and innovation in this niche.
3. Boards and Governance
If you want your nonprofit to run well you will need a governing board that knows what it’s doing.
The responsibilities of board members of a nonprofit are numerous. A nonprofit board is responsible for:
- Establishing the mission and vision of the organization.
- Selecting and supporting the top management of the nonprofit, including executive directors and CEOS.
- Monitoring programs and providing feedback so that the organization stays on track.
- Setting policies and standard operating procedures and assisting with strategic planning.
- Providing financial, legal and ethical oversight.
- Helping with fundraising.
In this context, it's critical for nonprofits to comply with legal requirements pertaining to the size of the board, financial reporting and audits, bylaws, documentation of board meetings etc. These legal requirements will vary from state to state.
Streamline your nonprofit's management with our free strategic and operational planning template
A lot of nonprofits do not stick to other best practices like insisting on mandatory presence of board members during meetings, following meeting agendas or following up on the decisions made during a meeting.
The board members should be selected so that they come from diverse backgrounds with complementary skill sets. Many nonprofits also set term limits for board members so that new blood can be inducted at periodic intervals.
And because flow of information is important for board members to do their jobs, nonprofits should establish procedures like circulating agendas of board meetings well in advance among members, breaking up a large board into smaller committees for effective discussions and bringing in a third party facilitator to keep the discussions balanced.
4. Metrics and measurement
For nonprofits to succeed in their mission, they have to function like any other goal oriented organization. This implies data collection and measurement. But unlike profit organizations who can measure their success using metrics like revenue or profit, nonprofit metrics are fuzzy and ill-defined.
Most nonprofit managers measure their success or failure by metrics like number of pet shelters opened, volunteers in the field, favorable legislations passed or the virality of a marketing campaign. This is simply measuring activities, and you run the risk of missing the forest for the trees and not looking at the big picture.
Instead, focus on the outcome- awareness about HIV among at risk groups, proficiency in science and math among students from inner city areas or increase in numbers of endangered rhinos, and determine the cost per outcome.
With this approach, you will be able to:
- Clearly determine which activities will generate the maximum impact.
- Save money and time evaluating viable programs.
- Predict the success or failure of a program with reasonable certainty.
- Compare yourself with other peer organizations working in the same field and under the same conditions.
Cost-per-outcome calculations are often nuanced, and there is always the danger of comparing apples to oranges. However, if you are careful and factor in multiple considerations and use a methodology like the Impact Genome Project you can demonstrate your efficacy with a fair degree of accuracy.
5. Strategic planning
All things being equal, a nonprofit which develops a strategic plan and executes it will, hands down, massively outperform another nonprofit which works on a day to day basis, not knowing what it will do next month, or next week.
The benefits of a strategic plan are many: organizations become proactive, efficient, and have a sense of direction. . To find out more about the nuts and bolts of strategic planning for nonprofits check out these posts from our blog:
- The 5 myths of strategy development.
- From a vague idea to an actionable strategic plan.
- Acing strategy execution: Part I, Part II and Part III.
To get started on developing a strategic plan, download our free Strategic Planning Template.
Nonprofit management can't be left to luck and chance, especially when the total amount of assets managed by them has increased by 77% from 2012 to $6.57 trillion in 2014.
As a nonprofit leader, there are many variables which affect your mission that are out of your control. However, you do have control over how smoothly your organization runs. You can eliminate wastage, cut back on activities that steal the focus from the ultimate goal, and by doing so punch above your weight.
What else did we miss? What challenges have you faced while running your nonprofit operations?