Nonprofit Board Crisis

Nonprofit Leaders when there's no succession plan

Over the past several years there has been strong support by foundations for nonprofits paying attention to succession planning.  The message: at minimum, have a plan.

The Christian Science Monitor did a good job of bringing this succession point home with an article about what's next for WikiLeaks with Asange facing so many personal problems.  One big lesson: separate the organization's identity from the individual's identity.  One framing: an organization "is important not for the soapbox it provides a single person, but for the role it plays in the larger civic culture."

I think this to be good advice but way easier to say than do -- still, nonprofit Boards should pay attention.

Nonprofit Technology Myth Busters

From the Utne Reader March/April 2011 article by Frank Bures from World Ark on "why technology is Africa's latest greatest poverty fighter" I found a line I thought useful for all of us to consider when building a program or venture business plan. One interviewee, Harish Hande, cofounder of SELCO-India, a social enterprise that has sold solar lighting systems to more than 115,000 households in India stated:

There are three myths about technology: One is that poor people cannot afford sustainable technologies.  Another is that poor people cannot maintain sustainable technologies.  And a third is that social ventures cannot be run as commercial entities.

Good lessons I believe.

Nonprofit Media: Questionable Business Model and Bias

Since its steady rise, I have been very concerned or at least puzzled about the long range financial viability of the nonprofit media that is more or less replacing the for-profit media.  As we all know, the for-profit media business model collapsed with help from a variety of elements, the internet being one of the more apparent. The nonprofit media has been attempting to pick up the lossess in "hard" news using a sustainability strategy that includes lots of philanthropic support and a bit from traditional sources.

I have been puzzled first over how sustainable anyone is in an environment where wealth is not being evenly distributed and the competing demands for philanthropic support have skyrocketed while the level of resources have fallen off.

Anyway, that said, there is one more issue nicely introduced in the Seattle Times where the Gates Foundation is proving to be a major supporter of the media.  This support produces positive results but the Times also argues that "growing support of media organizations blurs the line between journalism and advocacy".

This is an absolutely critical issue that for the moment really needs to be kept at the front of the plate as a check-point (i.e. how much do these gifts really influence what is printed) but at the same time, I'm thinking this is one of those "the only thing wrong with tainted money is there 'taint enough of it" situations, particularly when thinking about how shaky the sustainability model may be.

Nonprofit Exec Fired

Here's  a nice follow-up and more indepth look at the Muhammad Yunus story I posted earlier today.

Thank you Kevin.

Nonprofit Founder Fired

Nonprofit execs do not always get fired for poor performance.  Really high profile execs can get fired for all kinds of reasons having much more to do with politics and relationships than performance.

Take for example the recent firing* of Muhammad Yunus, the Nobel Prize winner and founder of the Grameen Microfinance Bank (ok, maybe not technically a nonprofit, more of a social venture).  It's really hard to say why he was just recently let go by the National Bank which owns 25% of his the microfinance bank.  One story is that he aged out, legally.  Another is that he was being punished for trying to start a competing political party.  And yet another is that he had created lending policies that weren't in the best interest of his target audience (an actual performance-related issue but not one an exec could do on his own).

So, the simple lesson is that a board can indeed fire their exec, even a founding exec without any reason.  Except of course the one most and really powerful reason - relationships.  An exec that doesn't pay attention to relationships, particularly with the board members, can frequently find their positions threatened.  A sobering lesson...

*Correction: Mr. Yunus has not formally been fired by his Board but the Country Bank is attempting to fire him.

Nonprofit Turns To Really "Old" Fashioned Fundraising

Once upon a time in lands far far away, a musician or poet or visual artist survived best when they found a sponsor: a Knight or Lady or King or Queen or really wealthy merchant who pretty much either paid for their livelihood in exchange for the benefit of their craft or presence or commissioned works of art.

Well, let it not be said that some good things just don't die including the fact that even in economic times where the majority have less, there remains those who have significantly more.  And, doesn't it make sense that these are the same folks who, as part of their role as the financial elite, should do as those who for centuries came before them, and sponsor artists?

That's certainly my take-away from the New York Philharmonic as cited by the Wall Street Journal.  As I see it, the only difference between what the Philharmonic has done and in the "once-upon-a-time" period, is that the "sponsorship" is institutionalized.

As I think about it, the toughest part of the sponsorship effort is making a connection with the "haves".  The Philharmonic has a board or committee of haves who can clearly pave the way to other haves.  A good reminder for all nonprofits struggling to stay financially afloat.

Nonprofit Business Model Leads To End of Agencies

In what I can only think of as a sobering ending, many of the substance abuse agencies in Illinois will be going out of business over the next few months. 

According to the Chicago Tribune, It appears that these nonprofits had a business model which had 80% or more of their income from state contracts.  The State is out of money and must be even more selective about how it spends its money. One item not in the budget: substance abuse treatment.

Of course there are significant consequences (to the public) no matter what the State chooses to stop funding.  But what is equally clear is that nonprofits that choose a business model with 30%-50% or more of its funds coming from a single source will face challenges such as those evidenced in Illinois today.  And yes, some types of nonprofits (human service in particular) definitely do not have as broad of a potential donor base as other types of nonprofits.  

But taking the long view and strategizing over the possibilities is what any business owner must do including nonprofit boards.  While the state is no saint in this matter, I believe that these nonprofit boards must share in what happens next.  At a very minimum -- time to look at mergers to try and save some of the services to the public.