Survey results (yawn): 2/3 of Executive Directors plan to leave. The shocker? 1/3 plan to stay!

On Monday, the results of the newest study on nonprofit leadership were released by CompassPoint Nonprofit Services and the Meyer Foundation.  They’d surveyed 3,000+ executive directors on issues ranging from career paths to boards and the impact of the recession on their organizations. The results of the survey were very similar to other types of studies that have been done recently, essentially stating:

• Boards are not performing their duties as they should be (in this case, almost half had not reviewed the Executive Director’s performance within the past year).
• The recession is having a large negative impact from the recession (again, no surprises).  
• Nonprofit organizations have dwindling operating reserves, if any. 
• Few organizations are providing executive coaching, though respondents feel it is  “a very effective professional development” tool.   

I’m not quite sure why organizations keep funding this type of research.  Perhaps to continue to validate the findings of the previous one, two, three studies? 

What surprises me, thinking about the depths of the economy, the lack of support from Boards, and the stress of the executive position, is that 1/3 of nonprofit leaders want to stay in their roles.  Bless their dedication and strength!  

So - let's say we get it now.  Let's say we see that nonprofit leadership is stressed and in serious trouble.  What do we do?   I suggest that’s what we need a study to figure out – let's get some answers.

I have one suggestion.  How about starting with better executive compensation?  I’m not talking about millions here – I do believe in staying within a reasonable range.  But I object to the extremely low pay they usually get.  It limits the market of who can afford to take these positions. 

Let’s actually treat these leaders - their positions - as if their organizations, staff, and all the thousands (millions?) of people they serve depend on them.  (Not to mention the animals, the planet, the arts, and other worthy causes…)  I suggest we stop worrying about what it might “look like” and think more about paying them what they actually deserve for their work.  Let's think about the value of the role to society.  How's that for a project. 

As I said, it's a suggestion… your thoughts? 

De-listed as a Nonprofit by the IRS? No great loss...

It’s official – 275,000 organizations have been listed by the Internal Revenue Service as no longer tax-exempt because they did not file the required documents.  You can search on this list, thanks to the Chronicle of Philanthropy link.

I took a look at my hometown just to get a sense of the injustice.  To be honest, I can’t say I’m too appalled.  Of the 50 entities listed, the majority appear to have been set up in someone’s apartment or house for a cause they felt was worthy and then left relatively dormant over time. 

Don’t get me wrong - I have nothing against worthy causes set up by individuals.  I did so myself years ago.  However, if they aren’t going to be ongoing – if they aren’t aware enough to “keep up” with regulations like this – my feeling is they can’t be too concerned with their nonprofit status, so why should I be?

It appears that the larger, more “ongoing” concerns are NOT listed and still ok with the IRS.  So I'm not worried losing programs for children getting daycare or homeless shelters or food pantries. 

How can I be so callous and make such a blanket, value-laden statement?  Here are some of the names I came across:

• Blue Knights Motorcycle Club
• Boon Family Foundation Inc.
• Independent Order of Odd Fellows
• John & Mildred Wright Foundation
• Quidditch Foundation, Inc.  

Now, I have nothing against motorcycle clubs, fans of Harry Potter, odd fellows who associate with one another, or family foundations.  I just think that if you set up one of these entities you have a responsibility to either keep it up or let it go.  The IRS has stated that they haven’t kept these up so - so now they have to re-do their efforts or let it go (with regard to their nonprofit status). 

Believe me, I’ve ranted about issues with the IRS changes previously – I have no love for their changes to the 990 (which I think have done nothing at all with regard to changing behavior).  However, in this case, I don’t think they’ve done much harm at all, except maybe to wake some sleepy people up.

What do you think?  

What did new IRS 990 Forms get us? Board Compensation at Health Insurers?

I’m visiting the same topic from last week because one of my colleagues – someone who asks great questions in the nonprofit arena – asked the same question I’ve been asking.  Why is it that one would put the phrases “board compensation” and “nonprofit” in the same sentence?

Well, they are on the new 990s. 

But they were on the old 990s, too! 

Has the changed form changed practices?

No. 

Not at health insurers. 

But apparently the state of Massachusetts is asking some good questions – and trying to legislate that board members of nonprofits should not be compensated for their “volunteer” work, as they are at most of the 22,000 nonprofits in the state.

Two large health insurers, Harvard Pilgrim Health Care and Tufts Health Plan have refused, stating it “is the industry norm and they must do this to attract directors, and that their members ‘committed significant time and effort to their board duties’.”  

I applaud what Massachusetts is trying to do.  Basically, health insurers are either in or out – they are nonprofits or they’re not. Nonprofit boards are volunteers.  For-profit boards can be compensated.  Which is a health insurer?  I want to know! 

And did the "new" 990s find all this?
No, they didn’t. 

The citizens of Massachusetts started this in 2009.  

I still don’t see how the 990s have made any difference at all, except taking a lot more time to fill out…

Thoughts?

What did new IRS 990 forms get us? Two Cups of Tea?

I’ve been wondering if all the changes the IRS put forth into the 990 forms actually made a difference.  A couple of years ago the IRS changed the 990s in reaction to the scandals and misappropriation of funds that had gone on at various nonprofits.  The changes were designed to make such acts less likely to occur. 

So has it worked?

Well, what were the changes?  Without going into details, they broadly covered a few categories, such as:    

a) a new section on governance, with the idea that good governance would equal good operations.

b) more detailed reporting for the compensation of officers and others affiliated with the organization. To make sure all forms of compensation were being reported.

c) expanded reporting regarding program services and exempted activities, as well as payments made to contractors in excess of $100K.

In all, they sound virtuous.  So how did we get Greg Mortensen’s scandal with “Three Cups of Tea” and the Central Asia Institute?   Did the 990 catch him?

I went back and looked.  The most recent 990 they post is from 2008 (unfortunately) but it’s revealing:

a)      There were only 4 board members.  Wow.  One of them was Greg himself.  Doesn’t look good, does it?

b)      Greg makes $180K in total compensation - a nice living - and not out of line. The head of our local United Way makes a lot more than he does.

c)      Expanded reporting doesn’t really say much…

But Part III says it all.  And Part III is no different than it used to be.  The “Statement of Program Service Accomplishments” clearly indicates that 41% of revenues are spent overseas on programs and 47% are spent on “domestic outreach and education, lectures & guest appearances in the U.S.”  So while Greg may earn a modest sum, the nonprofit is supporting the sales of his book, his lecturing, and the promotion of his book and cause in the U.S.

Since 91% of his funding, per the institute’s website, comes from individual donors, I bet they’d find this interesting. 

Not to take away from Greg – it appears that his organization is helping to educate 13,630 young students – boys and girls - in Pakistan and 28,475 students in Afghanistan.  He is certainly to be commended for this.  The list of schools is impressive.   

I’m  just thinking his funders might like to see the pie chart divided a little differently – with 47% (or more) of funds going to programs overseas – and even less than 40% going to promote the cause in the U.S.

So what has the new 990 done?  Not much that I can see.   It was the people within the organization, as well as some outsiders who were watching the reporting, who blew the whistle on Mr. Mortensen.  I don’t think the change in reporting did it…the old forms would have told this story just as well as the new ones do.

I’d like to see if the 990s are really ending corruption.  I doubt it.  It’s just being reformatted – for the astute to go and find.  Let me know if you see a difference somewhere that I’m missing.

Thoughts on Joplin, MO and the believability of change

My heart goes out to all those who have been afflicted in Joplin, MO.  With the videos, the media coverage, the tweets, as well as the nonprofit and humanitarian outpouring of assistance, they have truly been in the spotlight this week.
 
But that’s this week.  In the past weeks and months there have been disasters all over the world – tsunamis, flooding, storms, not to mention - aside from the strange weather - birds falling from the skies, fish dying.  The world didn’t end last weekend but something strange sure is going on – different in the past few years than in the years when I was growing up (I feel like I'm sounding old...).
 
Which brings me to the title of my piece – believability.  Why is it so hard for some people to believe in climate change?  In weather patterns changing?  In conditions all over the world being significantly different now than they used to be?  And by significant, I’m talking in statistical terms, not just the observation that it seems different than it used to be. By real, scientific measures, it IS different. Ice caps are melting.  The alps have less snow.  The list goes on and on.


Yet there are many in the world who do not see this, or believe it.  I attribute that to the influences in their lives.  Influences of people, religion, upbringing, education, geography – the list can go on.  Whatever those influencers are, they seem to be in opposition to the evidence.  Weather and temperature - as we know it - are different.  Geographies are changing.  And this shift is straining people and resources all over the world.

Perhaps it is time we look at the causes of what influences people’s belief systems – why they can’t “see” climate change – weather conditions doing their worst – what it does to humans and to nature.  For it is only by understanding what influences belief systems that we can truly communicate, understand, and – perhaps – move forward - to deal with the world as it evolves into something very different. 

Why Nonprofits Should Care About Losing E.T.

Stories from the L.A. Times, The Seattle Times, and NPR, among others, have described the funding problems of the SETI Institute in Mountain View, CA.  The Institute now lacks sufficient funds to operate the monitoring arm of the Allen Telescope Array, a field of radio dishes that scans the skies for signals from extraterrestrial civilizations.  

According to the Seattle Times, “the timing couldn't be worse,” as “1,235 new possible planets had been observed by Kepler, a telescope on a space satellite.  Fifty or 60 of those planets appear to be about the right distance from stars to have temperatures that could make them habitable.”

Sound familiar?  Ever have funding for a program in jeopardy just when you thought it could do the most good?  

The elephant in the room is the results.  SETI has been around since 1984, with 42 radio dishes scanning deep space since 2007, and not a peep has been heard from E.T.  

What nonprofits can learn from this is that results do matter.  Yes, federal funding is tight.  Yes, California is in crisis.  And yes, there is still a chance that a white knight will appear before June 1^st.  But the big question remains: who else is willing to fund an idea?  A vision?  A goal, no matter how lofty and wonderful – when there is the possibility that there will be no results?

Funders like to see results . They want E.T.  Or at least progress.  

As a nonprofit, be sure that you are the best storyteller of your results – your successes, what you’ve learned along the journey.  The best way to secure and continue funding from donors is to show them how their dollars have made the world a better place.

What Nonprofits can Learn from Skype and MySpace

The activity this week of these two very different sites – Skype and MySpace – may seem unrelated to nonprofits.  But Skype’s sale to Microsoft for $85M and the valuation of MySpace at 25% of its previous value provides some good lessons.

Skype is a nice success story.  It illustrates how being early in the game – helping to create the game – can help you to become a leader.  We use skype as a verb now, the way we use google as a verb.  Skype makes a difference in the way we think about technology and the way we communicate.  While Microsoft (and others) may speculate about possible overvaluation, they now own a certain share of the market and, just as importantly, have kept it away from their competitors.

MySpace, on the other hand, is the story of a site that was in early but had no barriers to entry and, over time, did not change enough to remain “relevant.”  It was copied and “done one better.  So it lost it’s standing as the leader and, though it was “hip” for while, it fell out of fashion.  It was replaced, technologically, and culturally. 

I may have simplified a bit in my summations of each, but I think I got the gist of each right.  The real question is: what relevance does this have for nonprofits?

Like Skype, if you’re providing a service that is unique – if you do something no one else does in an area – crow about it.  Get your constituents to tell their stories.  Record their testimonials.  Grow your fan base.  “Own” your market.  Most importantly, prove your worth.  Show how you’re making a difference.  This is what funders want more than anything else.  Illustrate results.

Don’t fall into the MySpace traps.  Those include being blinded by “popular” programs – what is fashionable at the moment or what others are doing.  Or starting a new program because some funder likes the idea and wants to back it, though it's not on target with your mission.  Stick to the knitting.  Do what you do best.  And stay up-to-date with technology that can help you manage your programs in a cost-effective way.

Being focused on your mission and your results never goes out of fashion and will always be “valued” by your funders.