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Oh What A Tangled Web…

August 15, 2012

by:

Joe Patti

Today at lunch a musician friend was picking our brains about a fund raiser he wants to do for a cause he really believes in. He outlined his vision and then asked for ideas of places he could hold it. There were a couple assumptions he made about his budget that were unrealistic which we helped him to re-evaluate.

The discussion made me think of an article someone I follow on Twitter recently linked to by Nell Edgington, “5 Lies to Stop Telling Donors.”

Edgington lists the lies as:

1. X percent of your donation goes to the program
The distinction between “program expenses” and “overhead” is, at best, meaningless and, at worst, destructive… It is magical thinking to say that you can separate money spent on programs from money spent on the support of programs…“overhead” is not a dirty word…

2. We can do the same program with less money
No you can’t. You know you can’t. You are already scraping by…Politely, but firmly, explain to the donor that an inferior investment will yield an inferior result…

3. We can start a new program that doesn’t fit with our mission or strategy
Yes, that big, fat check a donor is holding in front of you looks very appealing. But if it takes your organization in a different direction than your strategy or your core competencies require, accepting it is a huge mistake…Don’t let a donor take you down that road.

4. We can grow without additional staff or other resources
Nonprofit staffers truly excel at working endless hours with very few resources…But someday that road must end…

5. 100 percent of our board is committed to our organization
If that’s true, then you are a true minority in the nonprofit sector. Every nonprofit board I know has some dead wood…It’s a fact that funders want to see every board member contributing. But instead of perpetuating the myth that 100 percent is an achievable reality, be honest with funders…It is far better to demonstrate that you are tirelessly working toward 90 percent.

I have frequently linked back to a post Andrew Taylor made about 6 years ago where he suggests non-profit organizations aren’t doing themselves any favors by keeping funders expectations high when they report everything went as good, if not better, than planned every single time.

In recent years “overhead” has come to the fore as a problematic measure of effectiveness. I think the whole idea about low overhead being a measure of effectiveness is the root of the other evils Edgington mentions in her article, in the pursuit of portraying themselves as having low overhead non-profits will say they can do more with less money, do more with same/fewer staff and the organization has a super efficient board.

An April article in the LA Times talks about why overhead is such a poor measure of a charity. In that column, Jack Shakely, president emeritus of the California Community Foundation, cites the example of a group that was buying its medicine in Canada but was using the cost of the medicine in the U.S. as a basis to report the difference in price as an in-kind donation in order to make their administrative costs appear to be a smaller portion of their budget.

Writes Shakely (with my emphasis added),

Don’t get me wrong. Low administrative costs could indicate prudence and sound judgment at a charity, but they could just as easily indicate inadequate staffing, insufficient salaries or, shall we say, fudging. Moreover, administrative costs aren’t the primary measurement of for-profit excellence. Are McDonald’s admin costs lower than Wendy’s? Apple’s lower than Microsoft’s?

[…}

But our intuitive thinking system wants an answer now, and because we are intuitively inclined to believe that the nonprofit sector is filled with soft, amateurish executives, we latch on to the pseudo-science of administrative costs as a measure of excellence. It’s hogwash; there is absolutely no way of telling that an organization with 5% administrative costs is superior to one with 20% costs based on that criterion alone. In fact, the exact opposite may be true.

As Shakely notes, it will be hard to get donors and funders to shift to better criteria when the overhead ratio appears to be so clean and rational a measure. But as both he and Edgington comment, no funder is going to use any other measure of evaluation if they aren’t told the criteria is unfair and unrealistic.

Think about what you can do to change assumptions as you make your next pitch or write your next grant proposal.

Advocacy, Fundraising, Leadership

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Do The Arts And Millennials Share The Same Core Values?

August 14, 2012

by:

Joe Patti

Last month there was an article on Fast Company, Why Millennials Don’t Want To Buy Stuff, that claims the focus is moving away from acquisition of things toward access to ideas and relationships.

Though the article also admits it might be because they can’t afford stuff either.

They also point out many “goods” we consume are actually rented or licensed from services like Netflix, iTunes or Amazon’s Kindle. Exchanging money for a transient product is the norm for Millennials in a way it isn’t for previous generations.

According to the article, when Millennials do buy things it is motivated by one of three things. Either the item provides access to other experiences in the manner of most Apple products; the item can be used to develop a relationship or sense of community; or the item makes a statement about themselves to others.

Of course, there tends to be a lot of overlap between these motivators since sharing experiences enabled by a product can make a statement about yourself which can be shared with like-minded people.

If the article is correct, arts and cultural experiences are pretty well suited to Millenials. The experience is transient and can’t be possessed as a concrete object. It can provide a sense of community and opportunity for relationship building and can make a statement about the person to others.

Of course, as has oft been discussed, what Millennial wants the statement they are making to be that they like hanging out at a performance hall cultivating a relationship with old people.

The fact that this article just provides a slightly different perspective that brings us back to the conclusion that if you want to attract Millennials, you have to provide an experience they find attractive should be comforting. It means that the answer is so simple and evident that we keep reaching the same conclusion.

Or I suppose that we are so fixated on the idea of attracting Millenials, we lack the imagination to interpret it in any other manner.

There is something to be said for the research that shows people tend to orient toward arts and cultural experiences at a certain age range when they have reached a level of personal and economic maturity. In that respect, there is perhaps too much expectation placed on the Y generation to start attending now.

At the same time, I think that: 1- It never hurts in the cause of creating general awareness to let Millennials know now that the opportunities are available when they are of a mind to attend.

2-The product and approach you used to attract their grandparents and parents isn’t going to work on them so you might as well make your mistakes now while they aren’t really paying attention than trying to refine your approach later when they are.

I am encouraged by the thought that the Fast Company article might reflect the values being embraced by Millennials because I think it plays to the real core strengths of arts and culture. The message that the arts are what you get involved with to exhibit you are mature, cultured and refined is an ill-fitting suit in comparison. We have just been wearing it so long we have mistaken it for our identity rather than garb donned when an opportunity presented itself.

Arts in an Age of Technology, Audience Relations, State of the Arts

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Put Your Board On A Diet

August 13, 2012

by:

Joe Patti

The Chronicle of Higher Education had a piece about the problems inherent to large board size on their website today (subscription required). While the article is about large boards in higher education, there are lessons to be learned.

Governance experts say such large boards dilute accountability and invariably allow a small group to seize control of an institution, leaving the remaining trustees on board merely to cut ribbons and big checks.

But it is easy to see why a college might want a big board. It is simpler to add trustees than to remove members who are no longer pulling their weight, and growth can be justified as an effort to broaden the diversity of opinions in a group. It is also true that there may be no better way to cultivate donors than to give them active policy-making roles at a college.

These two paragraphs appear to outline all the major problems faced by boards-lack of accountability, small number of people really in control, some members not engaged in the board functions and valuing board members pretty much solely for their fund raising capacity.

Obviously, these problems can plague boards of any size. In fact some of you may privately be wishing you were “cursed” by a larger board figuring if the ratio of valuable to problematic members stayed true, you would have enough useful people to accomplish something. But the problems and dysfunction can become more pronounced and harder to avoid as the group grows larger.

The article provides a number of examples where weak controls and oversight brought on by large board numbers were the source of financial and sports related scandals. While the article doesn’t draw a direct link, it occurred to me that having large numbers at a meeting means that certain people never get a chance to talk and therefore are never invested or feel responsible for the decisions being made.

Perhaps a small group of people on the executive board make the decisions or perhaps the feeling of personal accountability is diluted across numbers. As they say, no raindrop feels they are responsible for the flood. Either way, the environment can contribute to bad decisions being made.

Another contributing factor seemed to be a lack of board education. The article spent some time on anecdotes from various university presidents who discovered their boards really didn’t have a sense of the business of higher education. The schools embarked on efforts to make their boards more knowledgeable.

Recently when I read about board relations, the importance of educating boards about their governance and oversight responsibilities seems to be discussed with greater frequency. In fact, the idea that board members are fund raisers and need to “give, get or go” seems to have taken a back seat to the importance of boards contributing to good governance and planning.

Perhaps the conversation has turned in this direction as reaction to Sarbanes-Oxley or perhaps the non-profit sector has started to recognize the importance of the board to organizational leadership.

Boards, Info You Can Use, Leadership

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It Is All In How You Play The Game

August 8, 2012

by:

Joe Patti

Today faculty and staff on my campus met to discuss what to expect when the accreditation team visits our campus for a week in October. If you aren’t familiar with higher education accreditation, basically it is an evaluation of how everything an institution of higher education does contributes to student learning and success. It looks at everything from curriculum development, grading standards and financial aid practices to the budgeting process and grounds/building maintenance.

The accreditation visits happen every six years but basically you spend the intervening time improving your practices, collecting data to evaluate if you are improving and generating interim progress reports.

If that sound incredibly mind numbing to you, it really is. Just about everyone in the organization is involved in contributing to the report, but only a few people handle all the information. God bless them for it.

That was what the meeting today was pretty much all about–making the whole organization generally aware of the report’s content. After my post yesterday about communicating organizational values, I wanted to share a little bit about how they did it because I really appreciated how they took a 500+ page behemoth and made us all a little more knowledgeable about it.

A lot of what transpired today could be used for board meetings/retreats where vision and strategy is discussed. It could just as well be used for volunteer and employee training to make people aware of values, procedures or even the upcoming season of shows.

Basically we played games. You may groan and I don’t blame you. I have been to meetings where the game playing seemed forced and awkward. I think the problem is that those games were aimed at breaking the ice or team building while these games were focused more on increasing familiarity with issues and content. I thought they were well designed in that they moved quickly and weren’t interspersed with heavy fact laden lectures.

Before we played games, we were told what the purpose and value of accreditation was and what the possible outcomes might be (including sanctions) so we had a sense of why it was important to be familiar with this information.

First played a type of BINGO game where questions were asked and then you got to mark off the answer–if it was on your card. The questions were a mix of statistics, history and information about where resources could be found.

Next we played a MAD-LIBs type game where we had to fill in the blanks in the text of recommendations that had been made at the last accreditation visit and the strategic goals we had developed to answer them.

Now if you think that sounds really boring, you will know how effective the game playing was when I tell you we were up on our feet trying to beat the other teams and resorting to strategic research (cheating).

Later we did a speed dating style game where we had to ask each other likely questions the accreditation team might ask of us, then shift seats and ask the next person.

The goal of this wasn’t to achieve a perfect answer, but give people a greater awareness of the many factors being evaluated. The question I was assigned to ask was about the 95.1% of classes currently involved in an ongoing evaluation process and what could be done to improve the process and percentage. I ended up talking to the head of Human Resources, Campus Fiscal Officer and a member of the business faculty.

The first two really had no idea how to answer the question because the don’t directly deal with academic concerns, the faculty member did provide a more cogent answer. But now we are all a little more aware of the criteria upon which the campus is being judged and know that a self-evaluative procedure is in place for a large number of our courses.

What appealed to me most about my experience today was that this type of approach really plays to the strength of the performing and visual arts. We do similar things in rehearsals when we are developing performances and when we try to communicate information in education and outreach programs. Even if you aren’t doing these exact things, the potential is present in your associated artists and staff. With a little work, these techniques can be applied to administrative and governance purposes.

Now as I said from the outset, there was a lot of time consuming and mind numbing work that got us to this point. There is no avoiding that or making too much more enjoyable (though certainly, any fun is an improvement). In terms of getting investment from the group and communicating information and values, games are a good tool.

Boards, Leadership, Management Philosophy

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