Nonprofit Status, Sustainability LeadershipNext Generation

September 15 , 2009

Core PurposeStrengthen Nonprofits

Core Values• Sustainable• Strategic • Collaborative• Native, non-Native, rural and

urban

ISER Study

Key Findings

• Total sector expenditures $3.4 billion, – $2.4 expenditures in charitable organizations

• Sector employs 11% of workforce; – 50% in rural Alaska (compared to 7% nationally)

• Alaska nonprofits more dependent on government funding

• Alaska nonprofits more dependent on corporate and foundation giving

• Individual Alaskans contribute below national norm, especially those making the most

Alaska Nonprofit Sector:Alaska Nonprofit Sector:Unofficial CountUnofficial Count

OFFICIAL COUNT…………………… 4,765

TOTAL OPERATING IN ALASKA……6,000

Alaska Nonprofit Sector:Alaska Nonprofit Sector:Major TypesMajor Types

• Reporting Public Charities & Funding Intermediaries (501c3)• Member Serving Nonprofits—Other (501c6 and others)•Civic Leagues and Social Welfare Orgs (501c4)•27 Categories of nonprofits in IRS Code

Reporting Public Charities:Reporting Public Charities:Expenditures of $2.4 BillionExpenditures of $2.4 Billion

Larger public serving and service providing 501c3 nonprofits that can accept tax-deductible contributions

Health

Social Services

Civic

Education

Arts/Culture

Largest Charitable Organizations

• Providence• ANTHC• YKHC• Banner Health• South Central Foundation• TCC• SEARCH• Central Peninsula Health• Maniliaq• Norton Sound Health• Valley Health• Salvation Army

National Nonprofit Sector: 501c3 National Nonprofit Sector: 501c3 Income Sources Income Sources

Philanthropy, 25%

Government, 35%

Earned, 40%

Alaska Nonprofit Sector: 501c3 Income Alaska Nonprofit Sector: 501c3 Income Sources Sources

Philanthropy, 9%

Government, 57%

Earned, 34%

Compared US AK

Philanthropy, 25%

Government, 35%

Earned, 40%

Philanthropy, 9%

Government, 57%

Earned, 34%

Nonprofit Sector: Total US Private GivingNonprofit Sector: Total US Private GivingDistribution of Private Giving Nationally

About 36% of giving by individuals goes to religious organizations.

Individual, 76.0%

Foundation, 12.0%

Bequests, 7.0%

Corporate, 5.0%

Nonprofit Sector: Total US/AK Private GivingNonprofit Sector: Total US/AK Private Giving

• US-$260 Billion– Corporate 5%

– Foundation 12%

– Individual 83%

• Alaska-$240 Million– Corporate 20%+

• BP 5%

• ConocoPhillips 5%+• Others? 10%

– Foundation 20%+• Rasmuson 12%• Others? 8%

– Individuals 60%

Alaska Nonprofit Sector: Individual Alaska Nonprofit Sector: Individual ContributionsContributions

• Most Alaskans give, but slightly below national levels:– 21% of Alaskans claim a charitable deduction, (IRS),

compared to 30% nationwide, and

• A 2006 study ranks charitable giving comparing 50 states and the District of Columbia, individuals making $200,000 or more,

• Alaska ranks 51st!

Challenges

• Nonprofits represent almost ½ economy in rural Alaska, primarily federal funding

• Generational shifts, workforce shortage

• Non-sustainable revenue

• Perception that nonprofits need no “profit”

• Continued desire to start new nonprofits

Sustainability• Board-staff balance

– Functioning board– Competent staff

• Focus-no “mission drift”– Who you are– Where you’re going

• Collaboration-– Sticking to core competence, supporting others to stick

to theirs• Unrestricted Cash-manage cash flow and investment

potential

Nonprofit Leadership

Nonprofit Staff Leader Profile• Commitment to mission• Technical skills to manage programs• Staff and financial management skill• MOST IMPORTANT

–Must be able to work in partnership with board, share power.

Good to Great

• In Built to Last, Collins and Porras– " how did market leaders that maintained their

dominance for more than fifty years do it?”

• Then, Collins for Good to Great – “how did average companies become great?”

Found Four Factors

• Disciplined People

• Disciplined Thought

• Disciplined Action

• Built to Last Focus

• Create great organizations!

Disciplined People

• Level V Leadership

• First Who, then What

First WHO, then what• Hire the right people, not the right skills

• Work to get right people in right seats

• Once it is understood that someone is not the right person, with style, get them to leave.

• Learn from people mistakes.

Level 5 Leadership• Leaders in most powerful seats are

ambitious about the success of the organization, not themselves

• Leaders who praise others for success, look at self when things don’t work– Substance over style– Once decision is made, all team members

support direction, even those who at one time disagreed.

• Understands why boards matter• Strong Board/ED partnership• Selects right Board President• Understands board member- demographics• Uses Core Values as a tool • Understands lifecycle of a nonprofit board• Strives to be High Performing Board

Board Leadership

Some truths about boards…

After analyzing data from 4,000 nonprofit boards across the country…”Effective governance by a board of trustees is a

relatively rare and unnatural act.”Richard Chait, Thomas Holland and Barbara Taylor,

Improving The Performance of Governing Boards, 1996, Phoenix:Oryx Press

• 75% of boards didn’t know what to do• Fewer than half had formal orientation• Less than 30% had current board job description• “Single biggest reason for why nonprofit boards

are needed is that they impact nonprofit performance”

William P. Ryan, Richard P. Chait and Barbara E.

Taylor, “Problem Boards or Board Problems?” The Nonprofit Quarterly, 10 2 Summer 2003

• Not very well

• 66% of board members rated their own board as only “somewhat effective” or “ineffective”

The Nonprofit Governance Index, November 2000, a joint project of

BoardSource and Stanford University’s Graduate School of Business

Conclusion:How are boards doing?

• Concern about the cause only motive for board service. Not branded to particular agency.

• Demands agency quality. Must have proven impact.

• Demands to make a difference. Time

• Time most important resource.

Conclusion: The ‘new’ board member pool

• Does your board look like these “new board members?”

• Are you making moves to be ready for this new board member?

• Can you see leadership qualities in your current or upcoming board President?

Turn to Your Neighbor

Six Tools

• Driven by passion, based on values

• Core values tied to leadership – and visa versa

• Values impact publics’ confidence, essential

• Ethical standards high

• Core Values used to make choices: people, programs, planning

1st tool: Understanding that the Sector is “value-based”

• Understanding the life cycle of your board is another tool to help you stay: – visionary and future focused;

– take calculated risks;

– lead to good communications;

– be a systems thinker;

– be creative in our problem solving;

– stays values focused

• Can “depersonalize” situation• Can lead to best practices for similar situations

2nd Tool: Understanding the Life Cycles of Boards

• Not all organizations will get there• Is not a linear process• There are some outward qualities to watch for• Progression usually looks and feels like a see-saw

going from one extreme to another before balance can either be seen or attained.

• Ultimately it is how it works and feels – Rater than a statement of fact

3rd Tool: Striving to be High Performing Board

• Lack of board support or board problems “first or second reason why nonprofit CEOs resigning in record numbers.”

Timothy Wolfred, Leadership Lost: A Study on Executive Director Tenure, March 1999

• Several studies showing boards are increasingly unhappy with their CEOs because they won’t share power and/or only want boards to fundraise

4th Tool: Understanding The CEO-Board Relationship

1. The agency’s mission2. Core values for the organization3. How to judge success for the

agency and the CEO4. Who should do what

Different perceptions on 4 key points:Main reason boards and CEOs don’t get along

• Keep the board focused on what matters most.• Continue to define the board’s boundaries to the

board- what is the board expected/not expected to do. • Monitor board discussion and ensure that board

meeting time is used effectively – create ad hoc committees to propose options to difficult

issues.

• Ensure that no one board member is dominating board discussions-– work toward operating as a team.

6th Tool: Understanding Board Chair Responsibilities

Group Exercise

• What other factors make great staff or board leaders?

BREAK!

Generational Shift

Generation Change

• Can’t hide from it• Nonprofits will be challenged on the

– staff level, – board – volunteer recruitment, – marketing – technological changes, and in – significant financial impacts.

Who Are We Talking About?

“Greatest Generation”-Born 1901-1924• Thumbnail: Size: 20 million

• When working with this generation, emphasize: Tradition, helping others, being part of a large-scale, valuable change.

“Silent Generation”: Born 1925-1945• Thumbnail: Size: 30 million

• When working with this generation, emphasize: Tradition, loyalty to a key issue in their lives, value of joint work ethic.

And…• “Boomer Generation”: Born 1946-62

• Thumbnail: Size: 80 million:.

• When working with this generation, emphasize: Their value to the team, your need for them, their ability to improve your services, that your workplace is young and “cool.” Publicly recognize them whenever possible. Tell them that they can help “change the world” by working with you.

• “Generation X” Born 1963-1980• Thumbnail: Size: 45 Million.

• When working with this generation, emphasize: Their value to the work of the organization, the value of independent thinking, that your organization focuses on work-life balance.

And most recently…• Gen@ or GenY or Millenials Born 1981-2002

• Thumbnail: Size: 75 million

• When working with this generation, emphasize: The good that they and their peers can do by working with you, the challenge of doing good in the community and doing it well, the need for their new perspective and ideas.

Trends that Matter

1) Financial stress

2) Technological acceleration

3) Diversity of population

4) Redefining the family

5) MeBranding

6) Work-life balance

Trend One: Financial Stress• First, there’s not enough money.• What there is will trend toward the Boomers.

– Not just Medicare/Medicaid, also withdrawal from 401K’s. And remember as we age, we vote more!

• And then, there’s the Federal Debt.• Finally, financial stress on families and students

(read: current and future employees) from the cost of higher education)

Trend Two: Tech Acceleration

• A reality, not up for debate.

• How you feel about tech acceleration is, in large part, defined by your generation.– Boomers see tech through bifocals: some good, some bad.

– GenXers see it through tinted lenses: how can tech work for me?

– Gen@?: They really don’t “see” tech at all-it’s invisible to them, like air. It’s always been there. And, like air, it’s part of their environment.

– Remember this—it’s really important.

Trend Three: Diversity

• We’re in our fifth great wave of immigration.• This is an issue in all parts of our country, urban-

rural, coastal, central, north, south.• We HAVE to be able to accommodate this

diversity in our marketing, services, hiring and fundraising.

• Remember, it’s not just about language fluency. It’s about cultural knowledge, sensitivity and competence.

Trend Four: Redefining Family• More Mobile: more spread out and more connected.

In past generations, families moved, but they all moved together. Now, generations spread out.

• More “stepped”. “Blended” families are more and more ubiquitous, but have a different set of wants and needs than “traditional” families.

• More multi-racial. Sometimes from marriage, sometimes from adoption, multi-racial families are also increasingly common.

• And your organization doesn’t deal with families? Think again.

Trend Five: MeBranding• Tried to buy plain tomato soup, regular yogurt, or

non-herbal deodorant? It’s hard.• Want to buy a shoe that only you have? You can. • If I only listen to my music, hear my news, have

my 6 adjective coffee, and never have to try a one-size fits all anything…it becomes all about me all the time.

• And nonprofits are all about other people.• In addition, customer now expect at least SOME

customization or accommodation of services.• I call this MeBranding, and it has profound

implications for nonprofits.

Trend Six: Work-Life Balance

• Boomers: “Live to Work!”• GenX and Gen@: “Work to Live!”• Don’t believe me? Draw the circles of

“Work”, “Family”, and “Life” Have all the Boomers draw theirs and then all the GenX and Gen@ staff. Compare---and learn.

• Want to do something really scary? Draw your circles and then have your family draw your circles.

Work Life Test

FAMILY

LIFE

TYPICAL BOOMER

WORK

LIFE

FAMILYWORK

TYPICAL GEN@

Final Words

• Generation change is the challenge of a lifetime for your nonprofit.

• Pay attention, and get started. If you wait too long, you could seriously impair your ability to do high quality mission for the next generation of mission-recipients.

• Good luck!