Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Monday, December 27, 2010

What's Your Non-Profit's Bottom Line?

From Guest Blogger Nick Cooney. Nick is the author of "Change Of Heart: What Psychology Can Teach Us About Spreading Social Change" (, and the founder and director of The Humane League, an animal advocacy organization based in Philadelphia, PA.

Is your non-profit succeeding in its mission? How can you tell?

Large for–profit corporations spend millions of dollars each year gathering data to compare the success of different approaches in advertising, audience targeting and product offerings. The success (or failure) of each is measured by the impact it has on the company's bottom line. Imagine what would happen to businesses if, instead of using a bottom line to analyze their success, they used the type of information commonly cited by non-profits:  anecdotal evidence, raw output and how much they cared.
Dear Pepsi Shareholders,    

This has been a very successful year for us indeed! We know Pepsi is the best cola out there, and we are 100% committed to getting the whole world to realize it too! Our achievements this year included a $50,000 awareness-raising advertising campaign on buses, billboards, and in magazines. These eye-opening ads highlighted our higher sugar content (yum!), attractive bottle design, and our Pepsi Generation credibility. We also launched "PepsiKids2.0," an online social forum where youth can get together and let each other know why they're committed to drinking Pepsi. Enclosed is a picture of Bobby Withers, an 8 year-old boy that had been drinking Coca-Cola his whole life. Now, he and his mom are buying a 12 pack of Pepsi each week! With your support, Pepsi is helping to create the world we all wish to see: a world where everyone drinks Pepsi.
As laughable as such a letter would sound coming from a large corporation, for many non-profits this type of analysis represents the farthest they’ve gone in measuring their impact. And it's not just small non-profits that have failed to take a bottom-line approach to their work. A study of one hundred and fifty-five major foundations (each with over one hundred million dollars in assets) found that only eight percent could describe the specific types of information or data that led them to believe they were likely to achieve some of their goals. The study, conducted by the Center for Effective Philanthropy, found that instead of hard data most foundations used anecdotal evidence to demonstrate the effectiveness of their programs. Only thirty-nine percent used any tools or indicators whatsoever in assessing even a portion of their work, with even less (twenty-six percent) using indicators or tools to assess all of their work.

Anecdotes and reports of our non-profit's raw output can’t give us clear insight into how much good we've done. Even worse, they provide no guidance on how to be more successful in the future.  Setting a bottom line enables us to quantify the amount of good we’re doing now and compare it to the amount of good we could be doing by using other methods, messages, or strategies. Without a bottom line (and gathering data to see the impacts our different decisions have on that bottom line), we'll be relying on assumptions and guesswork when assessing our accomplishments and deciding what to do next.

What exactly is the bottom line for non-profit organizations? Generally speaking, it is the amount of good that we have created in the world. Our bottom line should be the number of people (or animals, or portions of the environment) whose lives we've impacted.

A sound bottom line for a family planning organization would be the number of unwanted pregnancies they had prevented that year. "This year our non-profit reduced the teen pregnancy rate at Northeast High School by 10%." A follow-up question would be, "Which one of our programs contributed the most to that drop: distributing free condoms; in-class presentations about the importance of contraception; or hanging posters around the school encouraging students to make all sex safe sex.

A sound bottom line for an environmental organization would be the amount of harm they've prevented from happening to the environment. "This year our non-profit prevented 100 tons of greenhouse gas emissions; how can we increase that amount next year?" Follow up questions would be "Which of our programs contributed most to those greenhouse gas emissions: encouraging the public to carpool to work, or encouraging home owners to reduce their electric use? And how much money did we spend per ton of greenhouse gas emissions savings with each of those two programs?"

The Jameel Poverty Action Lab at the Massachusetts Institute of Technology has applied a bottom-line focus to analyzing poverty-reduction and public health efforts around the world. Founded by M.I.T. economist Esther Duflo, J-PAL’s mission is to conduct randomized trials of aid projects to see which are successful and which aren’t. Much like clinical drug testing, J-PAL researchers create both a test group for a particular project and a control group and then analyze what impact the project had. 

For example, in trying to prevent the spread of malaria is it more effective to give away bed nets (which protect people from malaria-carrying mosquitoes) or to sell them at a low price under the assumption that a person is more likely to use a net if they had to purchase it themselves? To find out researchers divided a segment of Kenya’s population into two groups, giving away free nets to the first group and selling the nets at low cost to the second group. Researchers then tracked how many of the nets were put to use and how they impacted the spread of malaria in each of the two groups. The result:  free nets did more to combat the spread of malaria than low-cost nets, at least in Kenya.

J-PAL’s scientific analysis on the effectiveness of different aid programs should serve as a model for advocacy organizations. Any non-profit serious about creating change should be collecting data on how effective their programs are (and whether they’re effective at all), and basing all decisions around their bottom line. Heartwarming anecdotes and emotional appeals are perfect when soliciting donations, but a by-the-numbers analysis is what's needed to make sure we're putting those donations to good use.

For more on the role that research can play in helping non-profits succeed, visit

Monday, November 29, 2010

The Importance of a Good Success Story

From Guest Blogger Christina Delzingaro. Christina has over 20 years of success as an entrepreneurial non-profit executive. A graduate of Randolph-Macon Woman’s College and of Averett University, Christina has her undergraduate degree in developmental economics and a Masters of Business Administration. After many years as Executive Director for a regional non-profit, Christina created Sage Strategies, a management consulting firm ( The firm specializes in strategic planning, board development, financial management, program planning and evaluation and grants management. As Principal, Christina takes the lead in Sage Strategies’ projects for small to mid-sized non-profits.

An old non-profit. Slogging along. Doing good work for children. But doing it the same way for the past 30 years. Operating from a perspective of poverty, tragedy and crisis. The loss of major funding brought them to a real place of poverty and crisis. The Board had a decision to make -- close the doors, or do things differently. They chose change.

The first step was to hire an Executive Director with the ability to make the programming changes necessary to address the needs of children and families -- the changes funders and long-frustrated community partners had been asking for. The goals were to improve outcomes for children, increase funding and increase community awareness. They asked me to help.

In order to become relevant, the organization had to change its context: its reason for being, its image, its story. They needed to move from being problem-focused to solution-focused. Mostly, they needed to stop being such a downer -- the pity party had to end. Everyone wants to be part of success 0 we're drawn to what is positive. We had to create a success story. Here's a quick look at six months of strategic, happy, thinking:

The old mission statement:
"We recruit, train and support volunteer host home families to shelter abused, neglected and at-risk children and youth."

The old mission statement describes what the organization does day today - recruiting and training volunteers to act as host families. But to what purpose?

The new vision/mission statement:
"We envision a Commonwealth in which all children and youth have the opportunity to experience the lifelong benefits of a safe, nurturing family. Children and youth deserve families in which they:
  • are safe from harm,
  • feel valued and worthy of love,
  • are free to heal and grow,
  • can learn to love and to trust others, and
  • have the opportunity to build lasting relationships with adults.
Our mission is to improve the lives of at-risk children and youth, by providing a network of volunteer host families."

Wordy, and still a work in progress, but it shifts the focus from the tools used to do the work to the organization's core purpose. From process to outcome. And from problem to solution.

The old outcome measures:
  • # families recruited
  • # families certified and active
  • # speaking engagements
  • # newspaper articles
  • # brochures distributed
  • % placements made within 24 hours
Under the old mission, the organization's measures of success were focused on the size of its volunteer corps, not on how services created change for children. And so staff spent time in a flurry of activities (and a lot of counting). They also collected stories of children served as a way to measure impact. The stories told of abused children being taken in the middle of the night to stay for a few days with loving host home families. But few of the stories had endings. Because of the way programming was provided, the organization only had access to the children during the 1 to 21 days of their stay with the host family.

The new outcome measures:
Volunteer Families' Vision for Children & YouthIndicators
... are safe from harm- No reports of abuse or neglect
- Parenting Stress Index
... feel valued and worthy of love- Rosenberg Self-Esteem Scale
... are free to heal and grow- Casey Life Skills
- Service Plan Goals
... can learn to love and trust to others- Multidimensional Scale of Perceived Social Support
... and have the opportunity to build lasting relationships with adults- Family Reunification

The new mission and changes to the program design provided a basis for more meaningful measures of program impact. One of the most significant changes in the programming was to provide more respite services, in order to reach children and families before abuse or neglect occurred. The second change was to extend the program to include on-going case management and family reunification services.

Now staff spend time assessing the strengths and needs of children and families, linking them to host families who are best situated to provide the specific supports needed, and measuring the changes services are making over time. With this information, we will be able to create a story arc that leads to family reunification and stability. A happy ending.

The old name: Volunteer Emergency Families for Children
The new name: Volunteer Families

Working with a great branding firm, Birch Studio, we quickly saw that the easiest way to remove the sense of crisis from the organization was to remove the word "Emergency" from the name.

The old logo:
The new logo:

The creative team at Birch Studio chose to spotlight the relationship between a child and caretaker. This focus on individual relationships side-steps the issue of visually defining a family while tying into the tagline, "Give your heart to a child." The sketchy quality of the logo has an informal and approachable feel. The open circle shape is a complete arrangement that feels inclusive but not stifling.  The adult's arms partially encircle the child's, signifying protection and security. The adult shares their heart with a child; the heart is open showing the possibility of new relationships.

The old Case Statement:
"Each year, thousands of children are abused, neglected or at-risk of abuse or neglect. We provide the safe haven children need to protect them from further damage inflicted by living in an existing or potentially hostile environment. Once a child is placed in the safety and security of a host family home, they may begin their journey toward a future free from brutality."
The new story:
"When crisis strikes, many of us rely on relatives, church or friends for support. But for some parents, there isn't a safety net. And for others, the safety net is extremely fragile, with parents often depending upon elderly grandparents or distant relatives to care for their children.

"Volunteer Families is here to help. Our statewide network of volunteer host homes expands the community safety net. Volunteer Families gives parents the time they need to address the issues that created the family instability, and provides a safe and nurturing temporary home for their children.

"For biological and adoptive families, we are a safe alternative to child welfare custody, significantly reducing the number of children entering the child welfare system. Volunteer Families can provide an overwhelmed and resource limited parent with a safe, temporary home for their children, without threat of losing custody. For foster parents, respite services can reduce family stress and increase the stability of placement for foster children."

The new story is one of success. It includes the elements that Douglas Gould & Company and The Topos Partnership identified in a recent study as being critical to telling stories in ways that "generate interest, excitement and a sense that progress is possible."

Volunteer Families is only three months into its new identity. There is still a lot of work to do. We don't know what the final result of the changes will be. But the sense of excitement and progress is felt throughout the organization. New partners have come to the table. New services are being provided. A funding partner recently cited Volunteer Families as a model for strategic change. The grant that was lost was restored -- at three times the previous level. The story is not over.

Thursday, October 21, 2010

Trash Your Management Style

As regular readers of this blog probably know, I do a lot of Interim Executive Director jobs. Basically, an organization that is in a transition period between chief executives brings a consultant, such as myself, in as a temporary leader to help them through tough period, be it a merger, or a financial crisis, or just a pause to strategize between EDs.

Recently I was having a meeting with the board leadership of an organization that is considering hiring an Interim ED, and one of the questions they asked me was, "What is your management style?"

That's a typical and harmless enough interview question, but I always wonder how other people answer it. Do the micro-managers actually admit to enjoying looking over the shoulders of their staff as they work? Do the hands-off people really sit there and say, "I just trust that staff is performing"? I've seen many "experts" give the advice that you should answer this question to match the company's style (if they're command and control, you be too).

But my answer is usually more zen-like: my style is to have no style. Or, rather, the manner in which I prefer to manage is a far distant runner-up to the manner in which the employee needs to be managed.

For an example, let's take two of the senior managers who reported to me in my last interim assignment. Both highly intelligent and extremely capable, creative, and motivated. But very different people with very different needs.

One was new to her position and was still very fresh out of college. While she was full of great ideas and eager to implement them, she was also uncertain in some situations and in need of a mentor. She felt best knowing that we had a set weekly meeting where she could go over her plan for the week and get any input she needed. Of course, if she had questions in between, she'd also be welcome to pop into my office and go over any pending issues, and I'd also casually check in with her as we went about our week.

On the other end of the spectrum was the manager who'd been in her job for about a decade. Still loving her job and always excited about new ways to improve services, but very comfortable in how to go about it. For her, having a regular meeting scheduled (yet another meeting!) with no set agenda other than "what are you up to this week?" would be an unpleasant distraction. As long as she know she could come to me with questions or issues as they came up, that was enough.

Of course, some people prefer to be left alone, but really need supervision... but I'll save those stories for another posting. The idea is that the best "management style" is to be able to put your own preferences aside and find the best approach for any individual employee and situation.

At least, that's been my experience. How about you?

Monday, October 18, 2010

Simple Answer: Boredom and Burnout

I was just checking Twitter, and saw a question from @GailPerrync: "In general, only 1 in 10 donors keep on giving indefinitely. Why?"

Well, I'm sure Gail has her own well-researched reasons why, but the answer that popped right into my head was, "Boredom & burnout; not being shown how their $$ led to progress."

Think of it, year after year, you've been giving a particular nonprofit. And, year after year, their appeal letters have been pretty much the same. The children are still hungry, the water is still filthy, and they're still asking you for another $50. When does it get better?

It's been said a thousand times before, by many more famous nonprofit consultants than myself, but donors prefer to invest in success than to be guilted into giving, yet again.

Do the appeals your organization is sending out make these mistakes? Or are you first explaining what progress you made since your last ask, the results that money led to, and what exactly you'll be doing with the next donation? Did you remember to thank the donor, and let them know how instrumental they are in your continued success?

Or did you just tell them how awful everything has gotten, and expect them to still be paying attention?

Join the conversation over on Twitter - I'm there as NonprofitKenG.

Wednesday, October 13, 2010

Managing Expectations Begins with Your Members and Clients

From Guest Blogger: William Biggs. William is Communications Officer for Safe Haven, Inc., in Thomasville, Georgia, a free-lance communications and strategy consultant, and in his spare time, a part-time graduate student. View William's LinkedIn profile, or email him at william AT safehaveninc DOT org.

The first opportunity to perform a task does not always succeed. When it does, the next opportunity should become easier and hopefully more successful. Funding requests work the same way. This opportunity arrived at my request with deadline approaching. I have always enjoyed writing and most of my prior writing was for either personal relationships or financial analysis.

In this case, the task required a major re-write to provide the HIV humanitarian organization the best chance to receive crucial yearlong funding. Delivering food and humanitarian care for people affected by HIV and AIDS in South Georgia is important. It is clear this population needs quality, nutritious food and the donor was willing to provide it - for the right project.

The non-profit's executive director was certain the project needed $27,000 and was reluctant to push for more. The project's purpose, scope and numbers show much more is needed - $77,000 to be exact. The shocked director asked how she would justify such a request.

Seventy-seven thousand dollars ensures the project's success but chance of funding decreases as amounts increase. A lesser amount would probably receive funding but unless the amount is sufficient, the project has a 100% chance of falling short. We decided the donor may not provide the requested amount but we went with it because it was the smallest amount that could succeed.

Our write-up considered all the parties: the donor, the target population and us. Your organization is probably very similar. Both of us want the job and must balance, and manage capacities and capabilities - on paper and when the project is won.

Celebrate when the check arrives because the work begins when you deposit the check. In this case, the check did arrive - at 100% of request.

Your organization has the money, the staff and a plan. What could go wrong?

The funding win places you as an incumbent and incumbents usually win. The donor has not called, written nor even hinted of any concern so there cannot be much need for concern, right?

Our organization learned the hard way after we won a $100,000 grant the next year for a new project from the same donor. We followed the agreement exactly as the donor required, tracked successes and challenges and reported to the donor. One success should lead to another and we applied to repeat the successful program.

Here is a recap of my conversation with the director:

"What do you mean we were denied?"

"We were denied."

"Wow. That hurts."

"We provided everything the donor required. What do we do?"

It turns out it is what we did not do. We did not anticipate and we did not exceed.

We made the mistake but prevented its transition into failure. New procedures communicate meaningful and tangible expectations and results to donors and members. This is work but it is worthwhile.

How we turned lessons learned into results:
  • Each member relationship starts with a two-party agreement
  • We value member input and seek their input twice monthly
  • Simple and thorough documentation validates mutual needs and successes
  • Revised the information cycle to begin and end with our members
Every relationship is a cycle and each stakeholder needs at least one more stakeholder to survive and succeed. Our members are our end-users just as your members are your end-users. Without their input, a great project may receive funding one year but maybe not the following year. Ask your members how they define success before you begin your next project.

Copyright 2010 William Biggs

Thursday, October 07, 2010

Reading the Fine Print on Micro-Donations

October is Breast Cancer Awareness Month, and we're seeing pink everywhere to remind us of that fact. Many charitable organizations are involved in this effort, and many have entered into cause marketing agreements with various corporations to receive donations on products sold with the pink ribbon logo. Donations are mostly small, such as $0.10 for purchasing specially marked packages of Dannon Yogurt, to several dollars on a new pink Kitchenaid blender.

Cause marketing is not new, but it's certainly been receiving more and more attention. One recent survey found that "Mothers and Young People Are Most Likely to Buy Products Tied to a Cause." Certainly, they make the purchaser of the product feel good about their choice, and certainly it makes the producer of the product look like a good corporate citizen. But how effective are these arrangements for most nonprofit organizations as fundraising vehicles?

There's no question that such co-marketing agreements work well for certain large, national organizations, such as Susan G. Komen for the Cure. They are "The" breast cancer charity to many people as a result of their leadership in cause marketing. But how about your local food pantry?

As a result of writing this blog, barely a week goes by when I do not hear from a marketing organization that would like access to my readers to promote "a fantastic new way to raise money for your cause." Typically, it involves the nonprofit selling some product or service, unrelated to their mission, and keeping a small percentage of the sale. "This product sells itself," I'm always assured in these emails.

You'll notice, I haven't been passing those along to you. It's always been my opinion that these small-scale cause marketing agreements are a distraction. Grassroots organizations need to maximize their interactions with their supporters, and squandering those contacts with a sale they only keep a small portion of comes at their loss, no matter how good the product might be.

I also believe it's misleading the donor as well. If I were planning on giving you a $25 donation, and you sell me a $25 item, in my mind we're done. I've given you the budget I had for you. That you are only keeping $3.75 of that $25 doesn't occur to most donors. Selling instead of raising not only distracts, it decreases your potential donations.

Here's my rule of thumb:
"When you ask for small donations, you'll only get small donations."
You can quote me on that.

But this subject comes up for me today as a result of Twitter. This morning, my twitter feed was full of warnings to "read the fine print." It turns out that it's not so easy being pink, and consumers are starting to catch on that "cause marketing" may be more marketing and less cause.

Many of the tweets were forwarding on that "Just because you bought the pink blender doesn't mean you made a donation." The fine print indicates that you must first register your product on a certain website before Kitchenaid passes along any of their profit to Komen.
See the fine print? just because you bought the Pink blender ... on Twitpic
And Dannon Yogurt? You also need to enter a code from each package lid on the website for your ten cents to pass through to the National Breast Cancer Foundation. And, they'll only pass on the dimes up to a maximum donation of $1.5 million.

Of course, $1.5 million is nothing to sneeze at, and going Pink for October is wonderful for raising awareness of Breast Cancer. But as a cautionary tale for small, locally-based nonprofits, it's instructive. Before entering into any marketing agreements, read the fine print. Both from your organization's perspective, and from the point-of-view of your donor.

How much money are you really likely to raise? How much staff time is it going to take? Would you raise more from your list with a simple ask instead of a sale? Is the product something you really want to be associated with? Are there maximums on donations? Any loopholes or gotchas that might prevent you from collecting all that your donors think they've given you? In the end, who will benefit more, your organization or the company you were promoting?

Tuesday, October 05, 2010

Continuous Improvement for Nonprofits

From Guest Blogger: Brian Leitten. Mr. Leitten is an experienced non-profit leader and consultant, chief executive and attorney.  He provides consulting services nationally to non-profit leaders from his office in Port Orange, Florida.  He can be reached at Leitten Consulting -

Non-profits need to practice the principles and techniques of continuous improvement (CI).  Better yet, they need to make CI part of the fabric of their organizations.

At its essence, CI is a repeatable process for improving processes.  While CI was principally developed in the for-profit world, it has broad application for non-profits.  Every operation is and will remain a collection of regularly repeated processes.  CI embraces the philosophy that those processes are ripe for improvement, even if they have been improved in the past.  Practically speaking, I’ve never met a process that can’t be improved by at least 15%.  That is a very significant number, translating into 1.2 freed up hours in an 8-hour work day.  CI not only frees up time that can be applied to other value-added functions -- it eliminates waste; reduces errors and mistakes; and improves quality of service – all desirable outcomes for a successful non-profit.  In any economy, non-profits need to run efficiently.  In the current down cycle, even more so.

The philosophy of CI is built up over time.  To instill it into an organization and make it last, the direction must come from the top down.  Active senior management involvement delivers a clear message that change is good and that experimentation and even occasional failure is okay and encouraged.  Management must also make it clear that improvements that result from CI will not result in job losses.  A solid promise that displaced workers will be retrained or reassigned to other value-added jobs is critical. 

At the same time, CI success comes from heavy involvement by those who know the processes best.  In the majority of situations, those who work the process daily know where processes fall short and where improvements can be made.  They may not have volunteered their observations or solutions in the past because they weren’t given the chance to; because they didn’t feel comfortable making suggestions for change; or because they feared they would eliminate their own jobs.  Over time, dedication to CI dispels these concerns and starts weaving CI into the organizational and cultural fabric.

CI comes in many different forms.  Individuals can work alone to improve their processes, using their own initiative and driven by the desire to make their work lives better.  Several employees can come together to start a project to address common issues and problems.  Projects work particularly well when it is recognized early in the process that the likely solution will require a time gap where someone separates from the group to build a critical tool(s) needed to complete the project.  Structured events represent the highest level of CI involvement.  They are scheduled in advance with a high level of awareness and recognition across the organization.  Events work well where rapid improvement that might otherwise take weeks or months is desired in a short time frame.  Events create focus and critical mass teams that can bust through barriers and deliver immediate results.

An example will illustrate the improvements that can be achieved through CI.  I’m just finishing a project with the FREE Foundation, a Virginia non-profit that collects and refurbishes rehab mobility equipment and gifts it to uninsured and under-insured individuals in need (

FREE is currently expanding its services to two major metro areas, Richmond and Hampton Roads.  Gifting is expected to more than double in the coming year.  Chapters report gifting and outcome data monthly to the parent organization.  The current process extends over one week each month and involves substantial hours of rework (re-entry of data) and inspection (review at the parent organization).  Realizing that this wasted time will grow with the expansion, FREE sought to improve the data reporting process before the new chapters came online.  A team of four (two involved in the monthly data reporting process, myself and the Foundation President) studied and mapped the current process, evaluated alternatives and laid out a plan to implement a significant improvement.  It was decided to build an online data collection and reporting tool that would allow each chapter to enter their monthly data remotely.  Once the data was entered, the tool would instantly roll up the chapter data into an organization-wide report.  As new data was entered every month, it would roll up year-to-date and quarterly statistics on gifting and outcomes, at the chapter and organization levels.  No data re-entry would be required.  Results would be instantaneously available.

I was assigned the task of building the tool.  Once a working model was ready, it was made available to the team for online testing.  Real-world data was entered and improvements were suggested and errors identified.  Several versions of the tool were built and tested.

The results reflect the value that can be created practicing CI.  The one-week period that was required each month to see final reports was reduced to a single day.  The parent organization and the chapters had instant access to all of the data.  All eight hours of data rework/re-entry and half of Executive Director’s inspection/review time were eliminated, simultaneously improving the quality of the data entered.  Outcome data entry, which was typically delayed by several days due to the priority of gifting data input, can now be scheduled as convenient and rolls up instantly.  The online tool incorporates training notes at the exact points where data is entered, further reducing data entry mistakes and errors in interpretation of data.  Color coding is incorporated to insure that each chapter enters its data in the correct locations.  Before and after process maps can be viewed at

In summary, CI is an extremely useful process that can add significant value to any non-profit.  Senior management needs to understand CI and make a visible commitment to support its implementation by everyone in the organization.  Over time, CI can become one of the fundamental tools that drives ongoing organizational success.

Brian Leitten, guest blogger, can be reached at Leitten Consulting -

Thursday, September 30, 2010

What Would You Say if You Were Me?

Alternate title for this post, "What you got to say for myself?"

What am I talking about? I'm offering you a chance to write the Nonprofit Consultant Blog for a day. I am interested in occasionally having guest bloggers come in and take over. The topics should be of interest and benefit to those working in the nonprofit sector. They can be new tools and tips for fundraising, using social media, advocacy, industry news and happenings, or just plain old boring good management.

Some may want metrics, how many people will see your post... This blog has average visitors of 185/day or 5,200/month on the site, plus another 284 who receive blog posts by email, and an unknown number who read it in RSS form (ie: Google Reader, etc.). And, of course, your post will be fully credited to you, with links to your blog/twitter/etc.

You can contact me at ken at to pitch your blog ideas. I look forward to sharing this space with you!

Tuesday, September 28, 2010

Social Media Training for Supporters

Here's an interesting item for those of us obsessed with social media. On the Jerry Brown for CA Governor YouTube channel, along with posting various interviews, campaign ads, biographical bits, and so on, the campaign has now posted a "Social Media Webisode" -- a short training video on how Jerry's supporters can help get the word out. The first webisode is on promoting the Brown campaign via Facebook:

This is a great example of using social media, and a brilliant strategy. Faced with a challenger who has so far spent over $119 million of her personal fortune, making hers the most expensive campaign for statewide office ever anywhere, Brown has not only made good use of social media to get his message out, he is harnessing the full power of social media by turning supporters into advocates.

Far too many of the social media campaigns that I see, whether political or for products or nonprofit organizations, treat facebook, twitter, etc., as one-way broadcast mediums. They neither engage the audience in dialogue nor tap into the extended networks of each of their followers. Brown 2010 has now done both. That the video is well-produced and gets to the point in barely over 90 seconds also helps.

Is your organization simply pushing random updates to your followers without thinking about how they will use it, or explaining how they can help your cause by re-tweeting, "liking," and commenting? When a supporter posts something to your facebook wall, or asks you a question with an @tweet, how long does it take for you to respond? Do you respond?

Whether or not you support Jerry Brown for Governor, or even live in California, take a look at the training video and imagine how you might be able to train your followers to be an army of advocates for your cause and for your organization.

Wednesday, September 15, 2010

Shooting The Fundraising Dog

Way back when I was barely a teenager, National Lampoon magazine was the utmost in risque humor. One famous and classic example of their pushing the limits of the acceptable was their January 1973 cover featuring a dog with a gun pointed at his head and the text, "If you don't buy this magazine, We'll Kill This Dog."

It was distasteful, it was outrageous, it was offensive, it was shocking, and it was, ultimately, just plain funny. It's also a great example of the fundraising strategy used at one time or another by nearly every one of us in the nonprofit sector. Don't believe me? How about this email subject line that just landed in my inbox: "Urgent Request: More than 24,000 children will die today but you can help."

This is what we've all been taught to do: Illustrate a need and create a sense of urgency! Buy the magazine or the dog gets it.

We all know the importance of our organization's mission, and understand our dependence on the good will of others to fund the work, but don't you think it's time to put the guilt trips aside?

Perhaps I just contributed to the death of 24,000 children, but I deleted that email. I didn't even read it first. Now, had the headline told me about 24,000 children saved (fed, clothed, housed, schooled...), I would have been curious.

Lead with your success and your strength, and I will want to be a part of that. More bad news and guilt, I really don't need right now. I'll bet a lot of other donors feel this way as well. Let's put that poor dog out of his misery and put the gun down, once and for all.

Monday, September 13, 2010

Get Seen By Private Foundations

If you've done any sort of prospecting for new foundation grants, either using one of the resources from the Foundation Center or any other publisher, you've certainly come across those listings that describe the perfect prospect - interested in your mission, located nearby, lots of money to give - but then you come across those fatal phrases: "Applications not accepted," or it's partner, "Contributes only to pre-selected organizations."

Many, if not most, of the private, family foundations seem to have this notice in their listings. These foundations are typically small (under $1 million in endowment), have no full-time staff, and no means of effectively screening and evaluating the volume of material they'd receive if they did open themselves up to unsolicited applications. And so, they typically make their grants each year to the same small set of nonprofits that their Board members are already aware of. The only way in is to know a family or Board member personally.

Foundation Source is a company that has, for about a decade, worked with these private foundations, providing management and back-office services, advisory services, and online research and application services. They manage over $4 Billion in assets for more than 900 foundations, granting out about $250 Million each year.

The majority of the clients that Foundation Source serves are those smaller, family foundations that currently do not want your unsolicited application. And they are about to make it a whole lot easier for nonprofits to be seen by these mysterious, but important, funders.

Foundation Source will soon launch it's Access website, which, among other things, will allow nonprofits to set up organizational profile pages, and Project Proposal pages, that will potentially be seen by the 900+ foundations managed by Foundation Source. You will also be able to associate your organization's profile page with different Cause Pages (such as Emergency Relief, or maybe Hunger).

When the private foundations, already using Foundation Source for their research and granting, are searching for an organization working on certain topics, there you are with your profile and project proposal pages, and they will be able to simply "click and fund," or, at least, invite a formal application - which will be a single online application for all 900+ foundations.

Sounds too good to be true? Of course, there is a hitch... Following the formal launch there will be a fee for you to post Project Proposal Pages (although maintaining your organizational info will be free). When I spoke to representatives from Foundation Source they were still working out the pricing details.

The good news, though, is that if you pre-register now, before the launch on October 1, you will have complete free access to all the site features through April 30, 2011.

Whether or not Access will provide a good return on your investment after that will depend on what fees they charge and whether or not their foundation clients really use the system to find projects to fund. But, the free trial is certainly a no-brainer, and sure to provide a positive ROI.

To pre-register and get the six-month free trial, go to and sign up before October 1.

Friday, September 10, 2010

Is Facebook Causes A Good Investment?

A new posting on the Blue Sky Collective blog claims that "Facebook Causes Continue to Show Little Promise as Fundraising Tool." In the post, they examine the Nature Conservancy's Cause page and finds this:
"Today, they have 286,000 members and have raised nearly $388,000!  Sounds great, right? That's about a $1.36 per member.  That's pretty awful. ... If I were a nonprofit manager, I would think twice before investing more time and money into Causes."
Here's my response that I posted to the blog:
I think you're looking at the wrong numbers. Whether they've raised $1.36 or $2.40 per current "member" is insignificant.

I want to know how much did they spend to raise the $388,000? Was that from current donors who gave through Facebook rather than their mail appeal? Or was a significant amount of that from new donors?

The cost of acquisition per donor is an important part of deciding whether or not the Facebook strategy is paying off. Obviously, if it's more than $1.36 then there better be some other value for the organization using Facebook Causes other than the income.

But, I'm willing to guess that the the cost per donor is quite small, and, once the Causes page is up and running, the marginal cost for each additional donor acquired goes down.

I'd love to hear from somebody from the Nature Conservancy with more data, and whether or not they feel they've gotten a good ROI from Facebook Causes. They're no bunch of dummies. I'm guessing they've done the analysis and are satisfied.
What about you? Has your organization set up a Facebook Causes page? How much have you spent, and how much have you raised? Did it come from your communications budget or your fundraising budget? Are you satisfied with the result?

I think the jury is still out, and I worry that we're making decisions about the worthiness of new tools for fundraising based on testing it in the worst economy in 70 years. I say, keep on testing, keep on communicating. The full ROI may not be there yet, but when the economy does return, you don't want to just be starting your social media strategy then.

Saturday, August 28, 2010

Nonprofits, Foundations, And Capital Formation

 On Sean Stannard-Stockton's Tactical Philanthropy blog, he commented that "One of the most bizarre criticisms of the Giving Pledge is the idea that it will hurt the economy." He quotes Forbes columnist John Tamny, who wrote:
“But while it’s exciting to contemplate the giving nature of Gates and Buffett, if their true desire is to help their fellow man, they should hoard every penny of their significant wealth..."
Stannard-Stockton's  response is demonstrate how nonprofits contribute to the economy, saying, in part:
"Nonprofits employ people, nonprofits buy goods and services from for-profits, nonprofits are an important economic engine of the US economy. In fact, nonprofits are a bigger portion of the economy than many other industries."
Certainly, for all the reasons mentioned in his post, nonprofits contribute to and benefit the economy of our nation and our individual communities.

But, in relation to the Gates-Buffett pledge, there's another "dirty little secret" of why the Forbes readers (assumed captains of industry) should support philanthropy of this scale: Endowments.

Of the money pledged by the 40+ billionaires, most of it will not be heading directly to our community service organizations; it will be sitting in foundation endowments, being granted out at a rate of 5% each year.

With that 5% barely being the earnings on the endowment, where's the principal of that endowment going? It's being invested. It's purchasing stocks and shares of mutual funds. It's in long-term bank accounts, giving banks the capital to loan to small businesses.

If John Tamny (and Forbes Magazine) is sincere when he says that "money saved and invested constitutes capital... and... capital formation... naturally stimulates job creation" then he should be encouraging more billionaires to tie up their wealth in foundation endowments.

Yes, nonprofits help build the economy, both through our direct actions assisting in our communities with job training, treating addiction, feeding the hungry, distributing gently used clothing, and offering counseling, support, and affordable housing (not to mention enriching our lives through the arts, cleaning our environment, protecting our children, etc.), but our sector is also responsible for the creation of dedicated capital for investment, something that our nation desperately need right now.

Stand up for the nonprofit sector; the most productive sector of all.

Thursday, August 19, 2010

The Engaged Board Member

Here's a bit from a twitter exchange between @npmaven, @alexandrapeters, and @GailPerrync:
"A perpetual question! ... but I always wonder, what does "engaged" mean for a board?"
Unfortunately, my answer takes a little more than 140 characters, so it will have to be a blog post.

My first thought on "engagement" is that it is demonstrated by involvement beyond speaking up at board meetings: committee work, volunteering for tedious tasks (envelope stuffing anybody?), sending out minutes on time...

But that's simply activity. To some extent, it's busy work. Engagement goes beyond that, to less tangible, but far more critical, elements.

For board members to be fully engaged, they should not just care about the organization, but about the cause. The nonprofit's mission must be something that touches them. Even if they weren't on your board, they would still be reading articles about the issues you work on, and discussing them with their friends, and doing so in a way that demonstrates both knowledge and understanding.

An engaged board member doesn't need to be asked twice to solicit their friends for a donation, and doesn't shrink and hide when asked to speak to the press or elected officials on behalf of your cause.

The engaged board member is an activist, an advocate, and a leader, as well as a hard worker who shows up on time having read the board packet before the meeting.

What does "engaged board member" mean to you? Post a comment here, or join in the conversation at twitter: I'm there as "NonprofitKenG."

Monday, August 16, 2010

The Power of Zilch: An interview with Nancy Lublin

One of my pet peeves has always been when well-meaning, but somewhat clueless outsiders tell us in the nonprofit sector that we need to be "more businesslike." Yes, there's much that each sector can learn from the best examples in other sectors of the economy, but I've always believed that the corporate sector should be learning from us when it comes to efficiency and getting the most out of limited resources.

Now, to our rescue, has come Nancy Lublin, CEO of Do Something and founder of Dress for Success. Nancy has just published Zilch: The Power of Zero in Business, with eleven practical lessons for business leaders on how the not-for-profit sector manages to leverage the power of Zilch into mission success, by doing more with our brands, our external people, our customers, our boards, our staff, our finances, and our stories (and all with no budget).

After reading this great book this summer, I had the opportunity to speak with Nancy by phone this morning. Her lessons and leadership are great examples, not just for business leaders, but also for our peers in the nonprofit world.

Ken Goldstein: First off, thank you! It's about time somebody stood up for our sector and told the simple truth that our managers know how to do more with nothing than most corporate managers can do with million dollar budgets. So, I hope the folks in the marble-lined corporate boardrooms listen. But my readers are all in the nonprofit sector. What lesson or takeaway do you want them to get from your book?

Nancy Lublin: It applies quite well to small not-for-profit start-ups and entrepreneurial organizations, because they've got less to begin with. The good news is that there's many ways to leverage. The book is about leveraging everything. Like external people. Who delivers your mail? Who are your neighbors? Do you know if everybody you come into contact with is marketing for you? Are they communicating your mission to the people they meet, or are they saying you don't know what's going on in your office? Is your purpose clear enough that they can help with word of mouth marketing and spread the word to the people in their circles?

Many in our sector are saying, "We've already gotten by on Zilch, now we have less than Zero." In the current economic crisis, is there any additional advice you have for nonprofits, or is it "do more of what we've always done"?

I think they've been doing this really well for along time, my one piece of advice for nonprofits is to remain focused on your purpose, don't flirt outside your space. People say, "I'll fund you to do this other thing," and it's easy to get tempted, but it ultimately leads to disaster. It's called following the money and it's not a good idea.

Your advice on partnerships, to choose partners that fit your brand, is great. A lot of smaller nonprofits are under pressure these days to enter into mergers and alliances based on dollar considerations only. How much consideration should branding receive in merger talks?

I'm a big fan of M&A activity, and would like to see more of it happen. There is a lot of duplication in the not-for-profit sector. What I'd like to see is that it's the strongest, not necessarily the biggest, that survives. Often it's the shiniest star that survives, and that's not necessarily the best. There are lots of organizations that are beloved that are actually lousy. I think that what needs to happen in the nonprofit space is what happens in the venture capital space, they look at an entire sector see what works best before picking a winner to invest in. I keep encouraging funders and organizations to look at an entire space before making a decision.

I can't tell you how many times I've had to grit my teeth and not lash out at those who think they're helpful by telling us to "be more businesslike" - How do you handle that?

We've heard that so long, and there are some things they're right about... Some things... But there's ways they can be more like more nonprofits, and not by being soft and cuddly, but by adopting some of our business practices. Like incentivizing employees without throwing ridiculous paychecks at them.

When you talk about "doing more with external people" and turning every contact into "brand ambassadors" what are some of the creative ways you've seen small, grassroots nonprofits do this?

I think the most important thing to start with is a clear, focused purpose. Are you saying you're going to end all homelessness? You're not going to do it. Pick something you can achieve, like reducing homelessness by 20% in a specific area: something achievable and measurable. Something people can say "I want to be a part of this," and get on board. This is the first thing. Simplifying your organization to make it easier for people to get on board.

You have a great story in the book with the lesson of not confusing business with friendship, where a donor was basically paying you to be her buddy and listen to her problems. This can often be a very fine line to walk. Do you see it being crossed by many fundraisers?

Apparently there was a study that the Chronicle of Philanthropy put out a month ago about sexual harassment of fundraisers; it's apparently pretty common.

So what can nonprofit managers and fundraisers do, other than just be aware of the problem?

Taking meetings in an office is a good place to start. We've always assumed that you've got to "establish the relationship" with a lunch or dinner, but it's easier to say "no" to a friend. In an office, they may say "yes" just to get you out of the office.

In the chapter on "doing more with your staff" you're very clear about hiring people who are passionate for the cause and that job interviews should include personal questions to determine that. Personally, I love interviews like that, but I find more and more organizations that have been scared by lawyers into only asking standard, dry, job-duty-and-skill related questions. What reassurance can we give nonprofits that asking about hobbies is legal?

Obviously, you want to check with your HR and legal department, but everything [a potential new hire] puts out publicly is fair game, so I check their facebook and twitter feeds. You're hiring a complete person, not a robot. I wouldn't hire somebody with less than 500 facebook friends. I want their networks. If you're hiring somebody who won't pull in all those people, hire somebody else who will. We've gone a bit overboard with lawyers telling us how our businesses should be run. And that's spoken as somebody who's been to law school.

Should all nonprofits be using social media (twitter, blogging, facebook, etc.)?

Absolutely, everybody, yes, yeah!

When I teach grant writing and fund development, I always try to emphasize how important storytelling is - that numbers served or in need can help build a case, but that it's putting faces on those numbers that gets signatures on checks. Your chapter on "doing more with your story" really shows the power of that. What's your favorite story from a small, community nonprofit?

I think at Dress for Success my story of my great-grandfather [leaving me the money that started the organization] really resonated with people. It was really hopeful, it was about making a success in a new place, and it really related to the mission of welfare to work. And I hadn't planned on it, it happened organically.

How can my readers help spread your message?

One thing you can do to do learn how to do more with less is to buy a copy [of Zilch] for yourself, and buy one for a friend. The fact that every chapter ends with practical questions really helps. It's just a real smart, savvy business book.

Yes, each chapter ends with eleven self-evaluation questions, and there are eleven chapters. What's up with you and eleven?

The end of each chapter has eleven practical questions that should really make you think about your own work place and help you evaluate how you can do more with it. The reason it's eleven is to go one further, because we at not-for-profits always have to go above and beyond. That, and I'm obsessed with Spinal Tap.

Friday, August 06, 2010

What's Better than 40 Billionaires?

There's been a lot of media attention this past week for the Giving Pledge, an effort organized by Warren Buffett and Bill & Melinda Gates "to encourage the world's wealthiest individuals and families to commit to giving the majority of their wealth to philanthropy." The publicity and many of the news stories focused on the first forty billionaires to sign the pledge, and the approximate dollar value of those pledges (at least $120 billion).

Of course, this is wonderful news, and we all applaud each of the billionaires signing on to the pledge. but, as Jeremy MacKechnie points out on, Small Change Adds Up to More Than a Billionaire's Bucks. Jeremy writes,
"While some of the money will go directly to nonprofit organizations, the majority will end up in the private foundations that the donors started themselves, like The Bill & Melinda Gates Foundation, and will then be funneled into other nonprofits through grants or used to support the foundations' programmatic work."
Of course, the full potential of $120 billion won't be donated to those foundations at one time, and once endowed, the actual payout of it as grants may be over the course of many decades. So, yes, this may increase over-all foundation spending ever-so-slightly, but it's not the immediate cure-all donation that some of the media hype is implying. In the idealist article, Jeremy has another important reminder:
"Individual donations (like yours) currently make up 75% of U.S. philanthropy while foundations make up only 12%. Collectively, individual donations are more than six times larger than those of our friends in the billionaires' club."
So, what does that mean for you and your nonprofit, and more to the point, does it mean that the Billionaires Pledge is worthless to us?

No, the Pledge is still of great value to all of us in the nonprofit sector, if we put the appropriate spin on it when asked by our donors or the media how it will effect us.

The key is that Gates and Buffett never intended for the billionaires to cure all our problems. Their intention was to lead by example and to encourage giving by all, not just billionaires. As Larry Ellison said in his statement, "Warren Buffett personally asked me to write this letter because he said I would be 'setting an example' and 'influencing others' to give... I hope he's right."

So, when you get those questions about whether your organization will benefit from the Pledge, remember its purpose: "To encourage giving." Your message must be a positive one thanking all your small donors, and recognizing that they're your strength, not bemoaning that you can't get your hands on all that billionaire cash.

Of course, even without the prodding from Buffett and Gates, research has borne out that regular folks have always been more generous than the wealthy when it comes to charitable giving. So, with a little more encouragement from the Billionaires Club, who knows what you can do with your individual giving plan this coming year!

Bottom line, 40 billionaires pledging to give half of it away is really very nice, but small, individual donors are still the backbone of any fund development plan. Of course, if you need help with the fund development plan, you can check out my book on the subject ;^)

Reminder, I'm now on twitter under the name NonprofitKenG.

Friday, July 23, 2010

Now Tweeting ...

First, a quick reminder that there's still a few days left to enter the 2010 Getting Attention Nonprofit Tagline Awards. Each year I'm pleased to help promote this fun approach to encourage and recognize great marketing by our nonprofit community. This year - for the first time - organizations can enter a tagline for their program (product or service), fundraising campaign and/or special event, in addition to their organizational tagline. But hurry, the entry deadline is July 28 - See to enter now.

Since my posting here a couple of weeks ago, taking a nonprofit to task for "over-tweeting," it has come to my attention that I am not "practicing what I preach" or modeling proper twitter behavior or, frankly, even tweeting at all from an account associated with my consulting practice. I've been on Twitter for a few years with a personal account, but I've kept that separate from my professional life.

Well, that is being corrected. I have opened a second twitter account - #NonprofitKenG - for professional purposes. I will be tweeting about nonprofit issues, news, and ideas, as well as linking back to this blog when new posts are added.

To see if I follow through on my own tweeting advice, simply go to and click on the "Follow" button.

Thursday, July 22, 2010

Nonprofit Mergers & Alliances: An interview with Thomas A. McLaughlin (part two)

Thomas McLaughlin is Vice President for Consulting Services for the Nonprofit Finance Fund, a nationally recognized expert on nonprofit mergers and alliances, having consulting in over 200 such collaborations, and the author of the excellent and indispensable volume Nonprofit Mergers & Alliances, now in its second edition.

I recently had the opportunity to speak with Mr. McLaughlin about his book and his experiences with nonprofit mergers and alliances. What follows is part two of our discussion:

Ken Goldstein: I've heard that, on average, only 1/3 of organizations that enter merger negotiations actually wind up merged. In my own experience, I've been successful in 2 out of 3 rounds of merger negotiations. What do you find are the most important factors in beating the odds and having a successful set of merger talks?

Tom McLaughlin: I don't know whether it's 1/3, 2/3, or 1/2... because we don't have standardized reporting, or any reporting at all, whereas with the FTC for-profit companies have all sorts of reporting to do. How do you define success? If you're talking about the very beginning, and just talking and exploring, that might be 1/3 successful, if people are sincere in the discussion, but there are many things that can intervene... if you start the clock ticking when organizations "get serious" and start to plan something, enter the implementation planning stage, I think the percentage goes up to 75%. Until that point it's just discussion, once you commit, things start to fall into place and you start making decisions that have lasting effects and consequences. In the future this activity will be frequent enough that organizations will say "we're always talking" but that doesn't mean we're always "getting serious." I would say that once you get over that first hurdle of the feasibility stage, your chances are quite high. Because there's something in it for both organizations. These are voluntary organizations; organizations in this sector cannot and should not be forced to merge. This should be a voluntary process from the ground up and should not be somebody else's grand plan. I think it's stronger when two organizations choose to put their groups together and follow through.

Given what you've just said about mergers needing to be voluntary, is it right for United Ways or Community Foundations or other funders to be cheerleaders for the trend, and to be encouraging mergers?

I think funders should be advocating collaboration, but not forcing any particular merger. They're independent voluntary organizations. Outside matchmakers don't have the inside knowledge and could push for a potentially bad result for all the right reasons. Funders can create an atmosphere that encourages talking, fund it... one of the best things they can do is provide Critical Juncture Financing; external financing provided to defray the cost of collaboration between two or more organizations. Those two parts are essential: collaborating organizations - to facilitate the process, not to ordain it. In Boston they call it a catalyst fund, these are efforts on the part of forward thinking foundations to provide what otherwise might be a pretty heavy lift for organizations to come up with on their own. One thing worth noting here, this is asking foundations and funders to do two things they're not used to doing: one is to pay for collaborative activities, not a strategic plan for one organization... the second is that this is not funding for programs, it's funding for management and infrastructure, and that's okay, it's the only way to get some of these going.

I really appreciated that in your book, you're clear about the differences between nonprofit and for-profit mergers, including issues of ownership, motivation, and the lessoned need for absolute secrecy around the talks. Do you find that a lot of board members, whose main lives are in the corporate world, are surprised or uncomfortable at these differences?

Yes, absolutely. For-profit board members who are bankers tend look at the nonprofit sector and see a lot of little banks. For-profit board members who are manufacturers see a lot of little factories. That is a problem because the incentives, the processes, the reasons for doing things, are very different in the for-profit and nonprofit sectors. The vast majority of public organizations tend to focus more on doing back-room collaborations for savings, but we already keep our overhead as low as possible for a lot of reasons. Say you have overhead costs of 8%, which is very low. If you can save 10% of 8% you're a genius. If you go into a nonprofit merger to save money, you will be disappointed. At some point you'll say, "We're doing all this to save $25,000? And we might not even come up with that kind of savings?" A sliver of a sliver is not a major savings.

You also do a bit of "myth busting" in the book - particularly around unrealistic expectations of immediate administrative saving, as you've just said, and that "only failing organizations merge" - How do you convince strong organizations that mergers or alliances are to their advantage with lowered expectations of quick payoffs?

It ultimately has to be strategic in nature. Everybody talks about strategic alliance. Strategic is a popular label to apply to things, but it really does need to be strategic. You may or may not regard 2% savings to be a lot of money. But if two dance troupes get together and they talk strategically about the ability for having bigger shows, to attract more media, to produce original shows... I can't put a value on that, if its' worth 2% or 5% or 10%. But if you can put a strategic vision like that on it, it's hard to say, "Eh, not worth it."

Wednesday, July 21, 2010

Nonprofit Mergers & Alliances: An interview with Thomas A. McLaughlin (part one)

Regular readers of this blog know that I've been involved in two successful nonprofit mergers, as well as a third attempt that was never consummated, and I've written several blog posts on my feelings about nonprofit mergers. So, when I received a message asking if I was interested in speaking with Tom McLaughlin, author of Nonprofit Mergers & Alliances, I jumped at the chance.

McLaughlin's book is a must read for anybody interested in the topic, or any nonprofit leaders (board or staff) who are considering any sort of merger or alliance. I found myself nodding my head and saying, "Yes, yes," throughout reading the book, and wish I'd had it during my three sets of merger negotiations. The following is part one of our talk:

Ken Goldstein: You certainly make a strong case for mergers and alliances as a strategy for growth, cost containment, reaching a sustainable size, and simply surviving in these times. Are there any times when you advise against a merger or alliance?

Tom McLaughlin: Oh, sure, absolutely. Here's the starting point... the two reasons that are most cited as reasons why organizations don't get together or it falls apart and doesn't work are, ironically, the same in both the nonprofit and for-profit sectors, and that is, that they can't decide who the CEO is going to be and culture clash. I'll give you an example of what I mean by culture clash, it's rooted in what the organization does and how it does it. Years ago I was working on a merger between a VNA (Visiting Nurses Association) and a hospice. I was working with the VNA, and they had had a number of conversations with the hospice down the street, part of the community, and it never worked. Never any animosity, it just didn't happen for different reasons, and the primary one was that they were just different cultures, two very different models for how they do their missions. With a VNA, it's a health care model; death is failure. With Hospice, it's a social care model; death is part of life. I believe that was at the heart of why they couldn't get together.

That was a specific example of why a particular merger didn't work, but is there a time in the life cycle of a nonprofit when a merger not advisable?

Yes, probably a small handful of those situations. The one that's most common is when one, or both, of the organizations is so financially stressed, that they are only paying attention to getting cash in the door and not brining in enough of it. The value of their programming is likely to be similarly stressed and declining. At some point an organization in a downward spiral like that, the programs become too much of a risk, just too neglected to be salvaged by another organization. An example of decision delayed tragically. In those cases, it would have been preferable to think about this a lot earlier.

While the main thing people are interested in, and the book focuses on, are mergers, you make the case for alliances at several levels below the full merger, with your CORE (Corporate, Operations, Responsibility, Economic) model. Does lower level collaboration always have to lead to full merger, or can it be an end in itself?

It certainly can be an end in itself, and that is what I try to communicate with the CORE model. You don't enter an alliance and then ask why. You have the question and build the alliance around that. It its whether it's a question of how to strengthen services or how to save money (etc.) that leads to the appropriate level of alliance or merger. It's entirely possible that organizations would create some kind of alliance first and move on to a merger; it's a nice progression if it does happen that way, but it doesn't have to.

Related to organizations entering mergers and alliances, there are organizations that come into being as pseudo-independent nonprofits, but they're under the fiscal sponsorship of another group and enjoy many of the benefits of an alliance. In the past, this was seen more as a "nonprofit incubator" approach, and the organizations were expected to eventually blossom and go out on their own, but I see that more and more, they'll embrace fiscal sponsorship and alliance as a permanent ideal for single-program nonprofits. Do you have any comments on this?

That's a relatively rare phenomenon, but it does happen. It takes a long time to incubate an organization, in any case, the fiscal sponsorship model has some characteristics similar to a management company or management services organization (which I have written about), where there is 501(c)3 that provide management services to others that are, effectively, subsidiaries. The most effective way is to lock the boards together, and it's kind of a merger under a different name. And I think that is one of the least understood models in the nonprofit sector. Why I say that, one of the attractive features of that generic kind of model is that both entities retain their brands and the connection occurs mostly in the backroom area, if that's the case, and there's not a board interlock, then you've got two separate entities with separate brands. You can have the same situation in the management company model, where if you have three subsidiaries you can three different brands, plus the brand of the parent corporation. I think we need to get out of the one corporation, one program, one site model. I think there are shades of gray here that quickly become black and white when we talk about changing corporate structures.

Thursday, July 08, 2010

"I had to unfollow because..."

From time to time I've used this space to encourage nonprofit organizations to use social media to help get their message out, connect with supporters and community, and engage in conversation. A good social media strategy can include all or any of blogging, Facebook, YouTube, Twitter, or any number of other platforms.

Last year, to the question of "Should Your Nonprofit be on Twitter?" I answered an enthusiastic, "Yes!" But in that posting, I emphasized that "Twitter requires listening, as well as frequent posting," and that ignoring that warning could cause your social media strategy to backfire. Yesterday, it did backfire for an organization I was following.

This organization had always had a habit of tweeting in spurts, posting five to ten links or comments at a time, then nothing for 24 hours. I understood this, as the person doing the tweeting has many other duties as well, and she did a good job of listening and responding to others.

But what happened yesterday was a spurt of several hundred tweets within a three hour period before I had to click "Unfollow."

Regardless of how useful and valuable the information in a tweet might be, and regardless of what other benefits such a promotion might bring, she forgot to consider the effect it would have on those who are already their supporters and followers.

For me, it rendered Twitter useless for those several hours before I pulled the plug. Within the hundreds of messages from that organization, I lost messages from other groups and individuals, and there was no possible way to read all the tweets this one group was sending - nor could they have been paying any attention to replies during this period.

Overwhelming is not informing, and drowning out is not communication. Even well-intentioned tweets or emails can become spam when the tools are abused.

This morning, they have posted an apology and explanation, promised a return to "normal tweeting," and I have re-followed. But if my loyalty to this person and this organization had not been so strong, I would have un-followed quicker, and not come back.

So, how often should you tweet? As far as spurts, I'd say that if you need to tweet more than five times in a 30 minute period, or more than twenty tweets per day (not counting replies), you should have written a blog post instead.

A handful of useful tweets each day, plus responding to supporters tweets, keeps you part of the conversation and relevant, and - most important here - not annoying.

Wednesday, June 23, 2010

How Many Board Members?

This is a question that came up in a conversation last week, and from time to time; "What is the appropriate size for a nonprofit board of directors?" Related to that question is, "Does it need to be an odd number?" and "Is it okay if we run on fewer for a while?"

The generally accepted number for most small- to mid-sized nonprofits is 9-14 members. Any fewer and you will burn out your members quickly with multiple duties, have difficulty making a quorum when even a couple of people are ill or out-of-town, and you will fail to build in new leadership development into your regular board activities. Many more than that and meetings can get bogged down in side conversations, factionalization, and members will begin to feel that they're no longer contributing or making a difference.

Many larger nonprofits do have large, 30-member boards, but upon closer examination, they're not typically the true governing body. These larger boards serve more in an advisory or fundraising or even just a visibility function, with the real work being done by a more manageable governing or executive board.

Another typical bit of generally accepted knowledge is to keep your board to an odd number of members. This is supposed to help you avoid repeated tied votes on important issues. Personally, however, I feel this is ridiculous advice that misses potentially much larger issues.

First of all, having an odd number of members is no guarantee of how many people are at any given meeting, as there's almost always going to be at least one absence. And, seriously, how many times has your nonprofit board been stuck in a tied vote on an important issue? If it is more than once, I'd say your problems run far deeper than simply having an even number of board members.

Not that every vote should be unanimous - that's an equally dangerous situation to be in, good decisions are made after examining an issue from all sides, and dissent on a board should be welcome. But a board that's so divided as to have frequent stand-offs, preventing decisions from being made, is clearly lacking a strategic direction. And if the board has no agreed upon direction, how is staff accomplishing the mission, if a mission is even agreed on?

The final part of the question usually comes up when the bylaws of an organization specify a number of board members (usually a range, say 10-15), but they currently are either down to four or up to fifteen.

The higher-than-allowed figure may have resulted from a merger, bringing two boards together, or, occasionally, from considerable good luck in recruiting several talented people all at once. The new larger number is okay, if it is recognized. It is important to be operating within your bylaws. To fail to do so could bring trouble later, if board decisions are questioned on legal grounds.

A temporary resolution recognizing the larger number for a specific period of time should do the trick. Or, if you are comfortable with the new number, a permanent change in the by-laws might be warranted.

A lower-than-allowed figure is far more problematic, and like the board with repeated tied votes, likely a sign of far deeper problems that require immediate attention. This board needs to take an honest look at what they're doing wrong. Has the mission become irrelevant? Are the expectations placed on board members too onerous? Is the board leadership out-of-control and chasing good people away? Are other unaddressed issues (poor finances, staff trouble) scaring away the liability conscious? Is the current board simply too overwhelmed with other issues to do any recruiting?

The bottom line here? The rule of thumb is that 9-14 members make a manageable board, just be sure you are operating within your by-laws. Beyond that, large fluctuations in the number, factionalization that impedes progress, and inability to recruit new members are all signs of deeper trouble that needs to be addressed before you will ever accomplish your mission.

Tuesday, June 08, 2010

Interim Executive Director Cost Savings Question

I love it when I get a good question in my email that results in a good blog post. This is one of those situations.

If you're a regular reader of this blog, you know that one of the main things I do as a nonprofit consultant is serve organizations as an Interim Executive Director (IED).  When an organization is between leaders, and perhaps facing other problems, fiscal, strategic, or otherwise, they'll bring me in to run the agency for a limited term as kind of temporary CEO and on-site consultant.

Well, today I received a question from a colleague asking about hiring an IED. In part, the email asked:
... For an organization thinking of bringing in an interim executive before hiring a full-time executive, do you think there are any real cost savings to be had? My thinking is not really, it would be more to give time or focus to the organization and its next steps or to bring in a specific expertise to help move things forward? ...
My reply was:

The safest answer is to say that you're right, cost savings are not the reason to go with an interim; time to review, assess, plan, strategize, and hire the right person (or, more and more these days, merger) is.

If it's up to dollars and cents, you could really spin it either way, an IED costing more or less than a permanent ED. Let's say the organization's paying $70-85,000/year for a full-time ED [based on the type of organization the question related to]. An interim, depending on who they get and how they set their rates, might charge anywhere from $75-100/hour for their time.

On the surface, the Interim rate comes out much more than the permanent ED, but is the interim working 40 hours/week? I usually put in an average of 25-30 hours/week as an Interim. Also, the Interim's rate is the full cost. As an independent contractor, the organization is not paying the payroll taxes, health care costs, etc., associated with a "real" employee.

The bottom line is that the bottom line is not an argument for or against hiring an Interim. Getting things right is. And I'm available ;^)

Friday, May 21, 2010

Interviewed on "The Vault"

I've recently been interviewed by The Vault - an online career information and research site - about how I got into nonprofit consulting. The interview, conducted by Alex Tuttle, can be found by clicking Career Paths: Nonprofit Consultant.

I enjoyed doing the interview, and thought the questions were well thought out and helpful to others considering a career in nonprofit consulting, or just wondering what a nonprofit consultant does.

Friday, April 23, 2010

Will Your Nonprofit Lose Charity Status on May 15?

It may be April, but this is no Fool's joke. Up to 25% of the nation's officially recognized 501(c)3 Nonprofit Organizations have never filed an IRS form 990; the nonprofit tax return. That's been fine, as those organizations with income of under $25,000 have always been exempt... until now.

While smaller groups may still not required to file on an annual basis, a provision of the Pension Protection Act of 2006 included a requirement that the Internal Revenue Service revoke the nonprofit status of organizations that fail to file for three years in a row. That third annual deadline is fast approaching.

The IRS has sent out notices to thousands of organizations that may be effected and, with the lightning speed of bureaucracy, the actual de-certifications may not happen till January, but there are still likely to be small community organizations that fall through the cracks, don't get informed, and wind up with no tax-exemption.

Don't let this be your organization! If you are working or volunteering with a small, community nonprofit, make sure they've completed an IRS 990 or quickly request an extension and begin work on your filing.

I have mixed feelings about this new requirement. The 990 is not an easy form to complete. To compare it to personal taxes, it's more like the 1040 long form with extra schedules than the 1040 EZ. It frequently requires the assistance of professional accountants to complete correctly.

For an organization with less than $25,000 of income, this is quite an expensive burden and a cost way out line with their other expenses. That fact, of course, once reported properly on the next year's 990, will make the organization look inefficient and earn them poor ratings with those who analyze over-head to program cost ratios.

On the other hand, our sector is often accused of unprofessionalism and told to "be more business like." Tougher 990 standards that apply to all nonprofits is one way in which we prove our ability to manage donated funds in a prudent and professional manner. The 990 is required transparency; it is the window into our financial affairs by which we demonstrate the value of our work.

And, frankly, my own feeling is that the majority of the organizations that will be de-certified as a result of these new rules have probably ceased operating long ago. The de-certs will likely include many start-ups that never started, one and two-person organizations that lost steam and disbanded, and other dreams and good ideas that never quite made it.

Clearing these non-organizations off the rosters of legitimate charities could only be a good thing, as it will leave a clearer picture of what organizations are active, and all the good work that they are doing.

Thursday, April 08, 2010

Proposal to Funding Conversion Rates

Often, my posts here start as replies to emails I receive from readers. Today I got an email with the following question:
I have written grants for years. I believe I have been fairly successful. My grant submission in relation to funding rate averages from 6-12%. However, I just applied for a full-time position where the organization listed that it REQUIRED applicants to have a history of a 60% funding conversion rate for grants submitted.

And my reply to the reader (in part) was:

The industry rule-of-thumb I've heard is that 1 in 12 proposals gets funded, or about 8.5%, and that's in a good year.

A professional grant writer should be able to do better than that, hopefully even one in four or better, but it really all comes down to the organization they're writing the grant for, and that organization's reputation and existing relationships with foundations.

An established, larger, or older nonprofit might be only working with the same foundations year after year, and only responding to direct invitations to submit a proposal. In such a situation where nothing is sent out as a "cold call," a 60% success rate might be easily achieved, or even exceeded.

Meanwhile, a newer, start-up nonprofit might be very happy with results of one in 15 proposals being funded, as virtually every proposal or LOI they send out is an introduction to the agency and an attempt to just get a foot in the door. Relationships with foundations have to start somewhere, and the LOI is traditionally that place.

So, your question was, is it reasonable for a prospective employer to "require" a 60% conversion rate. My answer is simply to turn it back onto them. What is their current conversion rate? Do they have established relationships with funders or have they had scattered luck?

If you're preparing for a job interview, you can figure out some of those answers by going to and downloading their 990 tax returns for the last few years. Check out who is funding them, and whether the list is completely different each year, or from a stable group of sources. Are they large grants, small grants, what percentage of the budget is funded through grants?

Meanwhile, in your letter and resume, you should explain that your success rate is based on the assignment given. If they client asks for LOIs to be sent to "a dozen new funders" that it will naturally be less successful than when a client asks you to write for a specific funder who has requested the proposal.

If they don't like that explanation, then, frankly, you're better off not working for them. If your job performance is going to be judged by an unrealistic goal your tenure will be short, stressful, and unhappy. Accepting a job you can only fail at is never a good career move.

Tuesday, April 06, 2010

Merger Complete

Now that the ink is dry and the papers filed and the merger official and done, I can publicly reveal that the Interim Executive Director assignment I was working on for the past 8-1/2 months was for the Support Network for Battered Women (SNBW), and that as of April 1, 2010, Support Network is now a division of the YWCA of Silicon Valley.

We completed the merger quicker than many thought possible, but we did it well. Because we knew we had an ambitious schedule we committed early to frequent meetings of the negotiations team, open and frequent communication out to the full board and staff of each organization, and to bringing together the implementation team and planning process even before the final agreements were completed.

The transition was smooth as the YWCA's CEO and COO each began attending SNBW staff meetings to assist with updates and get to know staff early. As negotiations wound down, the YWCA Administrative Director also began spending time at SNBW to begin answering HR questions and allay any concerns staff might have about transitioning to the YW's employment.

About that time it was announced that the YW's COO would be the Support Network Interim Division Director following the closing date, and she began dividing her time between the Support Network's office and the YWCA's office before the official merger date. When April 1 came, and my services as Interim Executive Director for SNBW were no longer needed, it was simple and stress-free to transition my duties over to her and make my exit.

Because of the focus on communications and transparency we managed to avoid the pitfalls of too-quick a transition and the potential jarring effect that could have had on staff and operations. As it was, when the official date came, it was a welcome move, well-understood by all, and a positive experience. Support Network staff attended a YWCA orientation session before the closing date, and a final private celebration of the 30-year history of SNBW took place to provide staff closure to that period in the organization's life.

Of course, while this was all happening each agency conducted their full due diligence review of the other agency's operations, including full financial review, personnel records inspections, etc., and a communications plan was continually updated to guide our messaging to key funders, constituents, and community partners.

As I've mentioned in earlier blog posts, this was my third time going through merger negotiations as an Interim ED. Each time is a little different, and the lessons learned help guide the next project, and then there's more to learn again.

And now, I'm available, once again, for an Interim (or the right permanent) Executive Director position, if you know of an agency in need of my services...