I just finished reading a heartbreaking story in The Chronicle of Philanthropy about a mega-resourced nonprofit – Benefits Data Trust – that sunk faster than the Titanic. It’s both sad and crazy-making.
The mission of Benefits Data Trust was to use A.I. to connect under-resourced folks with public benefits. How could they fold after receiving a $20 million gift from MacKenzie Scott? Just thinking about that kind of cash would make any nonprofit exec salivate.
While I don’t know this organization personally, I’ve been around the block long enough to speculate about what went wrong (and I’ve also read the post-mortem in The Chronicle). It’s a stark case of bad leadership.
As someone who does Executive Search work and has lived the insomnia of being a nonprofit CEO, I want to offer some insights about what good nonprofit execs need to know to do their jobs well.
In addition to a deep commitment to the mission, successful nonprofit leaders:
1. Listen to and draw upon the ideas of others
Even when someone has vast experience in the field, effective leaders understand that it’s crucial to hear what others want, need, and think. These execs touch base regularly with:
People served by the nonprofit to find out what’s working well, what could be better, and what else is needed.
Staff at ALL levels to hear about their experiences and ideas for improvements.
Allies at other organizations to explore how they can work together, do things differently or adopt new approaches.
Board members to talk through major decisions concerning new programs/initiatives, finances, policies, etc.
People who are less familiar or unfamiliar with the work such as elected officials and potential funders. Their reactions will provide key insights about how the organization and its work are perceived outside of its supportive bubble. The conversations will allow you the opportunity to correct any misinformation they may have heard and to “sell” your work.
Each of these “listening” elements requires taking what has been learned and using it strategically to chart a course.
2. Understand how to create a sound business/financial model
Since nonprofits can’t rely entirely on earned income to meet their expenses, chief executives need to think strategically about how to build a sustainable revenue model. I’m fond of saying this model should be like a 10-legged stool – if one of the legs snaps off, your organization won’t tip over because you’ll have nine other legs to support you.
It’s a tricky business. Sometimes government is a major portion of a nonprofit’s revenue and then, poof, there may be a change in policy and that funding disappears. Or, perhaps a foundation sunsets, changes its focus, or a major donor moves. If any of those happen, what kind of contingency do you have in place to replace that funding? How can you pivot so that core services don’t disappear overnight?
Top execs need to be skilled at thinking strategically and creatively about how to fund the work so that it advances the mission and doesn’t deviate from it. They need to fully understand how dollars flow into and out of the organization so that bills – especially staff salaries – are paid on time. This is ongoing work and not a “one-and-done” revenue model. It requires being vigilant about discovering new funding opportunities that match the evolving needs of the work AND maintaining an unwavering focus on the mission.
Technical skills like understanding finance and fundraising are part of the equation, and those can be learned. If you’d like to be a nonprofit exec and you don’t have these skills, there are many opportunities in your community to acquire them.
Having a strategic mindset is at the core of each of these elements. That, and a true willingness to engage with others and learn from them is key.
Pat
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Pat Libby is a change management consultant working principally with nonprofit corporations. She is author of The Empowered Citizens Guide: 10 Steps to Passing a Law that Matters to You, Oxford University Press, The Lobbying Strategy Handbook, second edition, Oxford University Press, and Cases in Nonprofit Management, SAGE. She has served as an academic, senior executive, board member, and consultant to innumerable nonprofit organizations and foundations for more than three decades.
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