In 1996, I wrapped up 14 years of Federal service in a variety of military and civilian roles. I had already established a solid freelance writing business at the time, but I wanted a “day job” to provide healthcare coverage for my family and a stable salary base atop which my I could write what, when, and as I wanted. Most of my colleagues from Navy days facing similar transitions at the time went into the for-profit sector, but I decided that public service meant too much as a guiding principle for me to walk into a world where shareholder profits were at all a governing interest in my day-to-day work.
So I made a conscious decision to enter the nonprofit sector, where I’ve remained ever since. I had to essentially start my career over that year, since my acquired skills of negotiating complex, high-value, confidential contracts for submarine and aircraft carrier components didn’t exactly translate into the cultural, educational, and social service sectors. But I’m a quick learner, and it didn’t take long before I earned the first of four nonprofit chief executive positions that I have held to date.
As that phase of my professional life now winds down with my retirement from that fourth nonprofit CEO position this month, I wanted to share ten frank thoughts that I think might be useful to the next generation of up-and-coming nonprofit executives. I would have appreciated having someone tell me some or all of these things in 1996, so hopefully others may find them useful. (Note: in the few cases where I’ve already written more on some of these topics elsewhere, I link to those articles, rather than simply repeating them here).
1. Understand the differences between governance and management: Nonprofit boards are tasked with governance, nonprofit executives are tasked with management. I developed this grid to explain the key differences between those roles. When boards manage and executives govern, nonprofits fail. As the chief executive of a nonprofit organization, you sit as the single crossover point person looking upward to a multi-person board that supervises you, and downward at a multi-person staff that you supervise. No one is in a better position than you are to monitor roles in both directions, to set appropriate boundaries, and to formulate and implement corrective action when the governance vs management relationships get out of alignment.
2. Serve on nonprofit boards: You will never fully understand or appreciate the challenges that your boards face in fulfilling their governance and fiduciary roles unless you yourself sit on that side of the table at some point too. But don’t just serve on a board as checklist item on your resume, or for the cache of having your name on the letterhead of a prominent charity. Board service involves a lot of challenging volunteer work, and there are specific duties and responsibilities expected of all nonprofit board members. I developed this summary of those roles and responsibilities, and you should be prepared and committed to live, work and deliver within such a rubric before you join any nonprofit board.
3. Understand nonprofit accounting standards and auditing practices: On some plane, I’d almost say this is the most important of the ten tips provided here, as an adept skill with your budgets and financials will allow you to work most closely and effectively with your board’s treasurer and your own staff financial professionals. You want to have the best people possible in those roles, sure, but you don’t want to turn them into the de facto financial decision-makers for your organization because you don’t have a complete, timely and accurate understanding of the reports they produce, review and approve. Some years ago, I wrote a (hopefully) amusing introduction to this somewhat dry topic called Financial Basics for Nonprofit Managers. While I mostly developed these skills in a hands-on fashion over a lot of years, if you’re at that transition point between being a development or other nonprofit middle manager and serving as your organization’s executive, I would most emphatically recommend that you find a training or certificate course in nonprofit accounting. It will set you apart, and it will serve you well.
4. Develop a thick skin: I often use a sports analogy when I discuss the life of a nonprofit fundraiser, noting that a really good professional baseball player will hit at or above .300 over the course of a season, meaning that 70% of his at-bats result in failure. Well, guess what? A really good fund development or institutional advancement professional has about the same success rate in a given year, and if being told “no” hurts your feelings, then you’re in the wrong business. Some nonprofit executives think they can get around this by having their development directors and/or board members make all of the hard asks, but that’s a recipe for failure over the long haul. Peer-to-peer asks are crucial, and many times you are the right person to make such asks, and many times you will receive a negative reply after you make them. They key to enduring that is to recognize that most “no” answers are actually “not now” answers, and to practice your swings and hone your skills until the next at-bat comes around, with a smile on your face while you do it.
5. Understand and practice the donor development cycle: Related to the point above, if you step up to the plate having done none of the necessary training and practice, the likelihood of a big swing and a whiff increases exponentially. The donor development cycle involves prospect identification, cultivation, solicitation and stewardship, and it takes time, research, and talent. If you ask someone for a big gift the first time you meet them, you can pretty much plan on a “no” response. If you do not understand what motivates a prospect before you ask them for a gift, you’re even more likely to get a “no” from them. And some of those “no” answers will really mean that, for good, with no invitations to come back around again for another try. The one part of the donor development cycle that most often goes neglected by nonprofit executives is the stewardship phase, or what happens after you actually get the gift. If a major donor does not hear from you again until you want more money, he or she is less likely to feel the love and write the check. But if you carefully, judiciously, and personally steward those donors, your next gift is more likely to come in, and hopefully be bigger than the one before it. People want to feel connected to their charitable causes, and they want to know that their gifts make a difference. You are one of the most important players in making sure that’s the case.
6. Respect the sector and its people: There’s a sadly common trope in the business world that “people work in the nonprofit sector because they can’t cut it in the for-profit sector.” From a strictly monetary standpoint, this might seem to make sense, since salaries in the nonprofit sector are generally lower when compared to comparable positions in the for-profit sector, and if people can get paid more for doing the same job in the for-profit sector, then their continued presence in the nonprofit sector must be indicative of their second-tier talents, right? But this is very wrong, offering a shallow and reductive view of the nonprofit sector that fails to recognize fundamental elements of the charitable experience: altruism, belief in a mission, philanthropy, a desire to serve others, a sense of deeper meaning, wanting to make a difference, etc. Some of the most talented individuals that any of us are ever likely to encounter have forged their entire careers and reputations working for and with nonprofits, to the tremendous benefit of their communities. The nonprofit workforce isn’t less effective or less valuable than the for-profit sector is, it’s just driven by a very different set of motivations and inspirations. I believe those of us in leadership positions within the nonprofit sector have a clear responsibility to educate those outside the sector on this front, and we should never denigrate, by action or by inaction, our colleagues and their organizations in the eyes of those who would judge our staffs that way.
7. Understand and manage the power dynamics of our sector: This is a subtle one, somewhat related to stewardship, somewhat related to developing a thick skin, somewhat related to respecting the sector and its people, but it’s a common facet of the nonprofit world experience, so I think it needs to stand on its own. At bottom line, you need money for your organization, and your donors have the money you need, which means that your donors have a profound power to greatly enhance your success, or to deeply undermine it, as they see fit. Some of your biggest donors will be clearly aware of this fact, and they’re not going to be bashful about letting you know what they want and expect from you, when they want and expect it. Sometimes, those wants and expectations are going to cross lines of professionalism and propriety and you will have to stand firm on principles in such cases, and (hopefully) do so in a way that does not produce negative outcomes for your organization. But other times, sorry to say, you’re going to have to suck it up and go along with what they want, when they want it, on their terms. This can be a real prick to the pride when you’re feeling particularly powerful and accomplished as the CEO of your nonprofit corporation, and I’ll admit that accepting this reality has always been a challenge for me. I’m a seasoned professional and a major donor for some organizations in my own right, so being treated like “the help” can really sting sometimes, e.g. going to a gala event with a lot of heavy-hitting donors in your community, where their interactions with their peers, and then with you, make it very clear that in their minds, you are not one of them. But that’s, sadly, the macro nature of a world where there are those who give, and those who need their gifts. Many major donors are truly gracious and would never treat you this way. But a surprising number of them will, and you should know that going in.
8. Foster a strategic culture: Strategic planning is crucial to the success of any good nonprofit organization. It may be broadly viewed as an iterative, two-part undertaking. In the first part of the process, an organization defines a vision for the future that is consonant with its mission. In the second part of the process, the organization then allocates financial, capital and human resources toward achieving this vision. The two parts of the process must be linked with regular feedback mechanisms that allow both the vision and the allocation of resources to evolve, together, to meet emergent opportunities and challenges. Strategic planners must recognize a principle most eloquently elucidated by General Dwight D. Eisenhower during planning for the invasion of Normandy: “Plans are nothing; planning is everything.” Planning is a dynamic, ongoing enterprise, not an occasional activity resulting in a static, printed plan that becomes obsolete soon after it is created because it is placed on a shelf to gather dust. Planning is a process, while plans are tools—and no tool should ever be held in greater reverence than the process it supports. As your organization’s executive, you sit smack in the middle of this crucial process: you must encourage and empower your board to think and act strategically, and you must manage your staff to implement the plan to fulfill the board’s vision, not your own personal preferences and projects. I wrote a bit more on this topic here.
9. Don’t start your own nonprofit as a hobby or on a whim: I will admit that this is a pet peeve of mine. I’ve seen more people than I care to consider over the years say “I see a very niche need not being met in my community, so the best thing for me to do is to establish a new nonprofit corporation to address that need.” And then they do it. And more often than not, it fails, but only after wasting a lot of donated money. Maybe some of those folks are correct in taking that first step to organize and establish, sometimes, but not very often, and a nonprofit organization shouldn’t be established as a hobby, especially if it needs to suck funds from a finite pool of community resources. You also should never establish a nonprofit corporation to give yourself a paying job as its executive. That’s just bad form. While changes in tax codes and economic uncertainty are resulting in shortages in individual funding for the nonprofit sector these days, there is no shortage of nonprofits themselves: the National Center for Charitable Statistics reports that there are over 1.5 million nonprofit organizations in existence in the United States today, of which about 1.2 million are 501(c)3 charities. (Don’t make the amateur mistake of saying “501(c)3” interchangeably with “nonprofit;” they are not, necessarily). The Balkanization of the nonprofit sector caused by a growing number of tiny niche mission nonprofits ultimately hurts the overall effectiveness of our sector. If you see a charitable need unfulfilled in your community, your best, first bet is to figure out which existing service provider may have a mission that could allow it to meet the need within its established operational and fundraising infrastructure, and commit to helping it do so. Setting up competing, small nonprofit corporations without the ability to actually pay for such provision will generally make it very difficult for any funds raised to have any significant, long-term impact. Again, this is not to discourage you from volunteering your time, talents and treasures in a visionary fashion, but you’re going to be a lot more useful to a lot more people if you don’t reinvent the wheel by starting a new nonprofit from scratch on a personal whim.
10. Keep charity charitable: There’s been a lot of (needed) discussion over the past couple of years about tax code changes making it financially beneficial for donors to use the increased standard deduction in lieu of itemizing deductions (including charitable giving), thereby reducing the strictly financial tax return benefit donors receive from their charitable giving. But I think we make a mistake in our communications when we put too much focus on tax benefits, because the charitable good that donors do is actually independent of any quid pro quo tax benefit they receive as a result of their philanthropy. Charity is, by its very definition, the voluntary giving of help, typically via money, to those in need — and nonprofit organizations need to demonstrate, at bottom line, that they remain worthy of support for the good work they do, and for the benefits that they deliver to their clients and communities. After all of my years in the nonprofit sector, I know that when push comes to shove, the sense of doing something righteous, and making a difference through one’s gifts, is the truly fundamental motivator for individual donors, one that resonates deeply in ways that simple monetary benefit from tax-deductions does not. As your organization’s leader and spokesperson, it’s your job to keep the sense of awe that comes from doing the right thing front and center in everything you say and do.