Investing in Nonprofit Leaders - Modeling Behavior for Funders

Exponent Philanthropy (the national organization for foundations with few or no staff, philanthropic families and individual donors) recently released an updated version of their informational piece on “Investing in Nonprofit Leaders.”  It lays out the case for why and how grantmakers should make an effort to provide nonprofit grantees with resources to foster and strengthen this critical component of nonprofit management.  It recommends ways to adjust grantmaking practices, and suggests specific funding and support opportunities that can help individual leaders as well as broadly foster leadership throughout an organization. 

From my perspective, one of the most critical elements of this primer’s guidance focuses on the interaction between grantees and their funders.  “Building trust,” “beginning the conversation,” and “talking about red flags” form a framework for honest discussions, which the author asserts can lead to a funder’s ability to clearly understand a nonprofit’s needs when it comes to leadership development.  On paper, it looks like sound guidance and an easy roadmap toward a solution, but we know that it is still a real challenge for nonprofits and funders to have such frank exchanges.  I don’t want to suggest that this is always the case, but too often it is the reality of the dynamic between grantmakers and grantees.

Perhaps one way to open the door to such conversations is for your nonprofit’s own board to “model” the behavior it might like to see from its funders when it comes to leadership development.  If even in small ways, I think there are steps any board can make which can demonstrate a commitment to leadership within their own nonprofit.  Here are some examples:

Supporting Individual Leaders – The Exponent primer suggest ways that funders can support individual leaders through such moves as sabbaticals or coaching, or by funding staff retreats and other team-building exercises.  Your board can make some moves of its own in this area.  When it comes to budget planning time, make sure you invest in your staff.  Even a modest professional development budget, or a few dollars set aside for the Executive Director to use for personal coaching or support can go a long way toward demonstrating your commitment to strong leadership.

Networking and Training in the Community – Funders often can have a broad, sweeping impact when they fund or create training and networking opportunities that are available to the entire community.  Peer networking and learning is critical to strengthening the sector and skills building.  On your own board, you should encourage efforts by staff to engage in the wider community.  You should recognize, not discourage, staff who are active in networks, organizations and forums that can promote your nonprofit and advance your cause.

Cultivating the Next Generation of Leaders - We all know that building and strengthening the pipeline of future leaders is essential. Funders are being encouraged from all angles to address this head on.  But what can a board do right now?  Your board can make immediate moves to support that next generation, many of which cost little to no financial resources.  For example, consider establishing a position on your board for a young leader, which can provide an opportunity for someone to learn about board service.   (Make sure to provide that person with appropriate mentoring!)  You can encourage senior staff to provide skills building to junior staff through job shadowing or “lunch and learn” gatherings, anything that promotes the sharing of expertise and experience.

With these small moves, I believe a nonprofit can position itself well to start that frank, honest conversation with its funders.  Even if you’re struggling to fully realize some of the steps suggested above, you can clearly demonstrate a commitment to leadership development at your nonprofit. You will promote leadership development as a true organizational value.  You will model the behavior you hope to see from your funders. You will be doing your part even while engaging funders to do theirs.

Explore these ideas.  Take some initial steps.  Demonstrate your commitment.  Then turn to your funders and say, “We’ve started this, now we need you to join us.  We can all agree that strong leadership is essential to our fulfilling our mission.  We need your help to take it to the next level.”




Start a Conversation with Funders; Nonprofits are Getting Squeezed

Pay-What-It-Takes Philanthropy published this month in the Stanford Social Innovation Review is the latest phrase in a conversation that's slowly picking up momentum, but which also has a long long way to go.  

It is yet another article on how funders need to rethink their practices regarding how so-called "overhead" expenses are funded.  It adds to the growing pile of research, op/ed statements, and case studies that point to a basic truth - nonprofit organizations of different scales addressing a diversity of issues are necessarily going to have an equal level of variation in their economic models and funding structure.  And that funders continue to use a flat one-size-fits-all approach to addressing the issue of overhead or indirect costs flies directly in the face of that basic reality.

This isn't new stuff. The idea of the "Nonprofit Starvation Cycle" has been around since 2009. GuideStar, Charity Navigator and the BBB Wise Giving Alliance teamed up to write "The Overhead Myth" letter back in 2013.  They (and many others) all say the same thing: funders need to better understand what it truly costs to manage different types of nonprofit organizations, and nonprofits need to have a clearer understanding of how their real costs connect to desired impact.  And all of these articles and postings have agreed that while the nonprofits have a role in finding a solution to this situation, the funders are the ones who can and should take the first step.

Funders have to start addressing this with their nonprofit partners.  Nonprofits must work with their supporters in ways that lead to greater understanding and a more useful financing of their missions.

The trick is to make this happen in ways that are real.  The big foundations - Ford, Irvine and the like - are taking some first, important steps.  And research is continuing to be developed (led in part by the article's authors from The Bridgespan Group) to help craft better language, benchmarking data and tools through which conversations can happen using shared terminology and context.  But philanthropy can't wait.  The people and causes being served by nonprofits can't wait. There are steps to be taken now.  And if funders appear reluctant to take them, then it's up to nonprofits to be brave and make the first move.

Nonprofits: it's time to seek out one of your funders and start a dialog that raises such tough issues.  These conversations do not have to be confrontational or argumentative.  They should be framed as ways that you both can collaborate more closely to achieve the impact that everybody wants to achieve.  

Go into such meetings with a plan; know what message you want to relay to your targeted funder.  Have a clear objective for the engagement that relates to mission impact.  If it's useful, bring along a neutral party - your accountant, a consultant or academic.  Such a person can serve as an "honest broker" to help facilitate the conversation.   Have available resource documents that provide data and perspective from other funders.  Help increase your funder's understanding by adding to their body of knowledge.

I do not want to suggest that this is a simple or easy step. But I do think that it is one that every nonprofit can take with at least one of their funders.

The potential: better, more effective philanthropy.  And that will lead to stronger funding for your mission.