It is possible to say that executive directors are always on, regardless of the mission of the organizations they lead?  Sure.  You just never know when you might be meeting a potential donor, you just never know when you will be called upon to represent your organization at any number of activities.

Could we say the same of all members of the senior management team?  In the past two years since my son started his career as a financial advisor, I haven’t seen him in public in sweats, his attire of preference for the previous four years of college.  Why?  Because someone told him that he never knows when he will be talking to a potential client and he must always dress to give that potential client confidence in his professional abilities.  Does that make his job 24/7?

There is a difference between a job actually being a 24/7 job—doctor, police officer—and our choosing to make our jobs such.  And we should never confuse the two.  There are times when I have treated my job as if it were 24/7—checking email when I get home in the evenings, last thing before I go to sleep, on the weekends, on vacations—but I have always known that it is not a 24/7 job—and I don’t get paid as if it were.  So, more fool me for making it so.

Having a child helped me get my priorities straight; and that helped me put my job in perspective.  I’ve just returned from six days off—totally and completely unplugged.  I left with the instructions that if I was truly needed, send me a text; I got a handful, which I answered in short order.  And never once was I even slightly tempted to check email.  As far as I can tell, everyone and the Center survived—as I knew they would.

Work-life balance is, by far, the second most frequent complaint that I hear from executive directors—second only to complaints about boards of directors—and yet each of us holds the controls to that dilemma within ourselves.  We chose to make mountains out of molehills, doable jobs into undoable ones and a 60-hour a week job (already ambitious) into a 24/7 job.

That said, the message—the one that says work-life balance (equal emphasis on both the work and the life) is paramount, that it is great to be a professional and do your job within an eight hour day (and on occasion a 10 hour day), to use all of your vacation time allotted, to not be stressed to the max and exhausted, etc.—must come from the top.  Executive directors must preach that message and do it; they must model that behavior religiously.  And they must force their employees to do the same.  To do otherwise is to give ourselves airs we don’t deserve, along with ulcers and other stress-related ailments.

The truth is that working longer hours at our job doesn’t make us better at doing that job.  In fact, it is more often the exact opposite.  If we can’t do a bang-up job in the “normally” allotted time for doing a job, then we aren’t equipped to do the job at all, no matter how many hours we take.  And that is the hard fact that too many of us refuse to face.

What goes up, 3/1/13
Every nonprofit can now be viewed by the exact same population of donors as their peers, collaborators and competitors.  And while we know philanthropists have their favorite causes and missions, these sites expose philanthropists to options they otherwise never would have known existed.  Now, that philanthropist sitting in the most remote of areas surfing the web can fund 10 miles from her home, 100 miles, around the country, or around the globe.  Donors are no longer limited to their own physical reach and experiences.  And while this is wonderful for many nonprofits, on the one hand, it may just be the ringing of the death knoll for many others.

Is there a place for the small nonprofit or the one without the compelling stories that stop you in your tracks in the Internet economy?

No way to treat a partner, 2/15/13
From too many nonprofit executive directors’ perspective, funders have nonprofits between a rock and a hard place:  they are damned if the stay focused on mission and don’t try to squeeze their round peg into the funders’ square holes and damned if they relinquish mission to chase funders’ current dollars.   From the perspective of the nonprofits, failure to play by the funders’ rules means the possibility of extinction.  So they choose to stray from mission in order to get funder dollars while trying to cobble together any ways and means to continue those few programs that actually serve mission.  Those few programs that actually serve the real needs of that portion of the public on whose behalf the organization was intended and supposed to work.

Does this sound like the path to creating healthy, vibrant, sustainable communities for all?  In our society, there is, sadly, such widespread acceptance of the false equation money=smart, that we presume that anyone with money knows best.  Money simply means money.  Years in the field, years working in the problem and on the problem, means knowledge, understanding, awareness.  The current paradigm of allowing the money to dictate the solutions while those who have their hands in the dirt are closed out of the determination process puts us all at risk.

Having  it all, 11/2/12
 Why is it that nonprofits don’t stay focused on what they are supposed to be?  Why is it that too many organizations try to be more than they can be?  In criminology, there is the Law of Saturation which says, if I may bastardize the explanation and make it very basic, that, in essence, each society has as much crime as it and its systems can tolerate and handle.  Would that nonprofits spent time assessing their true saturation point, and did not try to be more than they had the capacity to be, to do more when they really should be working to doing better, to be content to be the best at what they should be doing, even if what they should be doing is focused and narrow.  If only nonprofits truly valued quality rather than quantity, we’d have a stronger nonprofit sector doing a better job of responding to the needs of our people and our communities.  Instead, too many nonprofits prefer purgatory – but not of perfection – and failure.

How do we value nonprofits? 10/19/12
While I have gone on record supporting the notion that nonprofits should be responsible for the share of city services which they use, I have also gone on record saying that nonprofits are not the solution to others’ failed business planning.  Governments must find other solutions to their own financial crisis.

The brand of the “nonprofit sector” should be consistently, and highly, valued for what they are and not be used as a funding stream for for-profits and governments.

Why we give, 8/24/12
Tehila Kogut, from Ben Gurion University, through a series of research projects, found that some people give to charity to ward off the very disaster the charity addresses.  You give to the homeless organization so you don’t become homeless, to the cancer organization so you and your loved ones don’t get cancer, to the literacy organization so that all your children learn to read.  So, do we give to celebrities who represent the things which we want to prevent?

Willful Blindness,  5/4/12
How many executive directors really know how the employees in their organizations are executing their duties?  Sadly, children dying in foster care is becoming too common place ”to think that there is not something wrong with a system that allows that to happen.  There isn’t a person, from the bottom of an organizational chart to the top of that chart who works in a nonprofit where employees—call them case managers, advisors, SCOH workers, whatever—have a responsibility to oversee a specified number of clients who doesn’t know that the number of clients per employee is well beyond what one individual can handle responsibly.  Which means every executive director of such an organization is complicit in allowing a system to continue that can’t possibly guarantee the promises the organization makes.  Willful blindness.  The board, too, which should be receiving regular reports and outcome studies, knows, as well.  The willfully blind leading the willfully blind

Instead, they think they have found an out by jumping on what appears to be a small but growing trend:  creating another 501(c)(3) organization to do the fundraising.  Yup, creating “Friends of XYZ” or “XYZ Foundation”—the two most commonly used names—is the very bad idea organizations are turning to make board members feel more at ease.

And, oh, yes, isn’t that why nonprofits exist—to make our board members feel more comfortable in not doing their job?  (Do not confuse a friends organization with a “Friends Board” or “Honorary Board,” which are frequently created to give a title to those folks who are truly friends of a nonprofit and who demonstrate that friendship by giving money, making key introductions, doing favors, etc., but who don’t have an interest, for whatever reasons, in serving on the governing board.  These are great groups to have.)

Granted, there are some types of organizations for which a friends affiliate  might be considered a necessity.  Government agencies come to mind.  Government agencies, as we all know, are funded through tax dollars.  But sometimes, there are people interested in the work of a government agency—school districts and parks and recreational spaces come immediately to mind—who perceive that the government allotted money is not sufficient to support the kinds of activities that really should be happening in that park or afterschool—and so “Friends of Park Beautiful” and “Poor but Smart School District Foundation” are created.  While on the one hand it is irresponsible of a school district or park to not be able to support financially the caliber of work it promised the public, I understand the reality of their situations.  So these companion organizations seem to make sense and are not the subject of this post.

The sad and scary trend under scrutiny here are those 501(c)(3) organizations that create a friends organization so that board members don’t have to do an important piece of their job.  Instead, they fob that job off onto the friends organization.  But then, so many of the founding organizations populate the board of the friends organization with board members from the original organization!  Don’t they realize what they have done?  Or, as I know most, if not all, do is they once again and wrongly so believe that it will be the job of the staff of the friends group to do the fundraising all on their own.  And, what is even sillier?  It is frequently the exact same staff which is servicing both organizations!   And, not fault of theirs, doing about as good a job at fundraising as they were when they were just the staff of the original organization.

Where, please tell, is the logic here?   Let’s create another organization that will fundraise for us, but will cost us money as well.  A separate 501(c)(3) means a separate set of costs.  While all too often, the organizations “share” space, as they generally are the same staff, staff should be paid more because technically they are doing more than one job.  If you really want to avoid the risk of conflicts of interest and other negative accusation, there should be a separate person doing the finances for each organization, separate accounting firms doing the audits of the two organizations (for which you have to pay).  And regardless of whether an organization is smart and keeping things separate, there still is the cost of two audits, the completion of two 990s, the two sets of Directors and Officers Insurance policies, two strategic plans that need to be developed, two websites that needs to be managed, two sets, in essence, of everything.  Way to save money!

The situation gets even more ridiculous and illogical when you realize that these friends organizations frequently are set up with the sole “mission” of fundraising for the other organization.  They have no programs of their own, but rather must fundraise for the programs designed by the original organization.  Sometimes, simply because of the overlap of board members of both organizations and sometimes because of a proactive invitation, the board of the friends organization will be invited to participate in the strategic planning process (assuming there is one) of the original organization and thereby get some influence, if not actual say, in the programmatic priorities for which they must fundraise.

But think of the position in which that potentially puts the dual serving board members.  While serving on the board of the original organization and engaging in the strategic planning process, those board members must, as stipulated in state law, do what is in the best interests of that organization.  But what if a priority is suggested that is absolutely brilliant for the original organization but will pose a huge challenge for fundraising?  What’s a board member to do?

Suck it up and do the job.

Lean In

One of Sandberg’s points—and laments—is the paucity of women at the heads of for-profit companies.  She points out that women hold only 14% of top corporate positions.  According to data as recent as January of this year, there were only 21 women heading Fortune 500 companies, and another 21 heading Fortune 1000 companies.  That is a whopping 4.2% of each!

According to economist Sylvia Ann Hewlett, in India that number is 11% and Brazil 12% (two of the BRIC countries—those countries identified as having emerging economies; the other two are China and Russia).  In her book (which she co-authored with Ripa Rashid), Winning the War for Talent in Emerging Markets:  Why Women are the Solution,  Hewlett offers these astonishing—and as an aging feminist, incredibly disappointing—figures:  “76% of Chinese women, 80% of Brazilian women, and a whopping 86% of Indian women aspire to the top job, compared to only 52% of their US counterparts.”  No wonder they are emerging and America is sinking.

But is the picture of women leaders as bad as the above numbers would lead us to believe?  You decide.  An alternative to the figure that only slightly more than 50% of American women aspire to the “top job” is the fact that 10 million businesses in the US (out of more than 28 million businesses, ¾ of which are one-person operations) are owned by women,  according to the Center on Women’s Business Research.  And women are launching businesses at one-and-a-half times the national average.

And then we get to the nonprofit sector.  How are we doing?  You know   that when people make pronouncements about the state—or status—of women in the workforce, they are not talking about the nonprofit sector.  So, how do we stack up?  Thirty percent of the “CEOs” (and odds are very good  that this is, indeed, their title, as it makes them feel important) of nonprofits with budgets over $7 million are women.  Not a bad start.

Sadly, though, there is an inverse relationship between the percentages of women in CEO positions at these nonprofits the larger the organizational budget gets.  (Only 21% of women in nonprofits with budgets over $25 million are women.)  In organizations with budgets between $1 million and $7 million, the majority (52%) of the CEOs are women; and in those organizations with budgets under $1 million, 64% of the CEOs are women.  Hold your head up nonprofit sector!

And now lower it, because the pay differential between women and men employees in the nonprofit sector continues, be in the top paid position or elsewhere, continues are no one pays  because you know women’s information network, with women earning anywhere from $.61 to his dollar to $.83 to his dollar.  Outrageous that in 2012, we were still paying men more for doing the same job.

My question, though, is not in which sector do women fare better as employees, in general, and leaders, in particular.  My question here is why does this country insist on measuring the workplace success of women by looking solely  at corporate America?  What is the rest of the America’s workforce?  The arrogance of corporate America–yes, Sheryl Sandberg, that includes you—yet again reveals its ugly self as it determines that the only way to measure success at anything is through the lens of the for-profit sector.  Such amazing conceit!

DiversityInc  found that, in 2012, 1.2% (that is six) of CEOs of Fortune 500 companies were Black, 1.4 (seven) were Asian and 1.2% (six) were Hispanic.  The most “recent” equivalent data I could find on nonprofits goes back to a 2009 study of The Chronicle of Philanthropy.  According to that study, 6.3% (or 25 organizations) of its Nonprofit 400 organizations were led by nonwhite CEOs.  Not great numbers, but they sure beat those of the for-profit world!

And if we want to see how women are really faring in balancing workplace success with personal success, we definitely should be looking at the women leaders in the nonprofit sector—all of them, but in particular those who are leading the small nonprofits, those who aren’t earning big six figure salaries.

These are the working women who are taking care of children and/or parents without the financial ability to hire nannies, cooks, live-in help, and other caretakers.  These are the women who must not only bring home the bacon and fry it up in the pan, but stop at the grocery store, the dry cleaners and the party goods store on the way home before even getting to the cooking.  These are the women who will bake their own cupcakes to take to school, clean the house and/or do the laundry for their elderly parents before spending a few late night hours responding to email or writing a blog either before or after squeezing in an hour or so to devote to friends and/or partner.  These are the women who are not only doing it all, but doing it the average American way.  And therein lies the true measure of the success of women in the workplace today.  And we are successful!

There is one exception to this hard and fast rule and it only involves those who aren’t a departing founder:  if the incoming executive director wants her/his predecessor around.  But this is the new executive director’s call, not the board’s.

One of the key pieces of a succession plan that a large percentage of people leave out (and that is a large percentage of the very small percentage of organizations that actually have any written plan), is the transition strategy.  This is the part of the plan that scopes out how the new person will be acculturated, integrated with staff and board, introduced to stakeholders, etc.

When organizations do have that transition strategy as part of the larger succession plan, one of the chief mistakes I see is the imposing of an overlap of the old and the new—for days, sometimes weeks.  Again:  this should be the incoming executive’s choice, not the board’s decision.  Rather, the board’s decision should be to contract with the outgoing executive for an agreed upon number of consulting hours should the new executive desire that contact.

Many new executive directors want to get into an organization, feel their own way, start to get a little acclimated and then, when they know the right questions to ask, meet with the former executive once, twice, regularly once a month for six months.  Some want no contact, feel they can learn all that they need from the files, the staff, the board and think it is a new day, a new framework, let’s move forward, not look back.

There is no right or wrong, assuming, of course, that the search and selection process has been a good and thorough one.    But a new executive must be given the room to do things her/his way—not the way the board wants it.  That’s just not the board’s role.  And then, albeit under very rare circumstances, the new executive may want the former executive around in a clearly defined role to aid him/her and or the organization in a very specific capacity.  But again, it is the new executive’s call, and not an option that a board should even hint at, let alone suggest.

The reasons for this necessary (unless otherwise invited) departure should be obvious, but clearly are not, as the situation where an outgoing executive (ma)lingers around the organization long after her/his replacement has been brought on is all too common.  It is difficult, if nigh impossible, to put your own imprimatur on a place when the former leader is there; it is impossible to build the necessary relationship with the board and staff and gain their trust when the former executive is there and the heads are swiveling in her/his direction.  There are reasons, whatever they may be, that the decision was made to turn a current leader into a former leader; all of our actions must support that decision.

I have a different stance when it comes to board members:  with one very large exception, it can work for a board president who is stepping down from that leadership position to stay on the board afterwards and serve out whatever might remain of his/her term, provided, of course, that the individual is not an interfering, meddlesome, all-controlling person.

My one large exception?  Founding board members.  Regardless of the roles they have played on the board, when their initial series of terms (whatever the bylaws allow in regarding the number of successive terms), they must go, never to come back!  Seriously.  Reminiscing can be nice; but to keep pointing to the past and a set of goals that no longer applies and circumstances that have long since disappeared, only harms an organization that is seeking to go forward.

Just like a parent who may need to adjust the future s/he designed for a child as that child takes control of his/her own life, naturally influenced by the values the parent taught, the experiences provided, the conversations had, as well as the influences of the world around, the board must adjust as well.  But with a founder board member present who keeps waving the banner of the past, the future is hard to realize.

The past does matter, as there is much to learn there.  But the people who represent the past and whose presence always turns us around to the past instead of helping steer toward the future are the danger to an organization. They must go.

I’ve been thinking a lot about  these illness that inflict our bodies, respond to treatment, yet never really leave us and thus, given the right set of conditions, attack again.  Why, you might ask, am I spending time thinking about such a disheartening topic, especially because I am not at all involved in the field of medicine?  Because the same thing happens in organizations.

Recently, I’ve been struck by how many people are asking me for help with situations that were thought to have been solved quite some time ago; and, now, they are back, not like your worst nightmare, but actually your worst nightmare.  What is it about our organizations that don’t let go? That don’t truly rid themselves of the sources of their illnesses, but prefer instead to mimic the squirrel planning for its winter, buries those seeds of future disasters, protecting them as if they were their very lifeblood, to bring out in times of … what?

Two situations, very different:

One, a founder still involved in the organization though no longer the executive director (mistake number one!), once running amuck, then controlled and calmed.  Board members who couldn’t bear saying no to the founder, couldn’t bear any constraints on the founder left; those who remained understood the importance of holding the founder accountable, of putting systems in place by which he would have to abide.  In other words, he would have to play by the same rules as everyone else in the organization; no exceptions.  A strong executive director put those systems in place, turned the organization around, reputation saved, all was good with the world.  Problem solved.  Until…

Turns out the virus never completely left the body, and now it is back, and a flare up has occurred.  The founder is throwing off his “chains” and too many on the board are allowing him to do so, allowing him to ignore the requests and admonitions of the executive director, the demands of some board members.  Some board members have already quit because of the unwillingness of the founder to play by the rules—rules puts into place for the protection of the mission, the organization, all the players—and the inability to make him do so.  (Fire him, you say?  Seriously?)  Quite different from last time when board members quit because they couldn’t stand to see their precious founder treated as if he were one among many.    But the impact is the same:  the organization is at risk—risk of loosing the smart stewards and protectors, the ones who have the best interests of the mission, organization and clients front and center, and the ones who will do what is best for the whole, not for one person.

The second situation is a board member who decided to micromanage the executive director and staff.  Happened five years ago, is happening again not and both times the stirrer of the pot is the one in the position of treasurer.  Both times, the treasurer began demanding all kinds of ridiculous data, spending increasing amounts of time in the office, giving orders to staff and overruling the executive director.  And then, both times it was “the executive director must go.”

Both times, the treasurer wanted the executive director’s job.  And both times, the treasurer was able to get one other member of the executive committee to side with him and stir up the rest.  The difference, though, is that this time the board president has the backbone to address the situation straight on and call the treasurer and other board member to task and end the situation—but not before staff left and the executive director is considering doing so.  But even last time, after things were eventually resolved, with the aid of outside help, things calmed down; the organization seemed to have been cleansed of the virus.

And here we are years later in each situation and these organizations find themselves in a recurring problem cycle.  Not quite Ground Hog Day, but for the few who were there both times, there is a sad similarity.  I suspect it is because the stories have malingered within the organization’s culture, been passed down from one cohort of board members to the next, one cohort of staff members to the next.  “Oh, you remember the time when …?”   It doesn’t take much to revitalize a dormant seed.  These organisms never completely purged themselves of the problem; what remained was just enough to revive.

So what is the solution to preventing a recurring problem cycle from latching on to our organization.   Pediatricians recommend to parents that they throw out their child’s toothbrush 24 hours after he has started antibiotics for strep throat and to make sure everyone washes their hands.  Throwing out the fomenter from the organization might be the sagest of advice available.

Eventually, I shared this philosophical question with others:  can bullying exist without recognition on the part of the target?  Unfortunately, I rarely got to have that conversation, as practically everyone of whom I asked the question wanted to tell me about the bully in her/his workplace.  I was dumbfounded!

According to the Workplace Bullying Institute (yup! there really is such a place!), up to 1/3 of workers may be the victim of workplace bullying.  (Bullyingstatistics.org–yes, there is a whole website dedicated to bullying statistics of all sorts—reports that in 2010 about approximately one in seven students in grades K through 12 is either the victim of a bully or a bully him/herself, and about 71% reported bullying as an “on-going problem.”)  Interestingly, approximately 20% of workplace bullying crosses the line and becomes harassment, a behavior for which every personnel handbook spells out a protocol for how to report and address harassment.  How many employee handbooks address what to do about a bully in the workplace?

It should come as no surprise that bullying in the workplace occurs, or that it occurs to the degree that it does.  After all, a schoolyard bully unchecked grows up to be an unchecked workplace bully.   The American Academy of Child and Adolescent Psychiatry estimates that almost half of all children will be the victims of a bully at school at some point during their K through 12 years and 10% of children are victims of regular bullying.

That’s a lot of people to age into workplace bullies.  Look around.  If you hadn’t noticed them before, my bet is you do now.  And, no, the bullying behavior it isn’t just Tom being Tom (The New York Times found that 60% of workplace bullies are men, and are equal opportunity bullies) or Mary being Mary (who only bullies other women).  It is bullying.  And bullying, just like harassment, needs to be addressed in employee handbooks.

The consequences of this behavior in the workplace are real to individuals and organizations, alike.  Victims experience stress and anxiety and may suffer from depression, missed workdays and productivity slippage.  Some experts even attribute PTSD to victims of workplace bullying.   Companies suffer as well and can experience an increase in turnover rates (the bully doesn’t leave, the victims do), a lowering of production, an employee(s) with whom no one else wants to work, and the increase costs of providing health care as bullied employees use more and more health benefits.

As I came to understand, that which started for me as an internal dialogue that was part blowing off steam was really a most serious problem.  And then I discovered a whole other aspect of workplace bullying, thanks to researchers Emily Nicklett and John Tropman, both at the University of Michigan, who put the label of workplace bullying on an age old practice at nonprofits:  social exploitation–the “art” of paying ridiculously low wages, or no wages, so that others can get richer.

While I continually work to impress upon all who will listen that the need to underpay nonprofit employees is a myth–built on the extremely faulty thinking that those who work in this sector do solely out of pure love of mission and have no need to earn a livelihood, let alone a competitive livelihood–and we must be providing competitive compensation, I confess that I had never, until now, thought of it as workplace bullying—which it absolutely is.  When others–be it the executive director who receives a disproportionately higher salary than the rest of the employees; or funders who insist that only 10% of her/his/its dollars may go to overhead costs; or board members who have bought the myth hook, line and sinker–“insist” on keeping nonprofit employees earning grossly inadequate salaries and/or increasingly encourage reliance on volunteers–the lowest paid of all staff–nonprofits are engaging one of the worst forms of workplace bullying possible.  And yet, I am betting that few of the bullies would self-identify as such!

There simply is no excuse for allowing bullying of any kind to exist in the workplace.  We didn’t stop them in the schoolyard or the home; so we better stop them in the workplace.

And so it is true with best practices and nonprofits:  there are best practices, those practices to which everyone who wants to be the best will aspire.  They are beacons to right organizations if and when they may have lost their ways.  But, it is also true that not every nonprofit has the ability, interest, drive, capacity, etc., to implement and sustain best practices.  Still, every nonprofit should and must have the capacity to be on the good-better-best continuum working in the direction toward best.  To do otherwise suggests quite loudly that the organization does not care by what principles it comports itself, that ends justify means, and that improvement is not of value.

Don’t we all need something to which to aspire?  La Salle University’s basketball team just squeaked into the field of 68 teams for this year’s NCAA tournament (first time since 1992).  Folks were confident that if La Salle didn’t make the NCAA it would be one of the 32 teams invited to the NIT.

(The NCAA is more prestigious—the best end of the continuum; the NIT is just in the better slot, despite being the older sibling.)  Before the selection was made last Sunday, I had several discussions with college basketball aficionados as to whether it would better to get into the NIT where it was likely the team could go further into the playoffs than get into the NCAA and, in all likelihood, not get as far.  As you might imagine, I had advocates for both positions:  it is more advantageous to be the best, even if for a short while, while others thought better was good enough, especially if it was likely that you could survive in that tournament longer, regroup, come back stronger next year, and then get to the NCAA and truly be competitive.

Let’s follow this through a little further.  What are the consequences to those teams and schools that get to compete in the NCAA versus the NIT tournaments?  High school players want to play where?  The schools that are regularly in the NCAA.  Why? Because they are supposed to be the “best”.  Will they settle for teams that were just in the NIT?  You bet, and quite happily over a school that didn’t even get an invitation to any of the big dances.  How about the sponsors?  Where do you think they want their money to go?  My Google search discovered that last year’s NCAA final game received a 12.1 Nielsen rating (albeit down 9% from 2011); it did not produce a statistic for the Nielsen rating for the NIT final game.

The point is that there are best practices—notice the plural there—that have been deemed, based on evidence, to lead to success with a greater consistency and frequency than other practices.  Nowhere in the term of best practices—see the plural, though, is it suggested that there is one and only one model.  Nor does it mean that if you aren’t abiding by best practices you aren’t worth watching; you just aren’t deemed the best.  Which means that if you don’t have the capacity, the drive, the talent, the interest, in playing with the big dogs, that is fine; stay where you can comfortably reside, doing as well as you can within your means.  But don’t settle for staying there if you want or need the rewards of moving down that good-better-best continuum.

To suggest to nonprofits that there are no best practices in our sector is to sell ourselves short and give organizations’ a false sense of achievement that, in the end, leaves them short of what might be their potential.  To suggest to nonprofits that there are best standards out there, and that while you may not have the organizational capacity to achieve it now, know what it is and what are its rewards, and then decide—proactively and intentionally—if you want to strive for that attainment.

Students who have developed a false understanding of their capabilities—their intelligence, their communication skills, both verbal and written, their critical thinking skills, etc.—and who have been taught that missing deadlines or not adhering to directions will always be forgiven—do not do well in the unprotected world of real life work.  That is the effect of grade inflation and dumbing down standards:  we give students a grade to give them a false sense of warm and fuzzy about themselves rather than as an indicator of how prepared you are to meet the realities of the world.  We do equal harm to nonprofits when we back off best practices and coddle them to think they are just fine where they are.  They might be; but they also might be a heck of a lot better—do a much better job of serving out their mission—if we’d stretched their horizons, asked them to risk failure, told them the truth, and asked them to be the best they could be and not settle for mediocre.

But why can’t I find any?  Why do boards, executives and senior managers ignore the signs.  Why do we think that if we just struggle for another month or so we will accomplish what hasn’t happened in the many, many months before?  Where did we get the idea that sticking our heads in the sand will turn things around?  How many examples do we have of that working?

Then, because management and leadership did not take the time to learn any lessons, the organization will be right back where it started.  A futile “strategy”.  Whenever I say to a board and senior staff, “If your development strategy is to wait for the little old lady about whom you know nothing to leave you several millions of dollars in her will, you are going down,” everyone laughs.  But a year later nothing has changed, no new strategy has been introduced or greater results achieved.

Why are we so willing to completely fail—read, close an organization down—but not resize to save a mission?  Makes no sense to me.  Why can’t we see ourselves as others do?  Like the formerly overweight person who loses massive amounts of weight but still sees himself as fat though others tell him how fit and good he looks.  The once strong and stable nonprofit that doesn’t recognize its Achilles’ heel in its lack of diversified funding (read more than 51% reliant on one type of funding) that is shrinking but continues to see itself as successful and marches on while others shake their heads and worry about just how swiftly the organization will shut down.  Those examples are rampant; just look around your communities.

What is it about our society that seems to value only organizational growth while abhorring shrinkage?  We’ve developed a whole vocabulary for the latter, all of which is quite amusing.  We talk about downsizing, if we want to be direct, or rightsizing, smartsizing or workforce optimization, to mention but a few of the good ones, if we want to obfuscate and prefer euphemisms for the distasteful.

But obfuscation never served anyone in the world of business well.  Successful business is best served by direct and honest assessment, clear and strategic thinking, unswerving critical analysis, and the willingness to call it as it is, and not as it once was.

I continue to wonder about the group of people that would hire a new executive director, knowing the organization has been running a $100,000 deficit for a number of years, has an overhead that is more than two-thirds of its budget, has government contracts funding over 2/3 of its budget, and has a practically non-existent individual donor base—and discloses none of this, hoping candidates wouldn’t learn the truth before one signed on.

The law obligates all nonprofit board members to the duty of obedience—loyalty to the organization’s mission.   In other words, board members are legally required to do what is in the best interest of the mission.   Executive directors have a moral obligation to do the same.

BoardSource  expresses the duty of care, another of the three legal duties of board members, as “the level of competence that is expected of a board member.”  Moral practice holds executive directors to that same standard.

Where is permission to ignore the realities of the situation?   Where is there support to continue blithely along not recognizing that the walls around are crumbling?  Where in any of that is there authorization to wear blinders, chant a false mantra and continue to see things as they were and not as they are now?

Reality can be a tough thing with which to deal; going out of business is even harder.  A phoenix, however, is inspirational.

Philadelphia is no exception.  In 1995, under then Mayor Rendell, 46 nonprofits voluntarily paid $9.4 million.  In 2011, only nine institutions paid PILOTs for a total of less than $400,000.  For the record, there are tens of thousands of nonprofits in Philadelphia—that was true in 1995, true in 2011 and still true in 2013.  But jurisdictions never intend PILOTs to be for everyone–just the deep pocketed nonprofits.   Here we are in 2013, and two members of Philadelphia’s City Council are pushing to re-invigorate the PILOTs program.  No surprise that nonprofits aren’t pleased.

When I spoke to the reporter, I forewarned him, before he even got to ask me a question, that I was sure I would not be reflecting the standard nonprofit stance, while I simultaneously stole myself to be ready for some flack once the story hit the stands.  He shared a quote with me from a major nonprofit in the city in which the spokesperson said the nonprofit would take the payment of PILOTs under consideration but that it liked to target any “investment in the community” that it makes to align with its organizational mission.

Wow! Hold up!  PILOTs are not charitable dollars that we can direct to selected causes.  There have been periods when people have tried to say to the IRS, “Wait! Do not use any of my tax dollars to fund the X Department because it does not align with my philosophical beliefs.”  With few exceptions, this doesn’t work.

PILOTs are the cost of doing business as a charitable organization and not the payment of philanthropic dollars to the charity of our choice.  Nonprofit A and its for-profit neighbor B use the same roads, are protected by the same police and fire departments, benefit from the same sewer lines, enjoy the same city-maintained parks.  Why should nonprofits get the free ride while for-profits pay?  It doesn’t seem fair, right, just, equitable—the thesaurus goes on and on.

The first email I got in response to the article that had my succinct quote reflecting the sentiments above, felt rather aggressive.  The subject was “Taxes” and the body of the text was, “Are you in favor of taxing nonprofits or against?” The second email read:  “Please tell me that [reporter] either misquoted you or took you out of context. The last thing our beloved sector needs is to signal that PILOT’s are okey-dokey AND just ducky.”  Both emails were from friends.  So, I began explaining.

Unfortunately for you, the reader, the explanation isn’t a smooth cohesive one.  It has many different components.  In no particular order:

• First and foremost, I am tired of people always thinking that nonprofits are “trying to get away” with things.  I’ve never figured out exactly what it is the scores of accusers think we have gotten away with, but they think we do.  Certainly, here is a situation where they could point to something specific and say, “See, nonprofits are always trying to get away with things, like paying their taxes” and that I would understand.
• The quid pro quo of “Nonprofit, you do this work so we, the government, don’t have to, and in exchange we won’t make you pay taxes,” was nice 50 years ago, maybe even 10.  But it doesn’t work so well anymore.  With competition for that work we do coming not just from other nonprofits but increasingly from B Corps, other for-profits and the growing number of L3Cs, there are more and more organizations out there that can do what we do and pay taxes.  If we want to stay competitive, should we continue to expect – or even want – the government to waive our tax payments when we know that very same government could turn to our tax paying competition and get the service and the tax revenue.
• We cannot have it both ways, as it seems so many nonprofits want to do.  We cannot hide behind the cloak of “We are a nonprofit and thus we are entitled to …” (or worse, the whine of “Oh, we are just a poor nonprofit”) when it suits us and then be annoyed when nonprofits get treated as the lesser, insignificant relation of the for-profits.  Either we are businesses, have solid products and services and should be taken seriously or we aren’t.  If the former, then we should pay for the services we use just like those others to whom we claim to be the equal.

Payment of PILOTs – or, I’ll go ahead and say it, taxes –  to nonprofits is, to a certain extent, like buying your first home.  With that transaction, you’ve moved to a different stage in your life:  you have a mortgage, you are responsible, you are—okay, I’ll go ahead and say it – an adult.  For nonprofits, paying taxes is the same:  it says, we are responsible, we have an important job to do and, yes, we are equal to those for-profits so venerated in American society.

Read about the new push for PILOTS in the Philadelphia Inquirer >