Small doesn’t mean you can’t be great: Nine things to pay attention to if you want you charity to be great. Part Two
In my last post I talked about four of the characteristics of successful nonprofits as described by Brinckerhoff. This post will pick up with the remainder of the characteristics.
“A social entrepreneur seeks to take reasonable risks for the benefit of the people the organization serves (Brinckerhoff, 2004, p.19). Brinckerhoff goes on to explain:” Innovation- a characteristic of stewards noted above requires risk. To advance your capability to do good works, you’ve got to try new methods of delivery. Thus risk is inherent in improving your mission capability.” If you are the CEO of a nonprofit and you want to create a culture of innovation you need to create some balance. For you staff you need to make taking risks and trying new things feel less risky. For sure you do not want to punish mistakes. Staff who get punished for mistakes stop taking risks and stop innovating. For your board of directors, if you are trying to create this type of culture, you will have more support if you have an entrepreneur or business leaders who work in a sector or company that values an entrepreneurial approach.
A Bias for marketing
All of these characteristics are important but clearly this is one of my favorites. I worked many years for organizations that received most of their funding from government sources; you don’t think or talk about marketing all that frequently. I am sure most of those organizations have started to realize that even if you only have one government funder you still need to think about marketing-maybe you will just call it something else. It seems that Brinckerhoff views marketing as pretty important to the sector, as not only does he mention it in this book but he has also written another book entirely devoted to marketing (Mission-Based marketing: Positioning your not –for –profit). I am not going to say too much about marketing here as I do have a few other posts that describe my views on the importance of marketing, and I am sure over time I will write quite a few more.
Brinckerhoff (2004) describes this as;” Empowerment includes having and growing an endowment, improving the use of your financial reporting establishing and maintaining adequate cash reserves, establishing an endowment ,borrowing appropriately and … making money.” This are is also very broad and very important. I will likely write a number of other posts about some of these aspects. When I started working for the organization I work for now, in 2005, the society was worth (had assets of) a little less than $3 million dollars, now the organization is worth over $30 million dollars. We have done capital reserve studies on our assets like our Ronald McDonald Houses and our Care Mobiles. So essentially we know for the next 25 years how when we are likely to need new paint or a new boiler and what they are likely to cost when we need them. We have put aside funds so that we have that money when we need it. Eight years ago having this financial level of preparedness would have seemed inconceivable to us. However now we know better, and in certainty there are areas of our financial empowerment that are not yet at the level we would like to achieve, but with certainty we are working on those areas.
“Planning requires that you step back from day to day operations and engage in “big think-generating a compelling vision. Planning allows you to focus your energies and your resources on what you community needs most and what you do best. (Brinckerhoff, 2004, p. 21).” My own bias is that many of the individuals and corporations who support you or might support you will do so in proportion to your vision. If you think big they will give you bigger gifts than if you think small. This is not to suggest you just need big ideas or big vision, you need to know how to and have the ability to execute. Big vision: without an adequate business case or plan quickly becomes unattractive to your supporters. I have a colleague who has run a similar charity for about two years. He is an idea guy – he has the most amazing ideas but no clue how to plan for their execution. Worse he does not have anyone on his team that are particularly good at execution. People get excited about the idea and they have the ability to attract some small donations. But because they have a hard time with execution their fundraising events lose money and they have a hard time receiving large donations. Donors love big vision, but if you don’t have a business plan that seems likely to succeed it quickly becomes just another goofy idea.
Many nonprofit leaders moved their way up through the ranks of direct service in their current or other organizations, sometimes when your passion is directly helping people –discussing financial or policy controls can be your least favorite thing. However if you want to be able to achieve financial empowerment and maximize your mission having tight controls is critical. The easiest way to find improvements in this area is to ask your external auditor to give you advice on how to improve your controls. After a few years if you are following this advice your auditors will likely have fewer nuggets of advice to provide you, however there are likely still improvement you could make. Our audit and finance committee has helped the organization do a risk analysis. Through this process you are trying to identify any areas that represent a risk to the charity and any area that controls can be improved. This analysis is not just of our accounting and finance but all aspects of our operation. After the analysis is completed you rank items in a hierarchy with risks that are most likely to occur and well as by how catastrophic it would be to the organization. Throughout the year we work our way, five items at a time to develop or improve controls and processes to reduce the risk to the organization.
Each of these nine characteristics are extremely important to nonprofit organizations. You could write in considerably more detail in each of these areas. For a leader running a small charity without a lot of resources looking at this list may be overwhelming, however paying attention to each of these areas can be accomplished with benefit to the organization without the depth or commitment of resources a large or more established charity can do. Each of these characteristics can be scaled to the size of your organization. For example staff training and investing in it is important but to the cash strapped organization the first step may be capitalizing a lot on the free or low cost webinars that are available to the sector, before budgeting for remote conferences or training sessions.
Brinckerhoff, P.C (2004) Nonprofit Stewardship: A better way to lead your mission-based organization:
New York: Fieldstone Alliance
Brinckerhoff, P.C (2010) Mission-Based marketing: Positioning your not –for –profit: New
Jersey: John Wiley &Sons Inc.
If you want to read part one of this post: