321 posts categorized "Nonprofit Management"

What It Takes to Manage Leadership Change in the Nonprofit Sector

December 05, 2019

ChangesEvery organization experiences leadership change. But these days, the nonprofit sector is experiencing a big demographic shift. Which is why it's essential for all nonprofits to start planning for the kind of thoughtful leadership transitions —including those resulting from both expected and sudden departures — any organization needs to survive and thrive.

According to the 2017 BoardSource report Leading With Intent, only 27 percent of nonprofits have a formal succession plan in place. That's unfortunate, because having such a plan in place can help any organization overcome the challenges and bumps in the road that almost always pop up in the wake of a leadership transition.

In the past, the process was commonly referred to "succession planning." However, that term often refers to identifying a successor for a specific leader and, in our view, has outgrown its usefulness. It's more helpful, instead, to think about the work of preparing for and managing leadership change as "intentional pathway planning," a more expansive term that serves as a reminder that leadership change involves much more than thinking about a single role or person; it's a holistic approach and lens that should be applied to every step of the hiring and onboarding process.

While every organization’s circumstances are different (involving things like leadership configuration, organizational goals, skills gaps, etc.), all nonprofits would be well-served to take a proactive approach to building a strong leadership pipeline, developing internal talent for higher-level roles, and making themselves aware of specific knowledge and/or diversity gaps that need to be addressed.

Tips for successful intentional pathway planning include:

Consider the big picture. A critical first step in intentional pathway planning is to understand your organization's leadership needs and mission-focused objectives. What are you trying to do? What type of talent will you need to get there? What are your organization’s knowledge gaps, and how can they be filled?

Plan and train. To ensure there's a robust pipeline of talent available to take advantage of future leadership opportunities, you need to proactively take steps to support talent. Provide employees with ample training and development opportunities — as well as continual mentoring and coaching — to help them learn, grow, and thrive. Check in with individual employees about their goals and aspirations, and then tailor development plans for them as appropriate. To ensure you have a deep bench of future leaders, allow staff at various levels to flex their leadership skills — and assume additional responsibilities. Such an approach is just as beneficial for the organization as it is for individuals on the receiving end of these training opportunities and can be pitched to job candidates as an organizational value proposition.

Look internally first. There are significant benefits to promoting from within, including capturing institutional knowledge, boosting team morale, and increasing employee engagement and retention. It's also less expensive and time-consuming to promote from within.

Know when to look externally. Be mindful about your talent needs and recognize that you might not have the skill sets, experience, diversity, or other key attributes needed to fill certain roles in the organization — in other words, there may be valid reasons to conduct an external search. It can be valuable to bring in outside perspectives and skills, especially if you are trying to address knowledge gaps on your internal team. And if your existing team lacks diversity, now would be a good time to do something about it.  Just make sure you're ready to support people from diverse backgrounds as they are onboarded and begin to acculturate to your environment.

Use consistent systems. We are firm believers in the consistent use of performance management processes to capture personnel assessments and track professional development opportunities. Tools such as StrengthsFinder make it easier to assess the strengths (and weaknesses) of your leadership team, identify where knowledge gaps exist, and train people to fill those gaps.

Prioritize staff development. Healthy, sustainable organizations tend to excel at "growing" leaders and retaining their best talent. Make sure that someone on your leadership team is tasked with championing your pipeline development efforts and has the authority to embed it in the organization’s strategic priorities and budget. Recognize, too, that this needs to be an ongoing effort and remain a priority, even when other tasks and initiatives beckon.

Emphasize where DEI meets pathway planning. In the twenty-first century, it's imperative for organizations to embrace a culture of diversity with respect to race, gender, age, experience, perspective, and so forth. The first step in doing that is to identify and celebrate the various skills, competencies, perspectives, and backgrounds already present on your team. Then take steps to augment those skills and perspectives with external hires that enhance your diversity goals. Among other things, that means making sure a diverse group of candidates is considered for every promotion and leadership opportunity that arises.

Customize your plans. Recognize that your pathway planning needs to address future departures at multiple levels, including president/executive director, senior management roles (e.g., development director, major gifts officer, public affairs director, etc.) as well as board members. Because each of these positions requires different skills, experience, and so on, you'll need to develop specific plans to address each possible vacancy scenario.

Expect the unexpected. In a perfect scenario, your executive director will give the board plenty of notice about their planned departure date and will be willing to help select and train their successor. Unfortunately, departures of key leaders sometimes happen abruptly or unexpectedly (due to health issues, family emergencies, or other reasons). If your organization has a thoughtful plan in place, it should provide the kind of guidance an interim director will need during a difficult, tumultuous, and possibly emotional leadership change. If possible, take the time (with the help of the board) to develop an emergency transition plan that spells out the delegation of duties and authority (even temporarily) in the event of an unexpected transition or interruption in leadership.

Consider your organization's biggest challenges. Identify the current — and potential — challenges your organization faces (or is likely to face in the future). What type of leader will best be able to help the organization overcome these challenges, navigate obstacles, and meet its goals and objectives? What skills, qualities, and personality traits does this individual need to possess? What leadership qualities does your organization most need to bring about positive change?

Communicate wisely. Include a communications plan in your transition plans. While the circumstances of the transition will dictate the specific messages around it, you'll need to communicate any leadership change to internal and external audiences. Identify possible spokespeople, and make sure they're aware of — and comfortable with — their roles. Develop a list of key stakeholders that will need to be in the loop (e.g., board members, major donors, key staff, media, etc.). Recognize that you need to be thoughtful, clear, and concise with your messaging and its delivery.

Leadership transitions — especially when they're unexpected — can leave an organization vulnerable. It's essential to be prepared for a variety of scenarios and have plans in place to manage any change in leadership, regardless of the circumstance. BoardSource’s research shows that most organizations don’t have a formal transition plan in place. Make sure your organization does.

Headshot_miecha_forbes_KoyaMiecha Ranea Forbes is senior vice president of Culture, Inclusion & Strategic Advising at Koya Leadership Partners, an executive search and strategic advising firm guided by the belief that the right person at the right place can change the world.

The Fiduciary Responsibility and Nonprofit Boards

October 28, 2019

AR-160409948A key ingredient of success for any nonprofit is solid board governance. And that requires a blend of intellect, reputation, resources, and access — and that board members faithfully exercise their fiduciary duties.

Board directors have three primary fiduciary responsibilities: duty of care, duty of loyalty, and duty of impartiality. For a nonprofit to operate successfully, it's critical that board members fully understand the nuances of all three.

Best practices for a nonprofit board

When individuals agree to sit on a nonprofit board, they often do so out of a passion for the organization or its cause and may not fully understand the liability or responsibility of oversight that comes with the role. Some best board practices for nonprofits include:

Create a diverse board. Cultivating a culture of openness and inquiry is important to the effectiveness of any board. A board that includes different perspectives naturally allows for a range of ideas and opinions and allows for exploration of different approaches, which in turn benefits the organization.

Plan for sustainability. Planning doesn't just include fundraising and accounting for future dollars. Planning for sustainability means developing and putting a leadership succession plan in place to ensure the future success of the organization. Creating term limits for board members may also be important for the long-term health of an organization. The timely and planned rotation of trustees or directors on and off the board helps prevent complacency and contributes to the influx of fresh ideas.

Strike the right balance. Every nonprofit hopes to forge a strong partnership between staff and the board. And that requires striking a healthy balance between the power and responsibilities of the executive director and those of the board. The executive director should be in regular communication with the board but should also be sure to impart only meaningful information. Too much meaningless information shared with a board creates noise and distracts everyone from the organization's mission and work. By the same token, the board must be respectful of an executive director's prerogatives and avoid micromanaging the functions of the staff and day-to-day activities of the organization.

Recruit fresh talent. Attracting and retaining talent is critical for any organization that wants to succeed. The board is responsible for creating the job description and responsibilities for the executive director and ensuring that competitive compensation and benefit structures are in place for staff.

Be open to feedback. Boards should regularly solicit feedback from an organization's constituents, donors, and stakeholders to ensure that the organization remains focused and on track. Such feedback can also provide insights that the organization may be able to use during its strategic planning exercises.

Focus on transparency. It is critical to share information about what the organization is doing — and why — with donors, stakeholders, and members of the public. And that involves requires regular, planned communication.

Onboard new board members. Be sure to provide an orientation for new board members to ensure they are up to speed prior to their first board meeting. Make sure the onboarding includes the setting of clear expectations for their service on the board, education with respect to their role and the relevant bylaws, and thorough documentation of the organization's mission, values, programs, and finances.

What is a fiduciary relationship?

A fiduciary has a duty imposed by law to act solely for the benefit of another as to matters that fall within the scope of the relationship. The fiduciary standard includes undivided loyalty, prudence, and good faith and requires that the fiduciary act in the best interests of those with whom s/he has that relationship (in the case of a nonprofit board member, to the organization on whose board s/he serves). While board members act as fiduciaries for the organizations they serve, when the board itself does not possess the skills and experience to properly carry out all its fiduciary duties (e.g., the management of the organization's investments), it has a fiduciary duty to find a partner with that particular expertise. That partner — say, an investment manager — then serves as a fiduciary for the organization and its board. From the perspective of an investment partner, being held to the fiduciary standard means it must provide to the board thoroughly researched and accurate information and recommendations — and, most importantly, prioritize a client's best interests above incentives, commissions, or its own firm’s bottom line.

The fiduciary's role on a nonprofit board

Investment advisors can serve as either a strategic partner or consultant to a board that is looking to carry out its fiduciary responsibility with respect to investment oversight of the organization. In the role of strategic partner, advisors can advance the sustainability of the organization by helping the board craft a suitable investment policy statement, taking appropriate risks in the investment portfolio, and continuously monitoring performance. Investment advisors also can partner with auditors on financial reporting and serve as a resource with respect to industry best practices (even if it means going above and beyond their primary responsibilities). For example, hosting an orientation session for new board members will help them come to their first board meeting with an understanding of how the organization's portfolio is structured and give them the information they need to make informed decisions.

Nonprofit board directors have a number of key responsibilities and one of the most important ones is adhering to the fiduciary standard. It's critical that information and education be provided so that those who are involved in a leadership role of a nonprofit understand their fiduciary obligation.

Headshot_nikki_newtonNikki Newton is president of private wealth management at UMB Bank.

Candid’s Regional Teams: An Update

October 22, 2019

This year has been a busy one for Candid. In February, Candid was formed as the result of a combination of Foundation Center and GuideStar. One of our most important initiatives of the year has been the transition from four Candid regional library centers to our 400+ Funding Information Network (FIN) partner locations.

Candid’s staff in the Bay Area is now all under one roof, after Foundation Center staff moved in to the existing GuideStar office in Oakland. In Atlanta, Candid’s team has partnered with CARE by moving into that organization’s Global Innovation Hub along with several other social entrepreneurs, technologists, and internationally-oriented nonprofit organizations.

Candid_training_PND

In the next two months, Candid’s Washington, D.C., team will share space in our existing office on H Street, while staff in the Cleveland area will move into Midtown TechHive, a co-working space located along Cleveland’s Health-Tech corridor.

Why is Candid transitioning its library services?

In July, I wrote about what this initiative means for the communities we serve. Our transition away from providing direct in-person library services at our four regional offices will free up our teams to engage directly with audiences beyond our four walls.

Taking our D.C. metro area location as an example: currently three of our FIN partners are located within a ten-mile radius of our current location, and all three are Metro accessible. Our D.C. team plans to offer three to five classes per month locally, at various locations, and also plans on holding monthly training events at the University of the District of Columbia. Our largest office and library in New York City will continue to operate in its current form, providing library services and trainings on-site while also delivering programs across the region.

We'll also begin experimenting with local programming close to Williamsburg, Virginia, where a large contingent of Candid team members are based. Check the local calendar on grantspace.org for upcoming community events and to use our map tool to find partners near you.

Programming highlights from our regional teams

Our regional teams have been busy planning local events and partnering with organizations on the ground to deliver relevant, meaningful programs. Here are some of the highlights:

  • Candid is currently a lead partner in “The Soul of Philanthropy” exhibition in Cleveland. The three-month traveling exhibit officially opened on Friday, September 6, with over three hundred and fifty philanthropists, foundation executives, civic and business leaders, and community members in attendance. It was a magnificent celebration dedicated to uplifting and amplifying the power of black philanthropy. This is just one of several media stories about the exhibit, and you can learn more in this blog post.
  • A one-day Training Works conference was hosted in Atlanta by Candid staff on September 20, with nearly forty attendees on-site at the CARE Global Innovation Hub.
  • Network Days, Candid’s annual convening for Funding Information Network members, was held in New York City on October 10 and 11. More than sixty partners traveled to the city to attend in person, while another hundred and sixty tuned in virtually for sessions covering such topics as Candid’s Nonprofit Start Up Assessment Tool, best practices to help nonprofits secure funding through donor-advised funds, and why it’s critical for nonprofits to earn a Seal of Transparency from GuideStar.org. We also hosted an intensive train-the-trainer event earlier in the week, guiding partners and staff through a deep capacity-building experience designed to equip them to deliver high-quality programming through a culturally responsive and human-centered lens. It was an enlightening and energizing week that showcased just how central the Funding Information Network is to Candid’s mission and to hundreds of local communities.
  • Candid staff presented a program at the end of August that explored  a California legislative proposal to regulate donor-advised funds. Ninety-four people participated in person in San Francisco, while another ninety-one tuned in to the livestream.
  • Candid also hosted its second annual program with the authors of Unicorns Unite — Vu Le, Jane Leu, and Jessamyn Shams-Lau — on September 18. The program included an in-person and livestreamed panel discussion, followed by a facilitated in-person exercise with the authors in San Francisco, plus eighteen watch parties across North America.
  • Due to popular demand, we increased our monthly course offerings of Introduction to FDO to twice a month at the San Francisco Public Library, one of our Bay Area FIN partners.
  • Working with the New York City Department of Education, Candid will present Introduction to Fundraising Planning to approximately one hundred public school art teachers at our New York library location. The sessions also will introduce teachers to Candid's library resources and provide them with hands-on experience searching Foundation Directory Online for public education and arts grants.

Whom can I contact if I have more questions?

Please don’t hesitate to reach out to any of our team members with questions or ideas:

Western region: Michele Ragland Dilworth
Northeastern region: Kim Buckner Patton
Southern region: Maria Azuri
Midwestern region: Teleangé Thomas

We are thrilled by the opportunity this new operating model presents and are looking forward to meeting with more of you across the United States. As always, you can connect with me directly to talk about how we can serve you better.

Zohra Zori is vice president of social sector outreach at Candid.

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Learn more about what Candid can offer you today
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To Build More Diverse Teams, Avoid Unconscious Bias When Recruiting and Hiring

October 21, 2019

Diversity-inclusion-292x300The benefits of diversity and inclusion for nonprofit organizations are well-documented and include greater success in almost every possible metric. Often, however, nonprofit leaders and managers tend to ignore a key barrier to more meaningful workplace diversity: unconscious bias.

Research shows that bias — prejudice in favor of or against a thing, person, or group — is part and parcel of human nature. It influences all kinds of decisions, and most of us are unaware when it's a factor in those decisions. Unconscious bias is the term used to refer to judgments and decisions that are deeply affected by our unconscious mind — decisions that can play a significant role in recruiting and hiring.

Indeed, even as a growing number of nonprofit organizations say they are working to increase the diversity of their staffs, unconscious bias may be negatively impacting nonprofit workplaces by undermining efforts to recruit and retain diverse employee, contributing to poor hiring decisions and salary inequities, and denying equal opportunities in the workplace for women and people of color.

That's why it is important for your organization to recognize and mitigate unconscious bias in its recruiting and hiring processes.

Ready to get started? Here are a few tips:

Educate your team. Provide your HR team with articles, case studies, and trainings related to unconscious bias. Be sure your team knows what it is, how to recognize it, and how to avoid it.

Develop consistent, structured hiring processes. Before your organization launches its next job search, develop a list of core competencies for the job, including skills and experience, and then evaluate every candidate for the job against that list. Be sure, as well, to ask each candidate for the job the same questions to ensure that your evaluations of various candidates are impartial. To ensure that all prospects for a job are assessed against the same criteria, it’s also a good idea to have the same person interview all candidates for a job.

Consider using "blind" techniques. Blinded, or redacted, candidate materials can be effective in reducing bias in that they eliminate the possibility of making snap judgments based on details (e.g., name, address, alma mater) that may have nothing to do with whether a candidate is a good fit for a position. When such details are masked in resumes and CVs, interviewers are more likely to make decisions based on core competencies (see above) rather than personal factors. Similarly, when asking candidates to submit samples of their work, be sure to remove identifying characteristics from the documents to ensure that prospects are assessed and evaluated against a consistent set of criteria.

Expand your network. Employee referrals are often a useful tool in identifying qualified candidates. But because employees tend to refer people who are like themselves in terms of race, education, and background, such referrals can work against an organization's diversity goals. To expand your candidate pipeline — and build a more diverse workforce — task your HR team to go beyond the "usual" referral sources and proactively reach out to a range of organizations and sources.

Elevate your job descriptions. Job descriptions often end up being aligned with certain biases (unconscious or otherwise). Certain requirements (e.g., an advanced degree) will limit the candidate pool to a homogenous group of people with the same kind of experience and will make it almost impossible for you to consider a diverse range of candidates. Pay attention to the language you use in your descriptions: certain words can intimidate or be off-putting to some prospects and may discourage them from applying. You might want to consider eliminating, for example, gender-specific pronouns from your job descriptions. This can help eliminate gender bias in your recruiting processes and signal that your organization is committed to diversity and inclusion in a real and serious way.

Recognize and avoid the "halo and horn effect." This occurs when someone associates certain factors (e.g., working for a prestigious company) with particular traits (the candidate must be smart and capable). If someone on your hiring team "prefers" a candidate because s/he worked for a specific company, went to a particular school, or roots for the same sports team, it can create a "halo effect" around that candidate that puts him/her in an advantageous position with respect to other candidates. Conversely, a single negative association can create a "horn effect" resulting in a negative perception of that candidate. It's important your team looks beyond a single trait or factor and takes a more holistic view when considering candidate qualifications, factoring in a variety of data to determine which candidate is right for the job.

Be aware of affirmation bias. We tend to seek out commonalities when meeting someone new — did we attend the same school? do we live in the same neighborhood? During the recruiting and hiring process, we're more inclined to favor candidates who are "like us" and share our interests and/or beliefs. Conversely, we may not feel as strong a connection to someone who has a different background and may view them less favorably as a job candidate. If you want to increase the diversity of your staff, move away from considering only "people like us" and try to build teams comprised of people with different experiences, perspectives, and backgrounds.

Ideally, the decision to hire a candidate should be based solely on whether you think s/he will excel in the job. Unfortunately, unconscious bias often gets in the way of our conscious desire to make purely competency-based hiring decisions. The best way to combat this tendency is to recognize it and put in place hiring practices designed to promote equity, consistency, and fairness at every step of the process.

Headshot_molly_brennanMolly Brennan is founding partner at executive search firm Koya Leadership Partners, which is guided by the belief that the right person at the right place can change the world. Molly is a frequent contributor to the Stanford Social Innovation Review, Philanthropy News Digest, and other publications and recently authored The Governance Gap: Examining Diversity and Equity on Nonprofit Boards of Directors.

After the Hire, Then What?

October 04, 2019

Welcome-600x450You've gone through the time-consuming process of hiring a new employee, and you've hired the best candidate out there. Now you can relax, right? Not so fast. The work of onboarding has just begun.

Your new hire may have all the qualities and qualifications needed to make her a star in your organization, but the road to success isn't always that smooth. In fact, the line between fantastic and fiasco can be a thin one, and a lot of it comes down to how you handle the onboarding process.

Skeptical? Consider that more than half of all U.S. employees leave their job in the first year, citing internal factors like lack of training or mentoring as their reason for bailing. Contrast that with the 69 percent of employees who say they are likely to stay with a company for at least three years if they've had a great onboarding experience.

So what does "a great onboarding experience" look like? To help you train and retain new hires, here's our quick-start guide to best practices for onboarding.

1. Understand that onboarding isn't an event, it's a process. Some organizations mistakenly think that onboarding is an event that happens on a new employee's first day. Newsflash: a meet-and-greet over muffins in the conference room and pointing out where the restroom is constitutes only a small part of the onboarding process, which should actually start the day you make an employee an offer and continue for the next 365 days. PRO-TIP: Have a pre-set agenda for check-ins with any new employee at 30, 60, 90 and 120 days. Use that time to make sure the employee is settling in without problem or incident, understands his or her role and responsibilities, and knows where to go to give feedback or have an important conversation related to his or her work situation. Don't have an onboarding checklist? Download one here.

2. Include the whole team. We've all been there before: you come in to work one day, and there's a stranger in the breakroom. Is it a repairman there to finally fix the copy machine? Is it your co-worker’s ex-boyfriend come to win her back? Later, you discover the "stranger" is actually a new employee no one bothered to tell you about, leaving you feeling left out of the loop (and him or her feeling unwelcome). How to avoid such sitiuations? Be sure to send an email to your staff before any new employee's start day letting them know about the new hire and a little bit about who she is and what she'll be doing. Next, arrange a coffee break (don’t forget the muffins) at which your new hire can be informally welcomed to the organization and introduced to everyone on the team. PRO-TIP: While the whole team should play some part in the onboarding process, you should definitely consider assigning one person (a “buddy”) from HR or the new hire's team to help train her and make themselves available for questions.

3. Make a big deal of the new hire. That whole "coffee and muffins in the conference room thing" is a great way to introduce your new hire to her new colleagues and the culture of your organization, but it's just the start of the welcoming process. An employee’s happiness, productivity, and commitment to the organization over the longer term are all linked. Translation? It's time for a little red-carpet treatment. Start by making sure your new hire's workstation is clean (i.e., no traces of her predecessor) and set up with everything she'll need (computer, email, phone and passwords). PRO-TIP: Spread the news! Go the extra mile and (if the position is at a sufficiently high level) issue a press release and/or social media updates letting people outside the organization know how excited you are about your new hire.

4. Encourage new hires to ask questions. New employees tend to have a LOT of questions. Where are the office supplies kept? How do I make the copy machine stop copying double-sided? If the yogurt in the fridge doesn't have a name on it, can anyone have it? Does Hal realize that a mustache is not a good look for him? (Just kidding, Hal.) But many new employees don't want to come off as clueless or bother busy colleagues with what may seem like silly questions and will struggle to figure things out on their own. While every boss appreciates an employee who shows initiative, new hires often waste a lot of time trying to figure things out or doing them incorrectly (and then having to re-do them) — time they could have saved (and put to more productive use) if they had simply asked for help or instruction in the first place. Make sure your employees know that you not only tolerate and expect questions, you welcome them. PRO-TIP: Don't think that by simply saying, "If you have any questions, don't hesitate to ask," people will take you at your word. Instead, check-in with your new hires frequently, especially over the first few weeks of their employment, and encourage their questions as part of the on-the-job learning experience.

5. Lay a foundation for closer team integration. At Envision, we have a mantra: "Everything we do is connected." Our work in the areas of search, strategy, and leadership are all part of a bigger picture. (It's also why we feature gears — cogs meshing together to keep the machine running smoothly — in our logo and marketing materials. Like us, your organization is comprised of individuals who are engaged in collective work toward a common goal. But often people are confused about (or may not even know) what other people are doing to achieve that goal, making teamwork and integration a challenge. As you take on new, and possibly more staff members, you may need to hold more team meetings, at least for a while. People often gripe about meetings, but they are an invaluable way to get everyone on the same page, help them understand what everyone else on the team or in the organization is doing, and show them how the office is run as a whole. PRO-TIP: To ensure that your meetings are an efficient use of everyone's time (and eliminate some of the aforementioned gripes), be sure to map out your objectives for the meeting beforehand. What is it you hope to accomplish? What do you want and need to know from various team members? Is the information to be shared relevant to everyone who will be in the meeting?

6. Guess what? Your board needs onboarding, too. It may surprise you to know that new staff members aren't the only ones who need onboarding. To be effective, board members need proper onboarding, as well. Every organization strives to assemble the best board of directors possible, but once those members have been elected, getting the most out them is an aspiration, not a given, and almost always involves a carefully thought-out process. Applying some of the above tips can also be helpful for onboarding new board members (e.g., asking a veteran board member to be "buddy"/mentor the newest addition to the board). A general board member orientation session is another great way to onboard new directors and and, at the same time, invigorate the entire board. PRO-TIP: Want more information? Check out this great advice from the National Council of Nonprofits.

Some of the above tips may seem to involve a lot of unnecessary work, but when you consider the cost, in time and money, of replacing a valued employee with a new employee, it's really not that much and will feel like a bargain once that new employee has settled in and is contributing as a full-fledged member of the team.

Headshot_ashley_watersonAshley Waterson, a creative messaging guru at Envision Consulting, has more than ten years' experience crafting content for various platforms, including comedy sketches, NPR features, and websites.

Less Hassle and Still Charitable: Why Projects Choose Fiscal Sponsorship

August 21, 2019

Fiscal_sponsorshipOne of the big trends we've noticed in both philanthropy and international development is increasing interest in funding different and new types of organizations. For many foundations, traditional public charities are not their first choice for investment. Instead, they are turning to international networks and partnerships that bring together diverse stakeholders, innovation platforms, funder collaboratives and re-granting funds, social enterprises, and short-term projects with a handful of staff.

As a result of this, we’re seeing many funders and project leaders consider the fiscal sponsorship model, which typically entails a project or small startup being "sponsored" by a larger tax-exempt organization with an aligned mission. The larger organization handles governance, financial management, and administration for the project it has agreed to sponsor, while the project (in many cases) pursues an independent strategy with semi-autonomous staff and its own advisors.

Since the Transparency and Accountability Initiative (TAI) transitioned to a U.S.-based fiscal sponsor in 2016, we have been repeatedly asked for advice by both project leaders and program officers. We’ve also watched as the fiscal sponsorship sector has grown. In the international development field, we’re even seeing the demand for fiscal sponsorship expand to other countries, most of which do not have legal frameworks in place to accommodate such a model.

Here in the U.S., the law currently supports a variety of models. In the model used by TAI, the sponsoring organization assumes responsibility for all tax filings, financial reporting, and legal compliance, including ensuring the charitable mission and activities of the project it is sponsoring. Typically the project is expected to contribute to the sponsoring organization’s overhead, abide by its policies, and report to its management and board. The exact terms of the arrangement usually are spelled out in a memorandum of understanding (MOU). The MOU often allows the project or startup to have its own steering committee to direct its strategy.

We are frequently asked about fiscal sponsorship and wanted to share some of the things you should consider before taking the plunge. (Nonprofit leaders may also want to consider how some of these factors are shaping organizational structures in their own fields.) Based on our own experience and what we’ve heard again and again from other projects that have gone this route, below are the top factors in deciding whether to pursue a fiscal sponsorship arrangement:

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Changing the Way Candid Serves You

July 23, 2019

ZBlog 2 Option 2Announcing Foundation Center and GuideStar had joined forces was just the beginning — now the real work of being Candid has started. We're busy combining operations on a number of fronts, and starting up new and exciting projects, too. I mentioned one of our most important initiatives in a previous post: the transition from our four regional library centers to our 400+ Funding Information Network (FIN) partner locations. We've received some thoughtful questions about what this evolution might mean for you.

What's happening to Candid's libraries?

We're not changing whom we serve, we're changing how we serve.

We've been around a long time, and over the years we've heard feedback from people who have struggled with our metro locations in terms of accessibility, hours, and parking fees and availability. Our current footprint of library locations in specific metro areas also locks our teams in to commitments behind the desk. Plus, now that we've become Candid, we have two offices in both the San Francisco Bay Area and Washington, D.C.

ZBlog 4 Option 1By the end of 2019, our Bay Area and Washington, D.C., offices will have been combined so that we have one office each in Oakland and D.C., while our Atlanta and Cleveland teams will be operating out of co-working or partner sites. We will no longer provide in-person library services at these locations, but you will still be able to get all of your questions answered through in-person trainings with our partner network and online services (more on this below).

Our largest office and library in New York will continue to operate in its full current form (still providing library services and trainings). We'll also begin experimenting with local programming close to Williamsburg, Virginia, where a large contingency of Candid team members are based.

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How to Find Your Most Engaged New Board Member

May 23, 2019

Board-meetingThere are nonprofits that enjoy a celebrated status in their communities. Powerful people clamor to be on their boards, and they earn those seats with significant contributions and meaningful introductions. And then there are most nonprofits. Their boards work to attract qualified board candidates but often end up wondering whether they should make do with less.

What are these nonprofits to do? The good news is that it is possible to recruit board members whose commitment to your cause more than balances out their lack of connections or personal wealth.

Now, it doesn't hurt to have a few well-connected (and deep-pocketed) people on your board. But having too many can be a problem. Increasingly, nonprofits are looking to solve the challenge of board member engagement. They struggle with board members who don't do much beyond showing up for meetings, or who write a big check to the organization once a year and then drop out of sight. But when it comes to that long-term project or software integration the organization desperately needs, the one that requires board members willing to do research and outreach until the goal is met? Fuggedaboudit.

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From 'Tribal' Knowledge to Technology: How Data Can Supercharge Your Nonprofit

April 24, 2019

Nonprofit_working_spaceTeam members at nonprofit organizations often feel a special kinship. Everyone strives to deliver on the organization's mission and is passionate about the same thing — having a positive impact on people's lives and within their communities. In effect, the nonprofit you work for is like a "tribe" — a group of people bound together by a shared interest, a shared vocabulary, and specialized knowledge.

Many nonprofits rely on their staff's collective experience and "tribal knowledge" — undocumented information that is unavailable to those outside the organization — to keep things running smoothly. While both are invaluable, operating in such a manner tends to create gaps in actionable information. And it leaves the organization vulnerable to losing critical institutional knowledge when long-serving staff members retire or move on professionally. 

What's a nonprofit to do? 

Simply put, nonprofits need to be more efficient when capturing organizational knowledge, leveraging the experience of staff, and translating staff insights into action. How? 

With software and historical data. 

Filling Critical Gaps With Data

Better support for participants. Historical data can provide nonprofits with valuable insights that intuition or gut instinct alone cannot. Let's say a fifth-grade student in an afterschool tutoring program is scoring at a seventh-grade reading level. Intuition tells you the student needs to be challenged. But data can show you:

  • which strategies have worked for similar students in the past
  • which K-12 accelerated reading programs best fit the needs of the student
  • how to quantitatively measure the success of your strategies 

Data gathered from digital tools can help the organization answer the above questions and create a program for the student that both stimulates and challenges her. And just as importantly, it will enable the organization to provide customized support for all participants in the program — all the time.

Putting hours back in the day. You probably work in the social sector because you have a keen desire to help others. Spending hours each day on administrative work (like data entry) can undermine that desire, while wasting valuable time on tasks that could (and should) be automated only adds to your stress. You may feel pressure to "make up" that time, but rushing through routine data-entry tasks can lead to mistakes that might have been avoided if you weren't so pressed for time. 

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New Tax on 'Excess' Executive Compensation Poses Challenge for Tax-Exempt Organizations

March 18, 2019

Tax_puzzleThe ability to attract and retain high-quality executives is an important component in the success of any tax-exempt organization and the fulfillment of its mission. A new provision of the Internal Revenue Code added by the Tax Cuts and Jobs Act of 2017 will have a "sea change" impact on the cost of compensating such individuals. Under the provision, "excessive compensation" paid to executives by a tax-exempt organization will subject the organization to a substantial excise tax liability. The penalty may be viewed as an attempt to level the playing field, inasmuch as the tax consequences associated with the payment of "excessive compensation" paid by for-profit employers, in particular by for-profit public companies, to their senior executives can result in the loss of a tax deduction for excessive compensation payments.

What Is the New Excise Tax?

Effective as of January 1, 2018, "applicable tax-exempt organizations" are subject to a 21 percent excise tax on the sum of (i) compensation paid by the tax-exempt organization (and certain entities related to the tax-exempt organization) for a taxable year to a "covered employee" that exceeds $1 million, and (ii) any "excess parachute payment" paid by the tax-exempt organization to a covered employee.

Which Tax-Exempt Organizations Are Subject to the Tax?

Any organization that is exempt from federal income tax under Internal Revenue Code section 501(a), such as public charities (e.g., United Way), exempt farmers' cooperative organizations, certain state or local governmental entities, and certain political organizations, are subject to the tax.

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5 Questions for...Rebecca Masisak, CEO, TechSoup

December 22, 2018

For more than thirty years, TechSoup has facilitated product donations and technical assistance to nonprofits and NGOs with the aim of helping them implement technology solutions that drive social impact.

With the goal of raising $11.5 million over the next three years to sustain and expand that work, the organization recently announced a direct public offering (DPO) through impact investing platform SVX.US. The DPO offers three tiers of debt security investments — risk capital notes, with a minimum investment of $50,000 and a 5 percent interest rate; patient capital notes, with a minimum investment of $2,500 and a 3.5 percent interest rate; and community capital notes, with a minimum investment of $50 and a 2 percent interest rate. TechSoup is the first nonprofit to be qualified by the Securities and Exchange Commission to raise funds through a Regulation A+ / Tier 2 offering.

PND asked TechSoup CEO Rebecca Masisak about the genesis of the DPO, as well as her views on the role of technology in building a more effective philanthropic sector and driving social change.

Headshot_rebecca_masisak_techsoupPhilanthropy News Digest: What was the thinking behind the decision to launch a direct public offering on an impact investing platform? Is there a broader goal beyond the immediate one of funding TechSoup's work and outreach?

Rebecca Masisak: Throughout our history, we've achieved scale and reach with the direct support of NGOs that wanted to use technology to achieve their missions. They have been investing in us — in the form of their administrative fees. The DPO takes that principle to the next level. It's important that those individual organizations from our community have a voice in what we do and have a way to vote — not just with a "like" on Facebook or a retweet — but with an expression of faith that comes with an investment in our DPO.

The direct public offering reflects our belief that TechSoup's stakeholders come from a range of economic backgrounds but share a common belief in the importance of a strong infrastructural backbone for civil society. The DPO enables us to offer a debt investment with interest as an impact investment, not just to institutional funders but also to U.S.-based individuals and smaller organizations in our community, with meaningful but relatively low investment minimums of $50. We want all these stakeholders to play a role in our future, not just those who have a larger budget to invest.

From the beginning, we knew we wanted to work with a platform provider in order to securely manage the investment transactions. We also needed a provider that could specifically support a Regulation A+, Tier 2 Offering in all U.S. states, so we looked at a few different options before making our choice. SVX has a strong track record as an impact investing marketplace in Canada and met all our technical platform requirements. Equally important, however, was that the SVX team shared our values and belief in democratizing access to impact investments. They have become a true partner to us, and I'm confident they will do an excellent job supporting the community engagement we seek.

PND: What has been the response to date from investors and other nonprofits?

RM: We get a lot of questions: Can nonprofits do this? What do you mean I get my money back? Why are you making the minimum investment so low?

This is a new way of doing investment in nonprofits — we are the first nonprofit qualified by the SEC to have this type of offering in all fifty U.S. states — and there are a lot of technical questions. We also know people are curious about how it turns out, not only because they want to see us succeed but also because they're thinking about doing it themselves. We're glad to be in a position to learn for the sector and to share our experience as the campaign progresses.

Since the launch in mid-November, the response has been incredibly positive. This includes those community-level "Main Street" investors who have had very limited opportunities to invest in this kind of security offering before. We see that the ability to invest this way feels empowering. Based on preliminary conversations to date, we also anticipate receiving significant support from larger entities at the Risk Capital note tier and look forward to making some announcements in the near future.

We're excited that other nonprofits have expressed interest in learning more about this approach, and we're committed to sharing what we are learning. We want others in the sector to benefit from our experience and have already started to publish updates on our blog and recently hosted a webinar along with the SVX team and our legal counsel from Cutting Edge Capital.

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Weekend Link Roundup (September 8-9, 2018)

September 09, 2018

6-500x500A weekly roundup of noteworthy items from and about the social sector. For more links to great content, follow us on Twitter at @pndblog....

Economy

It's coming — whether we like it or not. Automation is likely to force a third of American workers  to switch occupational categories by 2030, write James Manyika, Manisha Shetty Gulati, and Emma Dorn in the Stanford Social Innovation Review, with the largest disruption occurring among middle-income workers without a college degree. "[U]nhampered by quarterly earnings calls or the voting cycle," philanthropy can — and will need — to step up. Mantika, Gulati, and Dorn suggest four areas where it can do so.

Education

In The New York Times Magazine, Sarah Mosle reports at length about the many challenges public school administrators face in "finding effective teachers, retaining them and helping those who need to get better."

In a photo essay in the same issue of the magazine, Brian Ulrich looks at the kinds of second jobs that teachers across the country are taking to make ends meet.

Why are many teachers forced to work second jobs? Could it be their wages are lower than ever? Sarah Holder reports for CityLab.

Global Health

On the Bill & Melinda Gates Foundation's Impatient Optimists blog, Steven Buchsbaum, deputy director of discovery and translational sciences in the foundation's Global Health Program, reflects on the launch, nearly fifteen years ago, and subsequent progress of the foundation's Grand Challenges initiative. 

Nonprofits

With summer a fading memory, Beth Kanter has a timely reminder about the causes and costs of lost productivity in nonprofit workplaces.

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If You've Met One Foundation...You've Met One Foundation

June 08, 2018

Grant_application_for_PhilanTopicWriting grants is a lot like dating. Just because something worked in one relationship doesn't mean it's going to work in the next. Each relationship is unique, unpredictable, exciting, and...sometimes heartbreaking. And when we write a grant proposal, we have to be vulnerable but still present our best qualities. Ready for some foundation dating advice?

Because every foundation is unique, there are two critical components of success to grantwriting that have nothing to do with how well you craft your proposal — research and cultivation. Or in dating terms, getting to know you and courting.

First, you have to research the foundation. If you were dating, this would be like checking out someone's online profile. A grantwriter, instead, checks out the foundation's profile in Foundation Directory Online and spends some time with its 990-PFs. If the foundation issues publications, you'll want to flip through them and take note of the terminology the foundation uses and its stance with respect to your issue. If the foundation has a website, read through the program guidelines, application information, and any FAQs on the site.

As you do, keep an eye out for the foundation's preferences and restrictions. What has it funded in the past and at what level? A quick review of its tax returns (those 990-PFs) should give you a good sense of its giving patterns. One of my favorite things about Foundation  Directory Online is its mapping feature, which allows you to suss out whether a foundation has ever made a grant to a nonprofit in your city, county, or district, as well who the grant went to and the grant amount. Powerful information. It's like peeking into someone's dating history and learning how long the relationship lasted and how serious it was!

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Addressing Racial Equity With an Organizational Change Lens

May 21, 2018

Racial equity treeOrganizational change efforts can be daunting, even when the organization and its leaders know that such an effort will lead to a stronger, more sustainable organization in the long term. When it comes to racial equity, such efforts often carry an extra level of pressure. That's because change efforts seeking to enhance diversity, equity, and inclusion (DEI) can trigger both conscious and unconscious anxieties when staff and leadership are required to examine personal and organizational values, norms, behaviors, and perceptions. No matter what you do to create and communicate a compelling story and adjust policies and procedures, it all comes down to employee engagement, especially when it comes to "unfreezing" behavior and modeling change, both of which are key to ensuring employee buy-in and setting the stage for a successful change effort.

When tackling racial equity, the amount of individual energy and effort required to achieve a truly equitable and inclusive workplace can create stress at all levels of the organization — particularly for people of color. As with other change efforts, racial equity work requires staff members to personalize the process in order to find their own entry points into the work, and as each of us reflects on our own identity and what it means in both an individual and organizational context, frictions can arise. If not tactfully managed, issues of intersectionality, power dynamics, personal and work-related boundaries, and unconscious biases can become barriers that stand in the way of progress. But when implemented effectively, racial equity change initiatives can spark an examination of our lived experience, both at work and in our personal lives — as well as individual transformation. Not surprisingly then, if organizations can create a culture in which individuals are able to express and work through their own unconscious biases, uncertainty, and shame, they will experience a greater rate of change.

CRE's nearly four decades serving the nonprofit community has taught us that organizations ready to address and embrace racial equity must first examine how race interacts with all aspects of organizational culture, from board governance, to leadership and management, to staffing and talent management, to day-to-day work flow. While not an exhaustive list, below are four simple strategies for moving the needle on organizational change efforts intended to promote diversity, equity, and inclusion based on what we have learned from our experience promoting racial equity in our own organization and with our client partners.

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Embracing Leadership Transitions

April 13, 2018

Top_hands_inLeadership transitions happen all the time in philanthropy, but we rarely talk about the challenges and lessons they reveal. For the most part, our inclination is to try to keep the internal dynamics of our institutions private and (often) separate from our grantmaking. But because organizational change happens to all of us, we have come to see leadership transitions as offering lessons that can be illuminating not just to us but to our grantees and colleagues in other organizations as well.

Three and a half years ago, Lani Shaw, the longtime executive director of General Service Foundation (GSF), passed away suddenly. During her twenty years as GSF's first executive director, the foundation transitioned from being staffed by family members to having a full-time professional staff. Lani's passing put into motion a number of additional changes.

We know from experience that embracing change can be hard. But change can also propel an institution forward, because when it is embraced, it can be an opportunity to connect with our values and work in new ways. This is why, as we mark the two-year anniversary of a new executive director joining General Service Foundation, we wanted to share what we have learned on our journey.

1. Expectations: Transitioning to new leadership is just the beginning.

Robin Snidow (GSF Board Chair): It was a wake-up call when I realized that the hiring of a new executive director was only the beginning of the transition. I had my nose to the ground and was focused on the day-to-day business of keeping the foundation functioning. However unrealistic it may have been, I thought my work would be done once we hired the new ED.

That was not the case, and board chairs need to be aware. Transition means change, and change is dynamic. I wasn't trying to change anything while the executive director position remained vacant. But once Dimple [Abichandani] was hired, I knew we had to be open to changing if we wanted to take full advantage of the opportunities her hiring presented.

Lesson learned: Prepare the board for change. As board chair, don't assume your job is over or that it will get easier when you fill an executive position. That's when the fun starts! 

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