Adam Goldfarb and Jeffrey Goldfarb
Jeffrey M Goldfarb & Associates
295 Main St, Suite 914
Buffalo, NY 14203
It’s not Rocket Science:
Back to the Basics of Sustainability for Nonprofits
Jeffrey M Goldfarb and Associates is an Independent firm
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Over the past 27 years serving as wealth managers to successful families, businesses, and nonprofits, we have seen many successful collaborations, as well as a few that did not succeed. While many reasons can be attributed to these successes and failures, our research shows that most of the sample believed that infrastructure and demonstrable sustainability of nonprofit organizations are the critical components in solidifying relationships with the community and donor base. As will be seen in the following white paper, the findings will serve to remind people on all sides of the equation that it always comes back to basics.
Depending on whom you speak with, 501(c)(3) organizations are either thriving or floundering. Why is there such discrepancy in opinions? Are these perceptions real? Are those who see the glass half empty accurate or are there in fact organizations that are doing things the right way?
While on the surface this question appears to be difficult to answer, our research leads to a different conclusion. In fact, some key root elements in 501(c)(3) failures can be easily identified and remedied. What our research uncovered is that acceptance of the problems and remedies are in fact the real obstacles that must be dealt with for the long-term health and sustainability of the industry. This white paper will explore three key barriers that consistently block progress. It will also present potential solutions, which based on the responses they garnered, may provide the foundation for long-term sustainability. Finally, it should be noted that the problems and solutions cited in this paper are not the results of solving a great mystery. Rather, they stem from common sense that is often overlooked.
The success or failure of an organization, not surprisingly, begins with leadership, or lack thereof. In the leadership pyramid the Executive Director is at the top, followed by the Board President, and finally the Board of Directors. While there is a hierarchy at play, it is, and must be, a three-way partnership in order to achieve success. The Executive Director is a committed and strong leader; the Board President works intimately with the Executive Director and the Board of Directors to forge a shared vision based on the mission and see it through; the Board of Directors are engaged and have not only the funds to support the organization, but also the skillset. All are united in their passion for achieving the mission. In order to facilitate the leadership partnership, clearly defined roles and expectations serve to highlight the importance of each player and reinforce their intra-dependence on each other for success. These roles are unique and non-redundant. For all intents and purposes, this model reflects clear and consistent job descriptions for leadership, who at times can feel immune from such systems.
The second obstacle to sustainability is adherence to an outdated mission. What constitutes an outdated mission? It can be either one that has been achieved, or the quantifiable data indicates that it is time to expand its scope. Having a mission is essential for any organization to survive; having a relevant mission is essential for that organization to thrive. Mission change should not be feared. Rather, it should be considered an essential component in demonstrating accountability and relevance to the community. Our research found that having a strategic plan in place allowed effective monitoring by leadership of successes and deficiencies, as well as mission relevance and irrelevance. The strategic plan is a product of leadership, and is communicated by all components of leadership to donors and the community at large. There are many voices but only one message. Measurable goals are identified and results are delivered through a healthy mix of data and storytelling. With the strategic plan up-to-date and quantifiable results, the organization is able to show its constituents that its mission is not only relevant, but a necessity for the community, thereby fulfilling its fiduciary responsibilities.
As seen thus far, an efficient and well defined partnership at the highest leadership level, as well as an organization’s ability to adapt to its mission in order to serve the community in a fiduciary capacity, are critical components in the health and relevancy of an organization. This leads to the third barrier to sustainability… organizational culture. There appear to be two distinct cultures that emerge. One is the culture of strategic evolution, while the other is the culture of preservation.
A good way of understanding these two cultures is to look at the concept of “Comfort Zone.”
Comfort zones can be addressed in two ways. The first is that they can be embraced and never left, which results in complacency. Static culture can manifest itself in large or small organizations. The reasons can be diverse, ranging from protection of “turf” to lack of efficient internal or external monitoring and accountability. Status quo is easy to maintain but not so easy for the organization to sustain. In large organizations the sheer size can impede growth and change, while in small organizations financial and staffing limitations, as well as group dynamics can have similar effects.
Comfort zones may also be expanded, which results in positive growth. The expansion can be gradual or rapid. The readiness of the organization, its infrastructure, and the vision of its leadership all play a critical role in the rate of expansion. If organizational leadership can answer the following three questions affirmatively, they are ready to leave their comfort zone and evolve:
- Are you willing to ruffle feathers?
- Are you willing to push the organizational agenda forward?
- Is the agenda about the mission?
Are you willing to advance the strategic plan and its related agenda, at the cost of disagreements within the leadership pyramid? Our research showed that strong leaders build consensus out of conflict while leaders lacking that innate strength avoid conflict and defer to the status quo.
What consensus is being built? It is the consensus around pushing the organizational agenda forward. The agenda is aligned with the core mission of the organization and is moved forward in a fiduciary manner. Very rarely will there be complete agreement about a specific program or change that is being proposed, however a strong leader will gain the consensus needed to have the agenda progress.
If these three questions are answered positively, leadership is prepared to move outside of it previously established comfort zone and take the next step forward. It is mission driven, accountable, transparent and visionary. If on the other hand leadership answers negatively to any one or combination of these three questions, it could be stuck in the perpetuating cycle of self-preservation. While preservation itself is an important piece of organizational success, it cannot be the main focus. If preservation becomes the primary organizational goal, it can lead to lack of innovation, creativity, motivation, and in extreme cases, obsolescence. When operations are proceeding smoothly, people do not want to “rock the boat;” the organization may be functioning but not producing results. Professionals have indicated that sometimes it takes the perfect mix of strong innovative leadership and financial instability (or some other perceivable crisis) for organizations to accept change. While that may be the case, strong leadership will remain the key to a successful and innovative transformation.
So the question arises, how can these isolated instances of success become universal? It can be argued that if it happens at all, eventually the process will trickle down, but that is an easy way out of a difficult question. The necessary pieces to this complicated puzzle are commitment, time, and modeling. Most sources were not highly optimistic with this outcome. The primary reason for their pessimism was general lack of standards, measurements, and oversight. But if that is the general opinion, from where will these guidelines and standards for success and failure emanate?
An internal solution would see the organizations take responsibility of meeting standards on their own. In order for this to be achieved, the specific organizational problem would be identified and systems developed to remedy shortcomings and service gaps. This includes a comprehensive and structured job description for all employees, including the Executive Director, with clearly defined expectations and consequences for noncompliance that are measurable and standardized. For the Board of Directors and Board President, standardized qualifications, skillsets they bring, network, and whether or not it is pay-to-play, and if so, are there exceptions to this rule if there is an individual who could make a significant contribution to the organization in other ways. This structure utilizes a strong nominating committee to hold the system together. By establishing practical and measurable internal systems, the industry could see forward movement without the constant oversight that would otherwise be necessary.
The other option would be an external solution; for example 501(c)(3) recertification. Systems in place would include strict measurements based on industry standards, a standardized timetable, consequences for not meeting standards, and strict monitoring. What would this new standard of measurement and accountability lead to? It could lead to a culture of field-wide organizational accountability and progress.
For this model to be feasible, organizations would fall into 3 categories. The first is “performing well;” these are the models for best practices1 and meeting those standards of recertification without issue. The second category is “needs improvement.” There is a standard timetable set for these institutions to make the needed improvements and gain approval for recertification. If they do not meet the requirements they would not qualify. The final category is “not meeting industry standards.” Here are the organizations that have fallen into irrelevancy, being put on a make it or break it probation. Those that progress regain their relevance and better serve the community, while those that fail lose their certification and successful organizations take over. While the results may seem harsh and threatening, many in our sample did note that a more businesslike, almost Darwinian approach would serve the industry well, in that the best would thrive and the weakest would not. It must also be noted that many in our sample believed these ends could be achieved without added government oversight.
The ideas presented in this white paper are not an indictment on the nonprofit world. There have been many positive trends in recent years, such as strategic philanthropy, which through identification of problems and measurements of results, have better aligned organizations with their donors. However, there are still organizations not remaining true to their missions, nor performing at the level communities need. By providing alternative internal and external solutions, successful agencies will remain relevant and continue to grow, while those that are lagging will either survive through change or shut their doors forever.
Special Thanks To:
Azzarella, Justin. Associate Vice President for Community Development, Evergreen Health
Bender, James. Executive Director, Hearts and Hands Faith in Action
Booz, Lisa. Regional Director, Camp Good Days.
Brann, Laura. Manager of Annual Giving & Sponsorship, Hospice Buffalo.
Buhrmaster-Bunch, Melanie. Assistant Vice President Corporate and Foundation Relations,
University at Buffalo, the State University of New York.
Civello, Dianna. Interim Vice President for Institutional Advancement, Canisius College.
Constantine, Betsy. Vice President Giving Strategies, Community Foundation for Greater Buffalo.
Durand, Bonita. Chief of Staff in the President’s Office/Secretary to the Buffalo State College
Council, State University of New York College at Buffalo.
Filipowicz, Heather. Former Executive Director, Western New York Women’s Foundation.
Flynn, Patrick. President, The Hospice Foundation of Western New York, Inc.
Foley, Mark. President and CEO, Community Services for the Developmentally Disabled.
Frome, Keith. Head of School, King Center Charter School.
Gair, Benjamin. Council President, Western New York Planned Giving Consortium.
Herdlein, Richard. Associate Professor, State University of New York College at Buffalo.
Herrera-Mishler, Thomas. President and CEO, Buffalo Olmsted Parks Conservancy.
Kline, Kimberly. Associate Professor, State University of New York College at Buffalo.
Levy, Holly. Community Volunteer.
Lynch, Thomas. President and CEO, Goodwill Industries of Western New York, Inc.
Mogavero, Jane. Director Client Relations, Community Foundation for Greater Buffalo.
Oczek, Kathleen. Vice President for Advancement, Evergreen Health Services.
Sampson, James. Member Buffalo School Board, Retired CEO Gateway-Longview.
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