Why Quality Matters

Of course if you ask any group of people if they want high quality in the goods and services, they respond “Duh!”. However when you explain that the highest quality will cost them more, they begin to weigh price vs. quality. In controlled experiments, subjects generally view a higher priced the item as higher value and expect that it will be of higher quality. The lower priced the item, the lower the expectation of quality. Sometimes, we trade price and quality in a very conscious way in order to save money. So what does quality really mean to you?

But keep in mind that when evaluating goods or services, there are more aspects to quality than just price alone. This is a major consideration in nonprofit human service organizations, where most of the ‘customers’ make no direct cash investment at all in the service/good.   Most of our customers invest significant time, energy and emotion in order to access services.  Don’t overlook this….respect it.

Survey after survey of low-income consumers who use public services indicate that they gauge quality via multiple attributes. Outstanding nonprofits do several things right.

First, they consistently improve the actual service/good they provide. They do this by having valid metrics to measure valid outcomes. Then management uses these outcomes to focus staff on the strategic question of how to improve on the numbers.

They provide superior customer service, which means streamlined paperwork/information requests, minimal bureaucracy, and quick decisions on all matters. Human service organizations that are difficult to deal with are not quality. These organizations cost their customers time and frustrate efforts of our most vulnerable populations to change the conditions of their lives.

One cannot discuss quality without eventually addressing Lean Operations. Nonprofits that make internal process improvements create value in the form of decreased costs or increased outcomes. These will be the organizations that Funders Want To Fund and the Public Will Want To Use. Advancements in technology for equipment, materials and software offer opportunities for human service organizations to impress consumers, funders and taxpayers.

So there are many aspects of quality. Nonprofits who are proactive in the above areas will be able to keep their customer base happy even if they are not the lowest priced supplier in the pack. What are you willing to pay for?  What are your end-users willing to give up in order to use your services.  And most important, what are your funders willing to buy off of you?

Are We Paying The Executive Director Enough?

Short story.  Back in the 90s I was advising a nonprofit when in the midst of this year long engagement, the Executive Director suddenly announced her retirement.  As the agency prepared to advertise the vacancy, one Board member approached me to ask "Could you do a salary survey to see if we're offering enough?"

Well, I did. And discovered that they were paying the previous ED too much....way too much.  What happened is that over 27 years with the nonprofit (23 as Executive Director) she received small increases in lean years and larger ones during fat times.  Little by little, it lead to where she was earning $93,000/yr at the time of retirement....when the market rate for a nonprofit of this size in their specialty was $65,000-$71,000.  The excess also had a carryover effect by lifting the salaries of the Assistant Director, Program Managers and Department heads far above appropriate scale.  All told, the inflated salaries cost the agency in the range of $55,000/yr.

Many nonprofits worry about paying their EDs enough, and with good reason.   A sharp Executive is likely to be identified as an up-and-comer in the community and recruited away from you by a more attractive package. Paying too little is just as bad as paying too much.  The compensation structure of your organization requires thought from your Board.  Some steps to deal with the issue.

1. Set a policy at the board level about your goals in compensation and benefits.  A policy is a strong message to your employees about how you value them and your long term organizational goals in this area.
2. Seek advice from peer organizations and state and national trade organizations. Don't reinvent the wheel.
3. Have a strong HR talent on your Board.  They'll keep you abreast of salary and benefit trends.
4. Seek flexible benefits to the extent allowable. Simply put, allocate 'x' dollars per employee, and then allow employees to choose how that money is spent. The more control employees have over their own benefits the happier they are--or at least they will be less discontented.
5. Show what the organization pays per employee for benefits and how it has risen. Educate the Board and Staff.. If you take the step above and make benefits flexible, make sure you help people avoid making the choices that don't benefit them.
6.  Make sure everyone gets the same deal.....no higher benefits for senior managers.  Equity does affect organization morale.

Say It Simple Please....

One of my pet peeves is documents written for clients in bureaucratic language that even I have to read two or three times to comprehend (sometimes never comprehending at all).  This is usually accompanied by complaints from the case manager that the client didn't do what was laid out in "The Plan."   Infrequently do they ask, "Am I making the instructions clear for the reader?"

There are now a number of good Readability Utilities online. I use this one.  Just simply cut and paste your text...it will tell you what grade level the reader must have in order to understand what you've written.   It will also flag difficult sentances and $10 words so you can see how to craft a better document.

This is not asking you to 'dumb down' your writing, but to recraft your words to make it easier for the reader to understand what you're trying to say. In the mid-80s I sat in a media symposium where New York Times editor Turner Catledge was explaining his decision to reduce the paper's comprehension level from 12 grade to 9th grade. His point was that even highly educated people absorb more information when writing is basic.

So go to Online-Utility.org and paste in something you've recently written.  Then post in comments to tell us what you learned.

Some Tips For Building Energy On Your Nonprofit Board

As I've noticed repeatedly, Great Boards just don't happen....they're built with a little loving care and a lot of hard work. If we don't get the leadership question right, then the organization is at best mediocre.
Gail Perry has posted over on Guidestar a good set of tips for keeping your Board engaged. She notes that we all want enthusiastic, action-oriented board members who pay attention and get things done. But high-performing boards don't just happen. It takes time, clear focus, and careful strategies to get them there. Here are 10 tips for creating a board that can deliver.

1. Reawaken their passion.
   Board members often forget why they care—and even why they are serving. You'll get the most out of your board members if you can fan the flames of their passion for the cause. Asking them, "Why do you care?" creates amazingly powerful conversations that can open their hearts and evoke new energy.
2. Give them a great experience on the board.
   Look at it from the board members' perspective. They want something out of their own experience. They don't want a passive role. They want to have meaningful work and to see real results. And they want to have a good time doing it.
3. Have interesting, upbeat meetings dealing with big-picture issues.
   If all your board members are doing is attending boring meetings, then you are going to have a bored board. And a bored board is not going to be an action-oriented board. Don't give your high-level people low-level work. Don't waste their time.
4. Give them social time to meet other board members.
   Board members want to meet the other members. You can't create a sense of "team" without giving them time to get to know each other. Social time creates community and collegiality—and trust. Encouraging friendships among board members helps mold them into a team.
5. Focus board members on action items to accomplish, not on attending meetings.
   Do you want your board attending meetings or do you want them making things happen for you and your cause? Don't get me wrong—meetings can be important—but board members need to understand that their job includes more. They need to be in action as well.
6. Be clear about what you need them to do and when to do it.
   Board members tell me that they want clear direction from the staff. They want to know what to do and when to do it. If you can give them clear action items, then they can make it happen. Don't make them guess—give them a list and follow up cheerfully and often.
7. Focus them on friendmaking for the cause.
   Board members may be afraid of fundraising and "asking," but they are not nervous about making friends for the cause. Set them up to host tours, socials, coffees to learn about your cause. Show them how to spread the word about your great work in the world.
8. Encourage a positive attitude.
   Negativity will not change the world—it will drive people away. It's through positive, exciting vision that you can keep the flames of energy burning—and keep your group motivated. Great energy attracts people—and funding—to your cause.
9. Help them understand specifically what you are raising money for.
   Show your board members that you need $xx dollars to help xx kids after school (or xx students, or xx ballerinas—whatever your cause). You'll be amazed at their action when they have a clear target that will help a specific number of people.
10. Appreciate every effort they make.
    How often do you thank your board members? Please don't forget that they are just volunteers, trying to squeeze your cause into their already busy lives. Personal appreciation goes so very far—and helps keep them motivated and happy.

The Seven (actually nine) Rules of Bureaucracy

I would guess that every American has contact at least once a week with that creature known as The Bureaucracy.  The chief lament of the nonprofit sector regarding The Bureaucracy is the maddening arbitrariness of rules, regulations, service contracts specifics, reports and other various hoops.  This drains away massive amounts of energy, time, money and enthusiasm.

Harry E. Teasley, Jr. is Chairman Emeritus of the Reason Foundation and a man with a long and successful career in business management.  In that context he spent considerable time interacting with The Bureaucracy and has come up with what he calls the Seven Rules of Bureaucracy (actually nine, but who' counting?)

Harry Teasley's Rules of Bureaucracy

Rule #1: Maintain the problem at all costs! The problem is the basis of power, perks, privileges, and security.

Rule #2: Use crisis and perceived crisis to increase your power and control.

Rule 2a. Force 11th-hour decisions, threaten the loss of options and opportunities, and limit the opposition's opportunity to review and critique.

Rule #3: If there are not enough crises, manufacture them, even from nature, where none exist.

Rule #4: Control the flow and release of information while feigning openness.

Rule 4a: Deny, delay, obfuscate, spin, and lie.

Rule #5: Maximize public-relations exposure by creating a cover story that appeals to the universal need to help people.

Rule #6: Create vested support groups by distributing concentrated benefits and/or entitlements to these special interests, while distributing the costs broadly to one's political opponents.

Rule #7: Demonize the truth tellers who have the temerity to say, "The emperor has no clothes."

Rule 7a: Accuse the truth teller of one's own defects, deficiencies, crimes, and misdemeanors.

Read the whole thing here...

Trends Shaping the Nonprofit Sector

Change is not coming....change is here.  As I repeatedly said, the time to change your buisness model is not now, it was 2008. 

Rob Reich at Stanford Univeristy puts forth five Tetonic Shifts in the nonprofit sector.  I would argue about the impacts of #3 and #4, but #1 needs to be on the agenda of every staff and Board meeting.  How will you deliver services that many people rely upon?

1. Deep budget deficits at local, state and federal levels. These deficits beg the question: how will public institutions deliver services that many people rely upon?
2. Fundamental tax reform at the federal level will reconfigure the manner in which the federal government collects tax revenue for what it does. This threatens the manner in which the incentive structure works for how charity in philanthropy operates.
3. A deeply dysfunctional political system at the federal level where polarized politics routinely wins out over the elected representatives doing something for the common good.
4. The idea that the 2010 Citizens United Supreme Court ruling has dramatically changed campaign finance in the U.S. and introduced a new way that the deployment of private resources can enter into the direct political arena.
5. Boundary blurring going on across all sectors: nonprofit, for-profit and government.

Learn To Delegate Please

The Next Generation of Executive Director will have to be serious about delegation.  Success comes from focusing one’s energy upon high value activities and then delegating down everything else.  It is the failure to delegate properly which kills most EDs….they get burned once or twice and then begin to pull back everything under their control…adopting the attitude “If you want something done right, do it yourself”.    That’s a career killer.

If you have to delegate a task or project,  understand these key principles in delegation

• Can they do the job?  Be sure to select someone capable of performing the task under typical circumstances and the period involved.
• Do they need any additional training to do the job?  What support do you have to put in place to ensure they “have what it takes”.
• Do they have the authority to do the job?  Make sure they understand the freedom they have to make decisions as well as the boundaries.  This includes budget authority.
• Do they want to do the job?  Not every task has to be joyous, but if you’re delegating the unpleasant jobs to the same person time after time you may encounter morale problems.
• Do they understand the desired outcome? Everyone should agree upon the specific results to be achieved.
• Is there enough time to  achieve the goals?  Nothing kills morale like being challenged with a goal but not given enough time to be successful.
• If they have to supervise or coordinate others, do they have the people skills to lead?  Note that the Executive Director was hired to lead people…so you better be sure those you delegate to can lead too.

"ReThink The Pink": breast awareness industry runs amok

Pink is now a marketing titan.  In the cause of beating breast cancer, the color permeates all sorts of consumer products as well as events.   Even the NFL made the leap in a big way, devoting a whole weekend slate of games this year to a pink theme (even as pink trimmed equipment looked ridiculous on 350 lb linemen).

What's often left unsaid is what a rich and lucrative industry breast cancer awareness has become.  Six Billion Dollars a year.  To put it into perspective, fundraising  in the aftermath of Hurricane Katrina topped a little over $7 Billion.  But that was a one-time event.  This is $6 billion year after year after year.

Naturally this type of money is like chum in the water for sharks.  One example is the Coalition Against Breast Cancer. CABC offers virtually nothing to the cause after taking in millions. This charity offers all the pitfalls of charitable giving. The New York Attorney General called the charity "a sham." Over a period in which they raised $15 million the leadership of CABC took home $9.1 million in salary and benefits. The telemarketing firm took $3.5 million for its services. You can do the math on the rest.

But The Big One....the one with the Top Of Mind brand name is the  Susan G. Komen Foundation.  The Komen brand can be found cross marketed with a wide array of consumer products ranging from yogurt to automobiles.   You've seen it.  In fact, recently you've seen it in a different light due to one of those occasional flare ups in America's Culture Wars.

While the debate raged around women, abortion, and whatever, a number of people began to comment on the internal operations of the Komen Foundation. According to financial documents Nancy Brinker (founder and sister of the late Susan Komen) took home $417,000 in salary in 2010. This is not an extraordinary salary for  an organization which grossed $420 million, but $3 million for travel and $28 million in office and consulting fees is.

While the problems at Komen are not exclusive to this type of nonprofit,  the Foundation suffers from what ails many other breast cancer charities.



Among the 1%

Nancy Brinker not only founded the effort in 1980, but presently serves as Komen’s Board Chair and its CEO.  This creates a  Founder's Syndrome , which can be a serious problem for a nonprofit, just ask The Second Mile.  The Board Chair must have an arms-length relationship with the management operations of the organization. In her dual leadership roles at Komen, Nancy Brinker is both recommender and decision-maker on all foundation matters.   Highly unethical....bordering on illegal. 

To exacerbate the problem Nancy Brinker is able to pack both the staff and board of Komen with those that are of similar mind. Members of family of leaders are on the board. This gives the appearance of an insiders club similar to the interlocking loyalties which have governed Wall Street.

So while the Susan Komen Foundation tries to repair it's image in the wake of the Planned Parenthood fiasco,  donors and supports should be asking much tougher questions about the ethics and values of its leadership....and whether it is time to withhold support until they ReThink The Pink 

Stop acting like a deer in the headlights and get busy reinventing your nonprofit

We Are Out Of Money ....and if your nonprofit isn't working to reinvent itself you're going to get left behind.

The federal government is facing record budget deficits and interest payments to service its rapidly accumulating debt.  When you factor in that 1/4 of state government funding and 1/3 of local government funding come from Washington, D.C., the pinch will be felt everywhere....from highways to schools to local parks.

The Boomers are starting to retire, which means Social Security and Medicare will chew up larger percentages of an already bloated budget.  Moreover, state and local governments have their own pension bomb to address...$3 trillion in unfunded pension and retirement liabilities.  As early as 2017, these will be eating up 27% of the Pennsylvania state budget.

Finally, American households are saturated with debt....nearing 95% of GDP.  They lack wiggle room to give more.

Economic growth is needed, but don't expect that alone to cure your ills. In order to make good the losses from The Great Recession as well as bring the federal budget into balance, our economy would need to grow at 7-8% annual rate for the next 15-20 years....an unheard of level, even during the boom following the Second World War.

The world is screaming at us: The Status Quo Is Not An Option. With shrinking dollars and growing needs, every nonprofit needs to reinvent its business for the coming austerity.  Even if you’re not the direct beneficiary of public funding, please don’t assume that you don’t need to think about these cuts. The competition for foundation grants, major gifts, and fee-based contracts will skyrocket as those whose public monies are cut look to other funding sources—like yours. Performance is the best way to protect your organization and meet the growing demands that are coming your way.

Are you job searching?

Ultimately, there are only three questions the interviewer wants answered....

1.  Can you do the job?
2.  Will you love the job?
3.  Can we tolerate working with you?