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Dear Friends and Colleagues: Many nonprofit leaders are talking about Jim Collins’ Good to Great. Have you read it? This management book is hot among nonprofit managers because Mr. Collins issued a monograph supplement, Good to Great and the Social Sectors: Why Business Thinking is Not the Answer. Collins offers an insightful analysis into what keeps some agencies stuck in mediocrity, while others continue to improve. The book and accompanying monograph are a must-read. Collins led a team of people to investigate how companies successfully moved a good organization into a great one. He shares a number of critical lessons gleaned from the research on how to develop an enterprise bound for greatness, including: 1) why it's important to pick the right people, 2) why you have to face brutal facts, 3) why you need a simple concept to drive your entire business, 4) why it's crucial to become rigorously disciplined, and 5) why technology is best used to accelerate, not steer, an organization. Collins explains that many business leaders believe that for-profit companies have nothing to learn from the nonprofit sector and that this is damaging. Just as damaging: many nonprofits believe they can move from good to great by becoming more corporate. Some nonprofits have thrown themselves into near ruin with earned income ventures that take over the agency, moving the mission to the back seat. In short, more does not always mean better. Instead, Collins suggests that we choose to enhance and upgrade rather than add-on. This shift allows a greater focus on organizational capacity in order to deliver quality services—a shift to consolidation, and quality enhancement, not necessarily expansion. Why introduce a new service when you can streamline the one you already have? For example, a great deal of funding currently exists to prevent childhood obesity. Does this mean that an organization with after-school literacy programs should add a physical education component in order to attract more funding? Maybe. But first the organization must do a quality check regarding its current mission. If they are not yet making a lasting and significant difference in improving the literacy of the children they serve, it may be foolish to add on a physical education component. Under the theme of moving from “good to great,” this issue of LAPA News & Views addresses why every nonprofit should have a cash reserve, and “Ask LAPA” gives a quirky view on how one can get from “good to great” by focusing on having the right people on your team. Lastly, here are a few Web links that may help you build more depth and quality:
Last, but far from least, LAPA warmly welcomes Patricia Jones as our new Vice President. Click here to find out more about Patricia. - Laurence A. Pagnoni, President Saving for a Rainy Day – The Importance of Cash Reserve Funds
Recently, I was reminiscing with a LAPA client, an executive director of a $7 million+ nonprofit organization, about my days as an E.D. of a much smaller nonprofit. I remarked on the sleepless nights I no longer missed, worrying about taking from Peter to pay Paul. Cash flow was the bane of my existence in those days, and I was surprised when our client remarked that he, too, had similar sleepless nights. I thought, “How can an organization of this size have cash flow problems?” After asking a few fellow consultants, I learned that cash flow is apparently a problem in many nonprofits, regardless of budget size. Executive directors fear that funders will shy away if their organization’s 990 shows a surplus. Many E.D.’s are afraid that 1) if they are not desperate, funders won’t donate and/or 2) if they don’t immediately spend every cent that comes in, they will be seen as not tending to their organization’s mission. This is old-fashioned thinking. It is time to welcome in the new millennium with the understanding that fiscal responsibility is attractive! A cash reserve fund shows that you are thinking of clients who will need you in five years. An endowment fund is one method of preparing for the future, but it is usually not sufficient. Although the interest will provide a small measure of insurance against sudden emergencies, the principal cannot be touched without taking a serious hit. Meanwhile, there is no nest egg should there be an immediate need to make a new hire, accommodate a client base that is growing faster than current funding allows, or even buy a new computer. Keep in mind the following when setting up a cash reserve fund:
A cash reserve campaign should be announced and launched with a lead gift, similar to a “bricks and mortar” capital campaign. Chances are that if you let your current donors know that you need their help, they will go the extra mile and may even write a larger check than usual. You may also find new donors who are delighted to help out an organization smart enough to plan ahead. - Blanche Norman, Director of Grants Services "ASK LAPA": ANSWERS TO YOUR QUESTIONS ABOUT MANAGEMENT AND FUNDRAISING ISSUES.
Dear LAPA: I have been the Executive Director of a nonprofit organization for the past five years and feel as if we are at an impasse. I want to see the organization strengthen its position, but feel that something is holding us back. I have been able to develop new funding sources and programs with some success, but still feel that we are barely living up to our potential. Any advice? Allow me to suggest a new way of looking at this problem. In the fall of 1928, Admiral (then Commander) Richard E. Byrd embarked on his first voyage to Antarctica. Byrd’s criteria for a successful expedition was not to log X number of miles from home, spend Y number of days on the ice, or explore Z kilometers of uncharted territory per each dollar of funds raised. His purpose was to mount a spectacular flight from the coast of Antarctica to the South Pole and back, something that had never been done before. The first thing you must do is to put aside the numbers your evaluation personnel are tracking Your next step is to make sure you have the right people in the airplane. This is not just a process of inclusion; it is also—and more importantly—a process of exclusion. And it is not merely a matter of excellence; it is also a matter of pertinence. Byrd included an aerial mapping photographer and excluded a cinematographer. Both were excellent professionals. The aerial surveyor, however, compiled a mosaic of hundreds of photographs from which detailed maps were later made, contributing directly to the lasting significance of the flight. The third consideration is aligning the necessary resource base with the spectacular flight. Byrd dispatched a sledge party to put down caches of provisions along the first half of his flight path Byrd accomplished his spectacular flight to the South Pole in November 1929. Four years later, he acquired a new aircraft with increased range and set out to determine if Antarctica was one continent or two. That is what going from good to great is about. As top-notch organizations acquire more capability, they pursue loftier ends. But the process of attaining the spectacular objective remains the same. - Sheldon Bart, Grants Officer
Click here to contact Laurence A. Pagnoni, MA, MPA. To reach a LAPA associate, click on the name below: Sheldon
Bart, MA |
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Laurence A. Pagnoni & Associates
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Phone: (212) 932-8001 |
