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Non Profit Quarterly

You Can’t Min-Max Board Membership

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I have a post about board recruitment over on ArtsHacker today where I call attention to a webinar Non-Profit Quarterly recently conducted on the subject.

My focus in that article was on how the webinar is a good resource for thinking about how you recruit for and structure your board. But there are a lot of philosophical issues raised in the webinar that I wanted to call attention to as well.

Presenter Anasuya Sengupta noted that when the responsibilities of board members are listed, duty of care, loyalty, fiduciary stewardship and compliance are standards across the entire non-profit sphere. She opines that this list sounds as if a lawyer wrote it up. This made me realize that while the purpose of a non-profit is generally service to a cause or community, that isn’t among the standard criteria for responsible governance.

Sengupta also suggests legality can be a low bar for ethics and risk aversion and compliance can be a very low bar for decision making. She notes that risk aversion and compliance are largely reactive orientations rather than the proactive approach non-profits should be taking. She says that these things, along with the legalistic list of responsibilities should be considered basic practices rather than best practices.

It occurred to me that this could be one of the results of the “run it like a business” philosophy we have seen espoused lately. Reduce costs, increase revenue, avoid risk, do the least possible for the most gain (aka low overhead ratio) all seem to be symptoms of this idea.

When your purpose is to deal with people on a social level rather than as consumers of goods and services, things are less apt to be neat and tidy.   The whole endeavor of trying to involve under served audiences requires interactions with people who don’t know all the rules of behavior and possess basic knowledge of the usual audiences. Almost by definition, someone is likely to be discomforted in the process.  Additional time and effort may be required to accommodate and educate them, including providing your services in a non-standard time, place and format entirely customized to the needs of the groups with which you are working.

Another presenter, Ruth McCambridge, said that even if you perfectly followed all rules for diversifying your board, your efforts might fail. This is because the underlying premises are flawed, most of which seem to be based on the idea that filling certain slots automatically solves that problem.

I go into a bit more detail in the ArtsHacker post, but briefly the problems are:

-recruiting members of under served communities:  the person you recruit may be a member of that community, but not representative of that community.

-recruiting people who can raise/give money: In Human Service Non-profits, studies show recruiting board members for ability to raise money actually negatively impacted their budgets. In the arts, it does help build the finances.

-recruiting to fill a skill slot (lawyer, accountant): the person assumes they were recruited to provide that skill, doesn’t focus on general governance, working cohesively with entire board

The other bad assumption McCambridge mentions is that fund raising boards and working boards are mutually exclusive and you can only have one or the other.

Put in this context, I got the sneaking suspicion that the concept of a board of directors emerged during the Industrial Revolution because there seems to be an underlying utilitarian philosophy. So much of board composition seems to be based on the idea that if you find the optimal mix of skills or insights to match your institutional mission, you will realize success. If you are not successful, you must have the wrong mix.

Despite optimism about Millennials being more meaning and purpose driven than their predecessors, I don’t see this changing without focused, intentional effort. The prevalence of video gaming and the attendant Min-Maxing approach to gameplay will only serve to perpetuate this as an ideal.

The Stakeholders Are Watching

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In Non Profit Quarterly, Ruth McCambridge wrote a pretty involved comparison between the stakeholder revolts which reversed board decisions to close San Diego Opera and Sweet Briar College.

There is a lot to be gleaned about how popular support has apparently turned things around for the two organizations. It is worth reading on that basis alone.

There were a few things that popped out at me as general lessons, not necessarily dependent on these scenarios, about the environment in which arts organizations are operating.

First was an observation by current San Diego board chair, Carol Lazier, that:

“…the community was absolutely furious. We had a great opera company, a cultural jewel, and no one wanted to lose it. We had people who didn’t even go to the opera who were fighting closure, saying, ‘This is not right—this is owned by the public; this is not owned by the small group of people on the inside.’”

It is easy to have mixed feelings about this response because indignation by people who never attended doesn’t pay your bills. Yet we clearly know that arts organizations are viewed as a community asset by both individuals and businesses. People may not actually participate in your activities, but they like the idea of living in a community that has an opera, symphony and art museum. Businesses and individuals will relocate to places with these amenities.

While the presence of your arts organization is definitely an intangible asset, the value of which is difficult to quantify to politicians and others who want to cut arts funding, this type of reaction does allow you to answer the question about how your community would be impacted if your organization didn’t exist.

Another observation made about San Diego Opera board governance provided some insight into a downside of a “Get, Give or Get Off” policy of board membership.

The San Diego Opera was one of those organizations where having a large number of people on the board was a function of fundraising. You pay x amount of money and you’re on the board, and no one wants to alienate any of those folk with contentious conversations that cause discomfort. But that is certainly not a good modus operandi for an organization facing the whitewater of the twenty-first-century cultural organization. And, it was not only the business model that had to change but the governance model, too.

The implication that a non profit needs to have a governance structure that allows it to be nimble is something to seriously consider. Scrutiny of non-profits is shifting focus about the role of a board away from fund raising and toward effective governance.

The San Diego Opera board went from 53 to 24 in the course of a few days due to resignations. A quick look at the opera website shows it continues to maintain those numbers two years later.

Not only is there no correlation between the ability to make large donations and the ability to effectively govern an organization, some people may have no interest in doing so. This made me recall a story told by an executive director about a large donor who showed relief when presented the option of NOT serving on the board because they didn’t see it as a reward at all.

Finally, in relation to the Sweet Briar closure, I was quite intrigued to learn that generally those who most supported the closure were from among the earliest graduates. When they attended, a women’s college was the only option for higher education. Now that a woman could attend anywhere they wished, they didn’t feel single gender higher education was relevant any longer.

It is the younger generations that intentionally chose to attend Sweet Briar when hundreds of other options existed that have been the most invested in keeping the institution open.

This information brought to mind the question that arts organizations have increasingly been challenged to ask themselves over the last few decades: Given that so many other options exist for people, are you providing those who intentionally choose to engage with the arts a reason to continue to do so?

The example of Sweet Briar seems to illustrate that answering in the affirmative is what turns people into invested stakeholders.

Positive Signs For Reimbursement Of Overhead Costs

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You may remember back in January that I wrote about the new rules promulgated by Office of Management and Budget (OMB) requiring that any entity receiving federal funds much cover at least 10% of a non-profit’s overhead costs.

Don’t worry, its okay if you don’t remember. But this is relatively important and bears repeating.

One of the concerns at the time was that state and local governments and other funders might pressure non-profits with whom they contract or provide grants to waive a their right to receive overhead costs. The OMB rules prohibit this, but if a non-profit isn’t aware of the rules or are afraid to advocate for themselves, the problem may continue.

Given this context, it was a positive sign when the L.A. County Board of Supervisors voted to adopt the OMB guidelines and to write a letter to the state government to do the same.

It may not seem significant for a governing body to agree to adhere to the conditions under which federal funding was allocated, but as Non-Profit Quarterly notes there are “rob Peter to pay Paul” concerns about how funding may be manipulated.

Rules do not implement themselves without strong nonprofit monitoring and oversight—hopefully, as in this case, in partnership with government authorities. In this case, not only are the supervisors talking to state officials, but they will also be developing an implementation strategy in consultation with Los Angeles nonprofits, which we presume, based on what we have seen as policy statements from CalNonprofits, ought to address how to ensure that higher indirect cost reimbursements do not occur at the cost of lessening service delivery.

As I had noted in my earlier post, the National Council of Non Profits created a guide to educate organizations about the rules and provide responses to assertions from funding entities that the rules don’t apply.

One thing I had mentioned was that arts organizations should note that these rules likely apply to the funding you receive through your state or regional arts organization:

One- it doesn’t matter whether it is called a contract or grant or any other term, the rules are based on the substance of the transaction.

Two – Sub-recipient non-profits who are required to acknowledge part of the funding is received from the federal government are covered under these rules.

Info You Can Use: Holding A Mirror Up To Fundraising

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Simone Joyaux wrote a must-read, “physician heal thyself” post for development teams in a recent Non-Profit Quarterly post.

In her column, Fundraisers: the Good, the Bad and the Ugly, she enjoins development teams to look in the mirror before blaming others for failures. (If you have a hankering to listen to the theme music for The Good, the Bad and the Ugly movie while reading, there is an interesting guitar rendition here.)

Joyaux addresses many common complaints development departments have about board members not providing assistance with fundraising, board members not donating, issues with opinionated executive directors and weak economic conditions inhibiting efforts.

She provides some advice about dealing with each situation, mentioning a different approaches to use. In nearly every case though, she challenges fundraising staff to examine their assumptions and understanding of the situation to see if they are at least partially contributing to the difficulties.

Often she asks if the development team has sat down and spoken with someone to understand their limitations and concerns and whether the development staff has been providing sufficient support to a board member’s efforts on their behalf.

There are some things Joyaux writes about that I have rarely, if ever, heard mentioned in relation to fund raising efforts.

(By the way: How do you define fundraising? I hope you aren’t thinking about asking for money only. There’s so much more to fundraising than the asking point. Do you know all the steps and the neuroscience and the psychology and communications and all the rest? Can you help board members apply that, in partnership with each other and in partnership with you?)

When she mentions them, neuroscience and psychology make sense as factors to consider, but I can’t remember ever hearing them mentioned in connection with development before. (Actually, I have to admit I only have guesses on how neuroscience relates.)

As Joyaux notes, becoming effective at development is a process and there isn’t anyone who hasn’t committed some sort of poor practice.

In my early years, I know I must have behaved this way. I saw glimpses in the mirror. How about you?

Bad fundraising performance #1: The fundraiser didn’t handle well leads suggested by several board members.

Bad fundraising performance #2: The fundraising staff didn’t ask for specific support from a specific board member, and explain why, and provide support.

Bad fundraising performance #3: The fundraising staff doesn’t spend much time learning about the program. The fundraising staff doesn’t collect stories from program staff. The fundraisers rarely observe a program or talk with client beneficiaries. This produces weak solicitations, bad links with our heroes, the donors.

Oops, actually that last point reminds me I need to follow up with some participants of an education service we hosted last week.

Info You Can Use: Non-Profits and Loans

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If you didn’t catch it, in June Non-Profit Quarterly had a good 101 guide on when it is appropriate for non-profits to take out loans.  Most times you hear about non-profits and loans it is once the non-profit is in financial trouble and deep in debt.  The discussion of constructive use of loans by non-profit arts organizations is relatively rare.

In my own experience, conversations among arts administrators usually touches on earned revenue, fund raising/sponsorships and grants.  I have never heard anyone talk about using loans to fund an initiative. This might be, as the NPQ article suggests, there is a stigma of failure associated with taking out a loan. Or it might be simply that we are so used to worrying about falling attendance, lack luster fundraising and onerous grant writing that no one really thinks to mention loans.

In addition to discussing the times it is and is not appropriate to seek a loan, the article notes that there are no “one-size-fits-all” loans so organizations can negotiate terms that suit their needs.  They also provide a general sense of what answers and materials you might expect to be asked to provide as part of the loan process.

 

 

How Dare You Refuse That Money?

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Really interesting story out of Australia via Non Profit Quarterly. The Arts Minister has asked the Australia Council to develop a policy penalizing arts organizations who refuse private funding based on idealistic or political motivations.

Refusing funding from tobacco companies is mentioned in a couple instances, but this was brought on by artists in the Sydney Biennale objecting to its association with a company involved in a controversial detention center used to house asylum seekers.

Senator Brandis responded to that by saying, “What I have in fact asked the Australia Council to do is to develop a policy so that it would be a condition of the receipt of Australia Council funding that the arts organisation concerned not unreasonably refuse or unreasonably terminate private sponsorship.” When pressed on who would be responsible for deciding what is to be considered “unreasonable,” Brandis replied, “I don’t frankly have a fixed or dogmatic view about whether it should be the Australia Council or whether it should be the Minister or whether it should be some third party arbiter.”

We can only hope that the option adopted is not the current Minister. Brandis has since said that while it was reasonable for arts companies or festivals to reject corporate funding if they had concerns about a sponsor’s financial credentials, it was unreasonable for them to refuse sponsorship on political grounds.

While the funding model in the United States is different than that of Australia and the amount of support U.S. arts orgs receive from government sources is comparatively small compared to private and corporate support, I can easily see a similar rhetoric being used politically in the U.S.

“X Theater has been on the public dole (equal to 2% of its budget) for years and they are perennially saying they are in financial straits. But just last year they refused a donation from Y Company (seeking to charity wash its reputation after that last scandal), even after they offered to double their usual donation. Where do they get the nerve to ask the people of this great state for more of their hard earned money after refusing Y Company’s generosity?”

To a certain extent, refusing money from tobacco companies might be easy because there has been a decades long nation wide campaign about the problems brought on by smoking. With other companies, issues like environmental damage and sweatshop like conditions with low pay may be mitigated by widespread employment and improvement in the general standard of living, causing more ambiguous views about refusing support on ethical grounds.

I think it would be difficult to pass a law or rule to this effect in the U.S. because it is easy to see how that there will be no end of trouble. (How can such a poor school afford to refuse Playstation’s sponsorship in return for painting their gym and cafeteria with the logo?!)

Just merely employing the rhetoric to equate arts organizations refusing private funding with the unemployed refusing a crappy job can be damaging enough.

Info You Can Use: Save The Charity, Save Your Company

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I loved this story on Non Profit Quarterly about a Maine restaurant which actually revived its business when it started holding all you can eat fundraisers for charities.

…the eatery thought of the weekly all-you-can-eat nights with suggested donations flowing to charity as a way to attract new customers. “It worked almost immediately and it revitalized the business,” Benedict said. “We would have gone out of business if we didn’t change the way we did business. Giving back is the first thing we did, and it worked.” She says that a total of $635,000 has been raised since 2009 for local charity organizations and individuals.

It is great to hear that a business saved itself by helping charities in the community. It could be a model for other communities and businesses.

However, the restaurant hit a snag when the state attorney general started to investigate whether it was licensed as a charitable solicitor.

My first reaction was disappointment because the restaurant was doing such good work, but the truth is that there is a lot of fraud and deception perpetuated by companies acting as charitable solicitors. So unfortunately, despite an abundance of good intentions, companies need to be careful about providing assistance to charities in a similar manner.

The Council of Non-Profits has a link to the first chapter of a book about the licensing required for charitable solicitation by 40 states. The chapter provides a good introduction to the issues involved and resources for finding out more about the requirements in your state. I was able to go right to the pertinent sections of my state code and find who is exempt from filing with a couple mouse clicks. (Unfortunately, it doesn’t appear the restaurant would be exempt in my state.)

The Founder’s Curse

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We here at Butts In The Seats blog, (okay, me), are not afraid to admit when we may have been wrong. This summer, Elizabeth Schmidt, wrote a piece on Non-Profit Quarterly challenging the myth of the Founders Syndrome.

There have been times in the past when my posts have played into the notion that Founders tend to hold their organizations back in various ways. As Schmidt enumerates:

The label seems to be applied if one or more of the following symptoms are present. The first is a sense of grandiosity—that the organization is the founder’s, and it exists to serve his or her ego (or pocketbook). The second is an inability to delegate—poor management on the part of the founder. The third is an inability to make a smooth transition from the founder to new leadership. And the fourth is an unwavering dedication to the original vision for the organization.

Schmidt makes the common sense observation that you don’t need to be a founder to exhibit these characteristics and gives a few examples of non-founders who have damaged their organizations by manifesting them. She also notes that being normal human beings, not all founders possess these traits, nor do they suddenly become infected with these inclinations upon deciding to found a company.

She notes the inability to plan a smooth leadership transition is so widespread it is more of an organizational failing than attributable to the influence of a single individual.

The worst in Schmidt’s mind seems to be the fourth stereotype of not allowing the organization to evolve beyond the original vision.

“This symptom is particularly disturbing, however, because it has the potential to squelch necessary dialogue among the stakeholders of the organization. To say, as soon as a disagreement arises, that the party who conceived of the initial mission suffers from founder’s syndrome, severely handicaps that party’s standing in the discussion.”

Schmidt acknowledges that there is always some basis in truth to the anecdotes that form these generalizations about founders and it is likely that many organizations have encountered troubles for just these reasons.

However, she points the lack of research providing evidence that this is a particular problem for founders. The only study she found that attempted to collect empirical data concluded that there was ““considerable truth to some of the rumors and stories about founder’s syndrome.” However, Schmidt feels the following data does not support this assertion and is at best, inconclusive.

-Founder-led organizations tended to have smaller budgets.

-Term limits for board members existed in 31 percent of founder-led organizations and 49 percent of non-founder organizations.

-Eighty percent of founder-led organizations held at least quarterly meetings, compared to 87% of non-founder organizations.

-Three-fourths of the respondents in both groups thought either the executive director or the board chair was the most influential person during a board meeting, but founder-led organizations were more likely to say the executive director was the most influential.

-On the other hand, founder-led organizations were more likely to have reviewed the mission in the past year than organizations led by non-founders; they were more likely to attract full board participation at meetings, and they were more likely to set and mail the board agenda ahead of time.

I haven’t read the study she references, but on the face of the data, I would probably lean toward saying non-founder organizations employed better governance practices. Still Schmidt makes a strong argument about resisting the inclination to automatically dismiss a founder as the source of problems for a company and instead evaluate all elements potentially contributing to the organization’s weakness.

Separating Governance and Operations

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Last month Non-Profit Quarterly addressed a timely topic I found extremely interesting: In a time when so many non-profits are being formed, but haven’t grown to the point of having a staff, how do you separate the governance and operational roles of a board?

If the organization has any ambitions of growing to the point where it will have a staff, making that separation early on will help avoid having the staff feel second guessed on everything by a board that has a hard time relinquishing those decisions.

As the author, Mitch Dorger, notes, it is easy to focus on operational decisions because the results are more visible and immediate than that of longer term governance decisions. So even if the organization never intends to have a staff, it is easy for the board to get bogged down in operational discussions.

Dorger admits he wasn’t quite sure how a board only organization could effectively keep that separation so he posed the question to an online forum. There were five basic responses he received including, having distinct governance and operational committees and even distinct boards.

Another “specific suggestion was that the vice president, treasurer, and secretary would oversee operational matters while the president and any remaining directors would focus their attention on governance issues. (Of course, all officers would participate in all governance discussions.)”

I liked this one because it actively utilized and made relevant the vice president role.

The final suggestion advocated an examination of the “whole nature of board committees” and abandon the “traditional committees that boards use and reorganizing into three new committees: operations oversight, organizational development, and organizational future.” Another rather intriguing idea.

The Philanthropic Second Date

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Simone Joyaux recently posted her The Donor-Centric Pledge on Non-Profit Quarterly. There are about 23 statements against which you can measure your organization’s practices.

A good many are likely to lead to extended conversations. There were a couple that caught my eye about first time giving that I wanted to address.

10. Many first-time gifts are no more than “impulse purchases” or “first dates.”
11. We’ll have to work harder for the second gift than we did for the first.
18. Asking a donor why she or he gave a first gift to us will likely lead to an amazingly revealing conversation.

Number 10 about first time gifts being an impulse purchase struck me as likely to comprise a much greater percentage of giving than in the past. If giving via cell phone and Kickstarter-like campaigns continues to grow, it is likely that donating will become more of an impulse rather than habitual practice.

Even people who have been reliable annual givers may find themselves possessed of a much greater awareness of interesting opportunities than in the past and start to shift their giving elsewhere.

So statement 11 about having to work harder to get the second gift may actually start to apply to the 12th gift in some cases.

Number 18 provides a portion of the roadmap to avoiding losing donors by focusing on what has motivated them to give. It is pretty much another version of the suggestion I made in my post yesterday about finding out what motivates people to participate in an arts activity.

Even though we probably don’t want to actively acknowledge it, perhaps what should be added to Joyaux’s list is the understanding that a donor’s interests and motivations shift over time. After a decade of giving, they have changed as people. If you have cultivated a close relationship over that long a period, it a separation can be painful.

But their shift in priorities may not be a reflection on the value of your organization, especially if you have been engaged in donor and audience -centric practices.

Tweet Me Your Gift Now

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Non-Profit Quarterly (NPQ) had a piece today encouraging people to pay attention to the fact that Chinese are using social media service Weibo to give directly to the needy. The NPQ piece is in reaction to a Washington Post article about how recent charity scandals had turned a lot of Chinese off from giving to the state approved charities. Now people are using services like Weibo (China’s Twitter/Facebook hybrid social media service) to give to people directly, even though it is illegal to do so.

The scandals have shaken public confidence so badly that the Chronicle of Philanthropy reported in June that giving in 2011 was down to $7.9 billion from $9.5 billion in 2010. The Chronicle’s numbers come from a story on the state run China Daily which attributed the drop to a number of factors in addition to the scandals, including the economic downturn and general giving practices in China.

“In China, people’s willingness to give is ‘disaster-driven’ while in the US, donating is a habit.”

He added that the Chinese philanthropic sector’s over dependency on corporations could be another possible explanation to understand the dramatic changes in donations.

“Our research shows that companies, especially private companies, are dominant contributors. Last year, many export companies suffered from the global economic downturn, so they didn’t have much money to donate,” said Deng.”

What interested most about these stories wasn’t so much that people are using social media to give. We already know that is becoming a bigger factor in giving in the U.S. and recent laws are making it easier to crowd fund projects.

What I was paying attention to was that people were giving via social media even though they acknowledged that it is no more transparent and just as ripe for exploitation as giving to an official charity. In fact, some Chinese observed that personality and good looks seemed to motivate giving more than need in a few cases.

There seemed to be a psychological factor inherent to giving to someone directly that gave people a higher degree of confidence in the act of donating.

The US doesn’t have scandals the size of those in China, but there is still a lot of conversation about administrative overhead and Non Profit CEO salaries. Even though these criteria are generally unfair, they can still motivate giving decisions.

There is an old adage that people don’t give to organizations, they give to people. Based on these stories about China and some general observations I have had about the way people generally behave in the US, non profit arts organizations may find they need to provide giving mechanisms that give people a much more immediate sense of connection and response than in the past.

In addition to the ability to give online, an arts organization may need to allow people to give via their smartphones so that patrons can donate during a performance and immediately gain the sense that they are supporting that actor/singer/dancer that just came onstage. If the person walks off stage before they can give, it may be too late.

Two years ago during a public radio fund drive I was so moved by the quality of the show I was listening to, I pulled over into a parking lot to make my pledge because the show was almost over and I felt like I needed to make my pledge before it ended. There wasn’t really any reason not to wait until I got home because the money was going to the station and not the show directly and I already knew I was going to give again that year—But I just had to show my support for that show!

As people become accustomed to giving to things like Kickstarter projects, non profit arts organizations may find themselves having to solicit donations specifically for each project they plan to do rather than based on a general promise to do quality work as has been typical.

Arts organizations may be faced with the dilemma of positioning their programs this way. Restricted donations have always been a problem for non-profits. Do you want to be faced with having every $25 donation restricted to a specific project because people are more motivated to give to something to which they feel a direct connection?

You might as well have a for-profit structure if you are going to have market demand dictate what is funded, eh?

Stuff To Ponder: Oh The Hats You Will Wear

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The Non-Profit Quarterly had an article this week, “Why Every Nonprofit Has a New Job Title: Publisher.” It really resonated with the way I had been feeling lately. Back when I started in my arts career, I didn’t do so much writing as I do now. Sure, as the new guy I had to write press releases and brochure text, but that was on occasion and scheduled by the marketing calendar.

Now I am writing everyday. It isn’t just this blog. I am creating social media updates, composing emails  , no make that designing emails given their highly graphic nature these days, writing press releases, brochure content, web site content, uploading images to other social media sites. Some of it is produced on a schedule, but more frequently it is produced spontaneously as events unfold so that the information is timely and fresh.

There are a lot of tools which make it much easier for people to connect with what we do from wherever on earth they may be. Servicing them is a lot harder than it used to be.

There seems to be something of a confluence of discussion around this topic lately. Thomas Cott circulated a series of posts about the media arts organizations use to communicate with this week. I was particularly interested to learn email is still more valuable than social media as a marketing tool.  I reminisced a little reading Trevor O’Donnell’s recollection of the 80s as a simpler time for creating marketing materials.

Don’t believe John McWhorter’s claim in the New York Times that “in the proper sense, e-mail and texting are not writing at all.” Maybe he ain’t doing it right, because it certainly feels like I am investing as much time as required when I do it on behalf of my venue.

Even in an increasingly visual media environment, you have to be a skilled writer and do much more of it than in the past. The talent required now is bringing writing, video, images, music together to tell a compelling story. People who made movies may claim this is old hat for them, but this sort of production is no longer their sole province. Now people like you an I can participate in production in places where highly paid professionals once walked.

It is probably good for all of us to remember that last bit as we look askance at Pro-Ams encroaching on our performing and visual arts territory thinking they can produce and participate in our sphere as well as we can.

Truth is, we are probably doing the same thing in respect to graphic design, music and video making among other areas. We now have the confidence to experiment ourselves. We aren’t necessarily as good as the professionals we used to/might have had to pay for the same service, but we are satisfied we are making a good show of it.

(Apologies to Dr. Suess)

You Don’t Tell Me What To Give, Don’t Tell Me What To Say

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An interesting question was posed to Kelly Kleiman, the Nonprofiteer, about the practice of suggesting donors increase their giving from the previous year. The writer was offended at being told what to give the next year. Kleiman attributes the origins of the practice to universities who, anticipating the increased fortunes of their graduates as the moved along in their careers, asked for slightly greater amounts as the years progressed.

This seems like a great thing and, in fact, is the reason individual giving is such an important source of funds to organizations: while foundations often won’t continue their support unless you do something new and different for every grant, most individuals will just keep on giving unless you affirmatively offend them.

But what you’re saying is that the request for elevated support is just such an affirmative offense.

The problem is that the cost of everything continues to go up, and unless the monetary inflow goes up at the same time the agencies you support will find themselves seriously behind the 8-ball. Perhaps the agencies requesting your increased support would do better if they reminded you of that—”We haven’t been able to give our actors a raise for five years while their rents and grocery bills just keep on rising”—rather than beginning with a flat-out demand that you do more.

I thought the question and answer gave some interesting insight into the whole practice of “upselling” donors from year to year as well providing some guidance about how make the request a little more graciously.

What made me cringe was the second part of the writer’s question/complaint.

“And this year, when, as a board member, I was given the fundraising “ask” letters that were going out under my name to my personal contacts, I felt especially irritated to see the request for a specific additional amount. I would certainly never have written my friends directly with this request.”

Kleiman responds that the writer is within their rights to feel upset that such a request was going out under their name. It put me in mind of a piece from the Non-Profit Quarterly I wrote on this summer. The author, Simone Joyaux, referred to the practice of having board members solicit donations from family and friends ,as trespassing. She claims it leverages personal relationships rather than an interest in a cause and ends up alienating both the board member and their friends.

Joyaux noted that giving based on trespassing is generally shallow and not likely to persist after the board member has transitioned away from the organization. Unless, of course, the person solicited is genuinely interested in the organization’s cause. In which case it is better to have conversations and identify that interest initially rather than blindly solicit everyone in a board member’s address book.

This post title inspired by Lesley Gore

[youtube http://www.youtube.com/watch?v=zaw1ibwVbPI&w=640&h=360]

Will Buffet Family Foundation Influence Other Funders?

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Non-Profit Quarterly linked to an interview in Fast Company in which Warren Buffet’s grandson talks about his approach to philanthropy as he takes up the reins of the family foundation.

As I read the interview, I vacillated between mild dread where I hoped no one else decided to adopt the approach and feeling that his approach was sensible and might provide leadership that would strengthen the general non-profit infrastructure in the United States.

What made me most uneasy was his focus on quantity over quality.

“The first question, for instance, is “Assuming we are successful, how many people would we reach directly with the funding of this gift?” Proposals gets 3 points for affecting +1 million people, 2 for greater than 100,000, and 1 for less than 100,000. Those proposals with a less ambitious scope can secure a coveted spot on the portfolio team by being particularly unique or cost-efficient.”

While he does allow for funding of smaller efficient and effective organizations, I just wonder if that will get lost in the desire to report numbers served and therefore reinforce the idea that you have fudge numbers and always report success or lose funding.

Where this is coming from for him is wanting to get away from non-profits making emotional appeals and move toward discussing the complex factors which contribute to the problems the non-profit is trying to address.

“In the philanthropic world, the problem is the product, in the business world, the product is the solution.” says Buffett, who argues that NGOs are forced to “sell suffering.” The needless focus on sappy narratives often overlooks sophisticated solutions that can’t be easily marketed with a T-shirt-clad celebrity holding a small child.”

This is where I feel he is most sensible because he is determined to fund every step in the chain to addressing a problem, including the unsexy areas. But to do that, he wants the redundant organizations to either get out of the business, partner with other groups or refocus themselves.

“…rather than dolling out cash to independent, uncoordinated actors with the most heart-string-tugging story, they could take on an entire social problems (like food security or breast cancer) by systematically lining up nonprofits to tackle each part of the causal chain, from federal policy to victim resources.

“If you are an NGO, doing the exact same thing as another NGO, and that other NGO is doing better than you’re doing it, then you are in business for the wrong reason,” Buffett says in an exasperated rant against the individualist nature of charities. Overlapping operations, he says, not only waste money through redundant overhead, but keep brilliant minds occupied with logistical distractions that sap their potential impact.

“We will give you money to execute your mission,” Buffett says, “if you work together and identify the most cost-effective and successful ways to achieve that.”

Meanwhile, looking at the entire causal chain of a crisis is key to revealing missing links in the solution, such as political or logistical hurdles that are essential to success, but not appealing enough to raise dollars.”

Granted, the focus of the foundation he is leading is on agriculture, water and feeding school children rather than arts and culture. However, the practices of a Buffet family foundation is bound to have widespread influence with funders in other areas. It is possible that other foundations may use the same criteria.

Given that the question about whether there are too many arts organizations in existence has been a hot topic of late, it is conceivable that funders are already thinking along these lines.

So let me ask-

-how many arts organizations would seriously discuss merging or refocusing if a major funder told them they were redunant and less effective than another organization?

-how many might consider abandoning major activities that were redundant if the funder offered major support to expand in their areas of strength?

-would the arts in your community be more vibrant if there were groups that focused specifically on different niches within the chain? Such as:

-organization that handed advocacy for the arts with local government
-organization that focused on advocacy for the arts in education in conjunction with other advocacy groups
-organizations that purely perform
-organization that coordinates outreaches to schools by designing programs that emphasize the strengths of the performance and presenting groups

There are more functions that different groups might handle, of course, but this serves as a good example. You might look at this and think about how difficult it would be with all these tasks so decentralized, but think about how more schools would benefit if there was an organization that was making an effort to provide uniform coverage of your entire city/county. How much easier would it be for artists to make a living in the community if there was an organization that was hiring them to do outreaches in schools or connecting artists with students seeking instruction.

All this in an environment made conducive for these activities by groups who solely focused on influencing law and policy in government and school boards. Their advocacy is made credible by the existence of organizations who attract and employ strong performers and other organizations who develop exemplary education/outreach programs and train the artists to execute them effectively.

This approach may decentralize efforts and require a lot of cooperation between different groups, but does improve on the current situation where everyone does a little of everything with different degrees of success provided they have the funding and personnel.  As Howard Buffet acknowledges, there is a lot of unsexy infrastructure that no one really wants to fund that is crucial to the success of non-profit efforts. What a boon it would be if someone would fund all those places at a level smart people would be willing to engage in the work.

Trespassing Won’t Make You Many Friends

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The Non Profit Quarterly had a piece by Simone Joyaux which I suspect reflects what will be the necessary practice in fund raising for the future.

She asks fund raisers to stop asking their board members to trespass on their family and friends.

Trespassing is when you ask your friends or colleagues to give gifts and buy tickets . . . just because they are your friends and colleagues. This is the personal and professional favor exchange. This is obligation to a person rather than a cause. It’s a lousy way to raise money. It’s offensive. It alienates the asker and the askee. And it’s not sustainable.

[…]

How often have you, as a fundraiser, asked your board members to name names? How often have you asked them to bring in a list? Did you ask your board members to write notes on the letters that you planned to send to their list?

I say again, trespassing is a bad idea. It alienates board members. It alienates the friends and colleagues of board members. It doesn’t produce loyal donors or sustainable gifts.

Joyaux advises asking board members to suggest those they believe might be interested in supporting one’s organization and then inviting them to learn more about the organization. In the process of interacting with these people, one can gauge whether they are interested in what the organization does and perhaps what specific manifestation of the mission they may be disposed to supporting. From there you can work on cultivating a relationship with them that may see them more involved with the organization.

This suggestion isn’t terribly earth shattering or new. I have heard Kennedy Center President Michael Kaiser say this is essentially what he does to garner support for the organizations he leads. When I first heard him speak about how he evaluates what people may be interested in and only really approaches them in relation to their interests, it seemed a less daunting and more considerate approach than soliciting everyone for every cause, even though it is much more time consuming.

As Joyaux notes, existing supporters like board members are probably going to be more comfortable implementing an organizational relationship building approach. After all, they invested the time to develop their personal relationships with friends and colleagues. While they may be willing to donate the fruits of that investment to their favorite non-profit, those relationships were built on entirely different circumstances which may not be entirely compatible with a request for support of a non-profit.

Now that social media allows people to be approached for their support every time they turn on a computer or pick up the phone, it is likely that only those organizations that take the time to cultivate a relationship with people will earn sustained support.

Not that social media won’t be a good tool for keeping people engaged with the organization’s work. It may just not be the strongest method for the organization and individual to gain a good mutual understanding and appreciation of each other’s priorities.

N.B. My apologies. Some how I ended up omitting the link to Joyaux’s piece when I first posted this entry.

Info You Can Use: Federal Employees As Board Members

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Well this one falls under the heading of, “I did not know that.” The Non Profit Quarterly reports that the Office of Government Ethics has proposed changing a rule that prohibited federal employees from serving as officers on a board without getting special permission.

I had no idea that federal employees faced that sort of restriction. I guess we either never approached a federal employees to be on the boards of the organizations at which I worked.

Actually, according to a link on the OGE’s website, until 1996 “a number of agencies had a practice of assigning employees to participate on the boards of directors of certain outside nonprofit organizations, where such service was deemed to further the statutory mission and/or personnel development interests of the agency.”

In 1996, the Department of Justice issued an opinion that a section of the US Code prohibited this type of activity. The restriction was based on concerns about board officers having fiduciary responsibilities that might conflict with the loyalty owed the United States.

But the Office of Government Ethics feels times are a changin’

“In an era when public-private partnerships are promoted as a positive way for government to achieve its objectives more efficiently, ethics officials find it difficult to explain and justify to agency employees why a waiver is required for official board services that have been determined by the agency to be proper,” OGE wrote. “The potential for a real conflict of interest is too remote or inconsequential to affect the integrity of an employee’s services under these circumstances.”

The comment period for the rule ended early this month. I wasn’t able to determine what the time line for the next phase of the rule making might be.

I don’t imagine non profits will line up outside federal buildings throwing their best come hither looks at employees when the OGE issues their final ruling. (Okay, I lie. I can imagine non profits lined up giving federal employees come hither looks. It is very amusing.) But if you have tried to recruit a federal employees before or have been thinking of doing so, the opportunity may present itself in the near future.

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