This past week, I had the great pleasure to attend my niece’s graduation from one of the top business schools in the country. This school annually awards one-year fellowships to eight deserving graduates which allow them to spend a year applying their new-found knowledge in one of eight nonprofits. Some, my niece tells me, as she is one of this year’s class of eight, even become employees of the nonprofit after the fellowships conclude. That’s the good news.
The bad news came at a reception that my niece and her close circle of friends held for their families. A conversation with the mother of one of the hostesses had me cringing, despite having heard what she had to say too many times before (including from my niece’s mouth after her summer experiences at various nonprofits). This woman’s daughter was taking her business school education and going to work (not a fellowship) for a national nonprofit, and the daughter was seriously uneasy with the prospect. She loved the mission of this organization, but she had had a bad experience with a summer job at a nonprofit that left her believing that nonprofits are inept and are not– no cannot be– run like an efficient for-profit. And this made her exceptionally anxious about her new place of employment.
As I said, I’ve heard this lament again and again. And, depending upon my mood, I chuckle and say, “That’s what keeps The Nonprofit Center in business!” Truly, I only say that internally. Externally, I explain how that is changing, that nonprofits increasingly understand that they need to run like a business, pay attention to the bottom line, have metrics and sound business models, require solid performances of employees, etc., etc., etc. I say that people for too long have looked at nonprofits as they do that dilettante relative: interesting, good for an amusing story, but not to be taken seriously. And quite honestly, I’m really, really tired of this.
But who is to blame for this? I’ll lay it at the feet of the paid and volunteer heads of the organization: the executive director and the board. I see it again and again, and have written about it probably too often: the executive director who spends so much time working in the organization, as I put it once before on these pages, and neglects working on the organization.
As a result, inefficiencies abound. Employees who underperform remain on payroll for years; funding is not diversified; programs remain in place regardless of whether they fulfill mission promises, bring in sufficient revenue, meet the goals of the program; jobs are “fluid” because there are no job descriptions; the strategic plan, if it exists, is ignored; decision making, because it must be inclusive, is painfully slow. And the list could go on. It may “feel” or initially look like a nice place to work, but the reality is quite the opposite. It is a disorganized, chaotic, underperforming, excuse-driven organization. And, quite frankly, who would want to work there?
The board, which is supposed to be there to prevent the above from happening, isn’t doing its job. It should be providing oversight of the finances, executive director and mission fulfillment; it should be laying the direction through policy setting and strategic planning; and it should be ensuring sufficient resources to sustain the mission now and into the future. Instead, we have bright board members—perhaps educated at some of the most prestigious business schools in the country—going dumb or not bothering to pay attention when it comes to advising the dilatant relative. How about the board that has no clue what its operating budget is nor any idea of whether it is in the red or the black? (Want to take a guess?)
Or the board that hasn’t had a financial report in a year because the staff hasn’t been able to get the new software to work? How about the one where the board that has been unhappy with the executive director for three or five or more years, but has never gotten around to doing a performance evaluation or making any corrective attempts and is only now coming around to doing something because the organization is tanking?
Or the board that has been comfortable, year after year, to rely solely on government grants, stridently refusing suggestions to diversify and ignoring the examples around it of such solo-funded organizations going down? This all might be funny if it weren’t for the fact that all of these scenarios, and the ones I don’t have room to tell here, are real; didn’t make one of them up. Promise.
Do people run their for-profit businesses like this? Don’t think so. I’ve yet to meet a CEO who lets an underperforming employee remain on the payroll (unless there were “special” circumstances, such as blood lines, sex, blackmail, etc.) or continue to push a product that was no longer delivering what the market could bear? Would for-profit board members be willing to let a whole year go by with an underperforming CEO at the helm or not knowing the financial health of the company? Can’t imagine it! And yet, time and time again, we see what would never be practiced in the for-profit world pass as acceptable in the nonprofit world. And it comes with serious consequences.
One serious consequence is the on-going devaluation of the nonprofit sector in comparison to the for-profit sector. The latter, this view holds, is more important than the former. Truth is, however, that both are equally important to the quality of everyone’s life. The sooner we realize that and start taking nonprofits and their missions as seriously as we do companies and their products, the better our society will become.
Another serious consequence is that we are chasing away the very ones who can right the sector. We all want the best and the brightest working for us—for-profits and nonprofits alike. The best and the brightest don’t just come out of the country’s top business schools; they come from all walks of life and backgrounds. It is more than time for every nonprofit to take a deep, hard and honest look at itself and see whether and how it is its our own worst enemy—chasing away the chance for a bright future.