Being an Effective Leader (1^st in a series of 5)

This year may be challenging for nonprofits. Amidst a backdrop of political uncertainty, the federal tax package will likely lead to budget cuts that affect nonprofits and reduced philanthropic support from middle-income Americans. Plan A Advisors spoke with colleagues in five fields to glean advice for nonprofit leaders – professional and voluntary – that we offer in five segments.

What does it take to be an effective nonprofit leader at a time of uncertainty and challenge?

Dr. Steve Axelrod, a psychologist who coaches executives in business and the nonprofit sector, says leaders must convey their own sense of commitment with passion and energy.

Know thyself. When the ground is shifting beneath you, get grounded in clarity around your own motivations. Ask yourself what drives you to lead, and catalog the values that inspire and guide your work.

Reassess the leadership context.All leadership is situational. Be clear-eyed about how your environment is changing and what leadership skills and behaviors will be critical for organizational success. How do you measure your own competencies – technical and emotional – against those required?

Close the gaps.Build your own competencies, or build a team that has them. If you are weak in budget and finance, take a class, find a tutor or mentor, draw on your accountant, or hire or promote staff with the skills you need. Ditto for communications: work with a coach, employ a firm, or hire or promote the talent you’ll need to rely on.

Recommit.You are more than the sum of your competencies. Rekindle passion for your nonprofit’s mission and your vision by focusing on the impact you want to have on those you serve, the motivation you want to provide to those you lead, and the personal sense of fulfillment you need to fuel your work in tough times.

Dr. Steve Axelrod holds a Ph.D. in psychology from NYU and has 25 years of counseling experience with leaders from nonprofits to Fortune 500 companies. He lectures on the powerful influence of a leader’s psychological dynamics on organizational performance, and has developed a short-term intensive training on increasing leadership self-awareness and commitment.

Protecting Endowment (5^th in a series of 6)

Well-structured endowments, managed by strong endowment committees, can generate recurring returns for a nonprofit that serve as a reliable source of unrestricted operating support or a welcome source of support for restricted purposes. However, investments must be managed in order to meet the financial and ideological goals of the endowed organization.

Ensuring the Future

It may be tempting for a board to borrow from permanent endowment or dig into quasi endowment when there is a budget gap to plug or a new program area that requires funding. Especially when a board designates funds to form quasi endowment, there is ever the opportunity to un-designate those very funds for short-term needs.

There’s also risk when money is moved around from one asset class to another, betting on the likelihood of a stronger return when the market suggests that a particular asset class is on the rise.

The board-approved Investment Policy is where rules are set for making decisions around the disposition of endowment or quasi endowment.  The policy should help protect the endowment. For example, the policy may allow the Investment Committee certain leeway in adjusting the asset mix within certain guidelines to take advantage of the promise of a higher return-on-investment (say the relative percentage of equities, cash equivalents and so on). But a strong Investment Policy should also require a vote of the full board (not just the Investment Committee) for any significant shift – say, more than 10%.  The Investment Policy should also require that an affirmative vote of the Investment Committee be followed by an affirmative vote of the full board if any portion of quasi endowment is to be used, say, for budget relief or any other purpose.

While a nonprofit may occasionally need access to endowment funds for emergency purposes, policy language should assure everyone that board-designated endowment is intended to remain in place in perpetuity, and permanent endowment is well-protected.

Next in the series: “Choosing Guidance”

Make Tough Decisions (2^nd in a series of 5)

This year may be challenging for nonprofits. Amidst a backdrop of political uncertainty, the federal tax package will likely lead to budget cuts that affect nonprofits and reduced philanthropic support from middle-income Americans. Plan A Advisors spoke with colleagues in five fields to glean advice for nonprofit leaders – professional and voluntary – that we offer in five segments.

What’s the best way to make and communicate difficult decisions?

Jenn Goldstone, who consults on leadership development and serves in interim executive positions, offers three approaches for nonprofit leaders when change is an imperative.

Shore up your strongest staff. Be an active listener. Understand the challenges faced by staff members and find ways to solve problems at their root, patch reparable relationships, and remove other barriers to individual performance that impact the nonprofit’s work. Look for and act on easy wins to demonstrate responsiveness.

Use data as a driver. Collect and share financial and program data. Use simple surveys to measure your impact and get your board in the habit of asking for numbers. Target necessary improvements or adjustments (e.g. cuts). Then empower staff to reach the numeric targets you’ve set so their performance meets objective standards.

Prepare staff for change. Ultimately you need the right people in each position and the right mix of programs to weather challenge and change. Craft individual action plans for weaker staff members so there’s a clear pathway to improved performance against data-driven measurement. Dismiss underperforming staff with empathy. Moments of crisis suffer under indecision.

Jenn Goldstone, principal in Xukuma, LLC, provides leadership development and organizational effectiveness coaching, governance and board development, interim executive directorship, and Core Capacity Assessment Tool (CCAT), design thinking, and user experience (UX) design facilitation.

Get Governance in Order (3^rd in a series of 5)

This year may be challenging for nonprofits. Amidst a backdrop of political uncertainty, the federal tax package will likely lead to budget cuts that affect nonprofits and reduced philanthropic support from middle-income Americans. Plan A Advisors spoke with colleagues in five fields to glean advice for nonprofit leaders – professional and voluntary – that we offer in five segments.

What are key areas in governance that nonprofit boards need to be especially mindful of in a challenging climate?

Attorney Pamela Mann, Chair of the Tax Exempt Organizations Group at Carter Ledyard & Milburn, says board members should pay close attention to their board’s legal, financial and procedural practices.

Update your bylaws. Examine your nonprofit’s bylaws to make sure they reflect a) your actual practices, b) contemporary technology, and c) the law. Amendments should reflect the way the board actually carries out its duties; use of electronic communications; and current state not-for-profit corporation laws.

Adopt best practices. Survey your board’s perceptions and catalog its competencies, looking for any troubling trends. Then use respected trainers or advisors (e.g. Board Source, or a consultant) to help adopt best practices around performance and composition. For example, pay attention to the degree of interconnectedness among board members; some is good, but insularity is not.

Firm up financial controls. Make sure the board is fully informed about your nonprofit’s financial condition and understands members’ fiduciary responsibility to act in its best interests. Oversight by a good CFO should be matched to controls put in place by the board to ensure financial health. Clarify board members’ fundraising responsibilities, too.

Pamela A. Mann chairs Carter Ledyard & Milburn’s Tax-Exempt Organizations Group and is counsel to public charities and private foundations representing clients in a wide range of governance, regulatory, tax, and general corporate matters. She is a former Chief of the Charities Bureau of the New York Attorney General’s office.

Stand Out in a Crowded Field (4^th in a series of 5)

This year may be challenging for nonprofits. Amidst a backdrop of political uncertainty, the federal tax package will likely lead to budget cuts that affect nonprofits and reduced philanthropic support from middle-income Americans. Plan A Advisors spoke with colleagues in five fields to glean advice for nonprofit leaders – professional and voluntary – that we offer in five segments.

How can a nonprofit best communicate its critical and enduring value to those it serves and to its funders when the field is crowded and the times are challenging?

Sarah Durham, CEO of Big Duck, the branding and marketing firm for nonprofits, says you have to cut through the clutter; be aware of your competition but don’t compare or contrast.

Develop your voice. Your nonprofit’s brand is shaped by the messages you share and the style you use to convey them, consistently, from every department and division. Train your board and staff to communicate using a simple set of rules around message and style.

Know your audience. Maximize opportunities in front of you by sharing your message with your audience in a way that it can appreciate. Ask: who am I speaking to and what will they get out of it? Audiences are more welcoming of information that is relevant and useful, in a language they understand.

Stay on point. There is equity in your brand and it is most powerful when you stick to it in your communications despite the pull to respond reflexively when you are challenged. Evolve your brand in words and images if you need to, but don’t discard the value you’ve built over time.

Sarah Durham founded Big Duck in 1994 to help nonprofits increase their visibility, raise money, and achieve their missions. She is the author of Brandraising: How Nonprofits Raise Visibility and Money Through Smart Communications and is a sought-after speaker and adjunct professor at NYU.

Making the Case for Support (5^th in a series of 5)

This year may be challenging for nonprofits. Amidst a backdrop of political uncertainty, the federal tax package will likely lead to budget cuts that affect nonprofits and reduced philanthropic support from middle-income Americans. Plan A Advisors spoke with colleagues in five fields to glean advice for nonprofit leaders – professional and voluntary – that we offer in five segments.

How can a nonprofit best make the case for support to funders in a landscape crowded with many worthy competitors?

Stuart Post, Executive Director of the Meringoff Foundation, says that funding decisions are an art as much as a science, so nonprofits have to work hard to build relationships with funders, and convey key messages with transparency and passion.

Instill confidence. Communications, proposals, meetings and site visits should leave funders confident in the chief executive and the board’s leaders; in the nonprofit’s administration, financial management and governance; and in the sustainability of its important work.

Correlate impact. Show that the population served benefits directly from the services you are uniquely qualified to provide and that philanthropy enables you to tackle a need. Numbers are good; but funders also make decisions with their hearts, so give them examples of your nonprofit in action – in person when possible.

Offer opportunity. Funders want their investment to be transformative, making possible something new or additive, and leveraging support from others.

Make them proud. Good philanthropists are personally invested. Give them reason to be proud and to tout your success to others. Give them an easy answer to the question: How did our money make a difference?

Stuart Post is the Executive Director of the Meringoff Family Foundation. He was formerly Senior Program Officer at Brooklyn Community Foundation. Stuart is the Board Chair of the Brooklyn Community Bail Fund.