Facing a Changing Not-for-Profit World
A wise man once said there are three kinds of people who either manage or are on boards of not-for-profit organizations:
- Those who say “I see change is necessary and I will make it happen”.
- Those who say ”I embrace those changes and I want to be part of what is happening”.
- Those who say “what happened?!”
Unfortunately too many not-for-profit leaders are in the third category. This means they are always in reactive mode and frequently when it’s either too late or requires crisis action.
Right now it would be hard not to be aware of the significant changes taking place in the economy in general and not-for-profits in particular. Regrettably, now is when the trickle down theory really does work. As corporations and governments deal with drastically reduced revenues they are looking for ways to reduce costs, and that trickles down to the not-for-profit sector very quickly. As inward cash flow declines, outward cash flow automatically has to be trimmed, and one of the first targets is corporate community investment budgets, followed by government grant budgets. As people lose their jobs and face hardships in the Alberta energy sector, it becomes difficult for companies to justify continuing the same level of charitable support.
In addition, one of the most notable changes that has been occurring even before the collapse of oil prices, is that of donors looking for demonstrable Return On Investment formulas for their charitable donations. It isn’t just about “what recognition will I get?” or “I will feel good for supporting this cause” – both of which are important -but more about “how will my donation make a difference, how will you manage it, and what will the outcomes be?”.
So how do not-for-profits not only survive but thrive in this new landscape? It will not be by implementing kneejerk reactions such as immediately cutting staffing and programming, although some of that will likely be necessary, but by rethinking staffing and programming and by a new approach to fundraising and overall development strategies. In other words, thinking differently.
What does this mean? First of all, it means embracing change and bringing new solutions to new problems. As has been said about Generals who are often fighting the last war instead of the current one, not-for-profit boards too often apply old solutions to new problems and a changed world. Adapting to this new set of circumstances means changing the way scarcer resources, financial and human, are deployed, not just pursuing a slash and burn policy which eventually could lead to a total shutting down of the organization. It means not just cutting off investment in everything and eliminating all expenses except minimal programming, which is the traditional way of approaching a downturn, but rethinking what investment should be made to meet changed circumstances. For instance, investing in new ways of raising funds or obtaining sponsorship for programs, new ways of being competitive, new ways of partnering with other not-for-profit organizations and new ways of presenting a compelling case for the organization.
There are approximately 24,000 not-for-profits operating in Alberta, and about 9,000 of those are registered charities who can issue charitable receipts. Every one of those organizations, from very large to very small, is chasing the same shrinking pie and clamouring for the same dollars. Not all of those will survive the current downturn and increasingly competitive environment and the ones who will are the ones who either have the capability to think innovatively and survive, or can invest in finding the expertise to provide different thinking. Being a “good cause” is no longer enough – your good cause has to stand out from thousands of other good causes.
It is not necessarily about discovering totally new directions, but more about looking at the existing model of the organization differently and from a new direction. One new direction that many not-for-profits are overlooking, but which can make a big difference, is that of thinking differently about the role of the Board of Directors. These are usually composed of private sector volunteers who bring varying degrees of commitment to their responsibilities as a Director. In the good times, it is only necessary to perform high level governance, but in these new and tougher times Boards need to be more involved in setting strategic directions and helping to find new sources of revenues. They need to be more involved in such decisions as whether or not to hold events, whether those events can continue to be strictly “friend raising”, and they need to take on a direct role in selling tickets and bringing donors to events. That may mean changing the board composition and recruiting more activist members. It also means rather than wholesale elimination of positions, looking at them differently so that some become combined and others are part time or contracted.
George Bernard Shaw once said “people who say it cannot be done should not interrupt those who are doing it”. In our world the not-for-profit survivors will be those who see the need for change and do not leave it to others to do the necessary different thinking and do not keep saying “we tried that once and it cannot be done”. The survivors will be those who think differently and positively and act.