“Nonprofit Follies”

“There are thousands of nonprofit organizations. Some by design.” – Anonymous

This article is about nonprofit organizations [NPOs], primarily start-ups. Over the past 24 months, the author has worked with newer, start-up NPOs that were seeking volunteer writing talent. A by-product of this was the opportunity to observe — how NPOs work and some ideas for improvement. And, admittedly, this experience is based on a sampling of NPOs, not an exhaustive study. Still, there were odd consistencies even in this small study.

In turn, I was building my portfolio, writing (which I love) and hopefully helping the NPO move the ball down the field. Sometimes, it was anything but. Both in terms of connecting WITH certain groups, but also the screening and hoop jumping with organizations who said and thought they needed a writer. Turns out, they needed a strategist, but their pride seemed to prevent them from admitting this.

MORTALITY

Like the restaurant business, where everybody who can cook thinks they can run an eatery [they can’t], the mortality of NPOs is high. According to the Urban Institute’s National Center for Charitable Statistics [NCCS], of the 50,089 nonprofits registered in 2005, 64% are still registered and 28% reported financial activity [the standard measure of whether a nonprofit is active]. Source: “Ben Carson’s Unsupported Claim that 9 out of 10 Nonprofits Fail,” in The Washington Post, by Michelle Lee, 10/26/2016.

So, three quarters of nonprofits will be out of business in ten years, meaning they will not be financially active. The classic definition of business organizational health. Sort of like respiration or blood pressure in medicine.

So, what is going on that leads to such a dismal outcome? More importantly — how can you be in the successful one quarter? And do the odds indicate an incredible waste of time and resources?

Interestingly, the nonprofit industry gave rise to scholarly journals (Nonprofit Quarterly, The Nonprofit Times, Journal for Nonprofit Management), an army of consultants and awards (Nonprofit Innovation Awards, Nonprofit Organization of the Year, and many others qualified with “Nonprofit Division”) to codify the movement.

Perhaps these supporting groups, themselves, are the biggest success story of NPOs. Or, to be less snide, perhaps they are largely responsible for the surviving quarter?

MISSION

 

There’s a story that goes…a tribe was preparing to conduct a Lion Hunt, and were banging drums, chanting and dancing wildly around a bonfire. A traveler wandered by and inquired what was going on. “We’re having a lion hunt” was the reply. “Oh. Do you suppose you’ll get a lion?” The answer: “Unimportant. We just want everyone to know we’re having a lion hunt.”

The same seems true of NPOs. They seem less concerned about the success of the mission [children, cancer, saving the rain forest] and more about BEING a non-profit. Now, to be fair, maybe that realization kicks in later, in subsequent years when grant applications need to crisply identify a string of successes. But in the beginning – bah, why bother?

501(c)(3) is a section of the Internal Revenue Code that allows an organization to receive tax-exempt donations. 501(c)(3) also allows donors to claim deductions on their personal or business tax returns. Finally, there are some grants that require applicants to be 501(c)(3) qualified.

501(c)(3) is not a “category” like Health and Beauty Products nor a type of business structure. And yet, great energy goes into the qualifying process. Those receiving their 501(c)(3) designation seem singularly gleeful, then trot off to worship at the Altar of Nonprofits. All this could be distracting and premature.

Truth is, the new organization is a business and could be reported as a Sole Proprietorship on their tax return, without the 501(c)(3) designation. Keep it small and tightly focused, and maybe add 501(c)(3) later, if you even need it.

View as Step 2, and for now — get a successful track record established. Although 501(c)(3) does convey a certain legitimacy, a crisp mission statement and series of solid accomplishments seems a better differentiator. Particularly if the mission resonates with supporters.

Instead, the newly minted 501(c)(3)-centric organizations bury themselves with corporate layers and titles. The founders might have had for-profit experience and assumed the same rules and names would give them credibility. At one of these smaller NPO Start-Ups, I actually had someone titled a “Human Resources Specialist III” chasing me, insisting on completing forms before we could even determine nature of the assignment and mutual interest.

STRATEGY/GOALS

I’ve always admired Minnesotans for their incredible work ethic – based on my experience working with colleagues in St. Paul and reading one of my favorite authors, Garrison Keillor. So I was enthused to be considered for some volunteer writing support for a cancer group in Minnesota. In the shadow of the Mayo Clinic – it doesn’t get much better than that.

But I always first take a step back and ask “So what?” A tough, but fair and revealing question. Also sort of a qualifier – would my work have any chance of making any sort of impact, or even see “the light of day”? The world has a lot on its plate, and a lot of competing noise. Almost a din. And in the NPO world, since volunteer work was “free,” there wasn’t much value assigned to it.

Sarcoma ranks low on the incidence level. Near the bottom. But higher incidence among children, so the emotion and support for the parents starting this group and painfully losing their daughter must’ve been incredible. Add to that, the good natured, “heads down,” Minnesotan work ethic where they immediately do as asked. Without flinching.

But you need to ask: Are the goals reasonable, and reachable? Are there ways to leverage our activities and get some “lift” from other organizations – possibly those who travelled this road ahead of us? How can we differentiate ourselves from the 501(c)(3) clamor of “pick me, pick me!” for funding consideration?

You owe it to the organization. And to yourself.

But, the asking wasn’t well received. In fact, probably resented at some level.

DON’T EVER, EVER SPEND MONEY

There’s almost a mantra in NPO’s – “spend no money.” Not sure this extends to salaries for executives and staff. Almost self-flagellation – “spend no money!” “We’re not worthy” [of “Wayne and Garth” SNL fame]. Also works when you break out the tin cup, but begs the question: since you don’t spend money, why are you collecting money?

Now, undoubtedly this plays well for the stewardship angle. We run a tight ship, and if it’s not free it doesn’t get done. But the point is – “money makes the world go around” and “it takes money to make money.” Not a lot, but certainly for strategic purposes.

I designed a fundraising campaign for “No kill animal shelters” in Florida. Our campaign would reach 125,000 pet owners in Florida and we conservatively expected a $50,000 campaign yield, on a $1000 investment. But five self-avowed “no kill” sponsors “could not/would not” [from Green Eggs and Ham, by Dr. Seuss] pony up $200 each for the email mailing list required to reach this highly targeted list. Plus, it would continue to get the word out about no kill shelters and their ugly truth [4000 healthy animals a day are destroyed nationally at kill shelters].

You can’t save yourself rich – even NPOs need to take a few small, calculated risks. Show the world that you have vision and drive. You are not only worthy of their consideration, you deserve it. You’ve earned it.

OVER-ENGINEERING

In another NPO model, there was a headquarters location in Chicago and a number of chapters based in major cities across the country. There were detailed [almost full-time] job descriptions, weekly national conference calls, a separate email system exclusively for the organization, a Google documents network, two weekly mandatory on-site meetings, mandatory [online] training, submission of biographies and headshots and even attendance requirements which terminated volunteers for two absences or three tardies in a 90 day period.

Now, in their defense, this group was in the performing arts category, so some of this regimentation was probably to protect ownership of work product – scripts, copy, staging, venues, etc. However, that defense also suggests a fear that your volunteers are out to rip you off. Not a healthy mindset. Plus, all these requirements affected the ability of the new chapter to assemble a flight crew, taxi and take off. We were too occupied with HQ dictated pre-flight checks.

CURRENCY

Lastly, since money is removed from the NPO equation, you need to re-think what motivates people? I can think of three, in priority order: #1 – to make a difference, gain traction in an increasingly indifferent world. #2 — a group that is fun and enjoyable, a way to connect in an increasingly isolated world. And #3 – your title, especially if it conveys high rank and responsibility.

On that first and most important point, it can be more quality than quantity.

In my work in the death category, in twenty years I figure I have solidly reached about 100 people through my writing, performances or word-of-mouth. “Life after life” messaging offers hope and healing in some of the darkest moments ever encountered. Initially, I thought – only 100? What difference does it make? I had expected packed rooms, clamoring for my message. But over time realized the “taboo” label society has slapped on the death category – making ALL efforts an uphill battle.

My (childhood, school and now Facebook) friend Gloria told me “but Todd, 100 is HUGE!” And that kept me going.

Sort of like that story of the parent walking with the child on the beach after a storm. The beach was littered with starfish who were blown ashore. The child picked one up and threw it back in the water. The parent asked: “Honey, look at ALL the stranded starfish. What possible difference can it make?”

The child smiled, pointed to the splash in the water and said: “It made a difference to THAT one.”

CONCLUSIONS

You might be thinking “how do I get into that one quarter survival segment?” Or, is an NPO the right opportunity and use of resources? Obviously, for three quarters of NPOs, it wasn’t. So you might consider:

• Start with a crisp, well-thought-through business plan. You ARE after all, a business – that happens to be involved in charity work. Your plan shouts “we’ve thought this through.” Even better – we’ve been implementing it for two years and it’s working!

• Integrate “for-profit” characteristics into your NPO world: how to make money [donations], how to track money [accounting], and how to tell your story clearly, convincingly [marketing]

• Minimal personnel – prepare to wear many hats. Make sure the chemistry is right as you make additions. Forget titles – they can be divisive and make you appear stilted. Use single ACTION words, like “Membership” or “Volunteer” followed by “guy” or “gal.”

• Is there passion in your mission? If not, DON’T DO IT!; Almost like some of those career selections where you feel “called”: ministry, teaching, nursing and funeral directing. Money not ever a consideration [except as a deterrent]. You do it because you love it. You do it because you HAVE to. You couldn’t imagine your life WITHOUT it.

An economic “production function” states that everything requires energy, time and money. These three inputs then convert into a useful output

. If you don’t get it right, you go belly-up in the business world or just wither away in the NPO world. Volunteers and donors quit coming and don’t return calls.

If you are going to misuse energy, time and money – recognize it [on your own or through observations of others], admit it and redirect your wasteful efforts into something more appreciated and valuable.

Like weaving potholders. Everyone needs a good, new potholder. Check your own kitchen – chances are there’s at least one frayed, burnt, limp, worn-out potholder.

Plus, weaving them is productive. Colorful. And fun.

Not always the case in NPOs.

Well, at least three quarters of them.

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