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Articles
Tough times require priorities, focus on mission
By Hugh Ralston
Pacific Coast Business Times, November 13-19, 2009
I once read of a board chairman of a nonprofit who
claimed his proudest achievement in his three-year term
was to ensure every board member knew the mission of
the organization so well that if awakened at 3 a.m. in a hotel
fire, each could articulate the mission in the stairwell
as they evacuated in their pajamas.
An extreme example, but a useful test.
While the current economic environment may sometimes
seem like the hotel fire is happening every week,
the need to remain focused on mission priorities is more
important than ever for the local nonprofit sector.
And unlike many for-profit businesses,
nonprofits not only have to
worry about the revenue side — state
contracts disappearing, endowment
earnings falling, foundation grants
slowing and individual donors becoming
more reticent — but the expense side is harder to control
when demand for services skyrockets.
In fact, many local nonprofits are caught in a vise —
between surging demands for their services and constrictions
on cash flow. And the business imperatives that are
critical for well-run nonprofits — manage your costs to
meet your revenues, be as focused on service delivery as
on customers, understand your markets — these create a
double set of issues for nonprofits:
How to control costs when the demand for your product/
service is expanding at levels your current staffing
costs can’t sustain;
When your customers represent both the revenue and
the expense — donors are customers as much as the clients
who use services, you have less flexibility to adjust;
When your primary clients — whether it be the state
and/or public agencies, or long-standing donors — are reacting
to changes in their economic models, your agency
is impacted as well.
In short, the challenges of running the nonprofit sector
require the same nimble and responsive business smarts
as any small business in the community.
One challenge in the nonprofit world is that the required
business expertise is often stretched between the
executive director (who may not have been trained in
management and/or finance) and the board members
(who bring expertise from the business world but may
have limited experience with how the nonprofit’s service
delivery actually works).
In many ways, that is what makes volunteers so important
to the nonprofit sector, both in responding to the
passion of the mission but also in lending skills to the organization’s
board. Successful nonprofits are often a joint
enterprise, a blending of talents and passion. And that is
also why the focus of the board on mission priorities is so
important. These tougher times call for making tough
choices — between good programs that no longer make
sense with a leaner budget, between abandoning new initiatives
launched with promise and good intent but struggling
to break even under new economic conditions, Or
perhaps even more significantly: staff reductions, closing
down programs or considering mergers.
In my 15 years on nonprofit boards, in times of booming
markets and of disappearing endowments, we focused
on key responsibilities: keeping the ship righted,
oversight of budgets and policies, working with the CEO
to advance agreed priorities, expanding visibility of the
institution and its programs, reviewing key messages and
ensuring we had a good pipeline of new board members
to carry forth the cause. This is all healthy work of the
board, in addition to helping recruit new friends and new
resources to the cause.
But none of that is as important as
focusing on the core value proposition:
Why do we deserve to survive,
and how can we advocate to a wider
circle of stakeholders the importance of our mission and
the opportunities ahead. If the board can’t articulate the
purpose of the mission — and why it should thrive —, it
can’t be very effective in leading staff, donors, clients and
stakeholders into the future.
And it needs to articulate that mission in more places
than the stairwell of a smoking hotel.
We know there are conversations going on in the region’s
nonprofit sector that are full of difficult choices and
tough tradeoffs. The board ultimately makes the strategic
choices. As we share in our board leadership series at VCCF’s
Center for Nonprofit Leadership, the board owns the
enterprise — both legally and morally. Its responsibilities
focus on governance, mission, direction and holding the
staff (and in particular the CEO/executive director) accountable.
In many cases, the board is full of founding
donors, and a core of those contributors who have provided
the resources to keep the mission alive — either
in annual contributions to program, endowment contributions
for sustainability, or planned gifts to ensure its long
term life. They believe in the cause, and have already
voted with their support.
Staff has an important role, both to ensure that decisions
are made with good data, relevant information and
accurate analysis. But we frankly have a vested interest in
some of these programs, because they pay our salaries.
And they keep segments of our community afloat in less
forgiving times. And it is good work we have invested our
hearts, souls and careers in. Clarity on mission provides
the framework for making the right decisions — right for
the current times, right for the organization’s future and
right in the sense that it won’t permanently damage the
interests of stakeholders.
• Hugh J. Ralston is the president and chief executive
officer of the Ventura County Community Foundation
in Camarillo. For more information on VCCF’s board
leadership efforts, visit www.vccf.org and click on the
Center for Nonprofit Leadership.
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