This is the third Sam Sector III case. If you check on a regular basis you can follow the escapades of Sam “the greatest and only nonprofit detective in the world” as he answers the questions facing today’s nonprofit leaders. Each installment will take only a couple of minutes to read, will provide you with some information, and will end in a bit of a cliff-hanger so that you will return in about 7-10 days to find out what happened. This of course is fun for me, and a different way to get information out to all of you who have an interest. Please let me know if you like it, hate it, or wish that Sam would find a real job that pays.
Sam arrived early at the Shack, staked out his favorite table in the corner under the big moose antlers, and reviewed his notes for Gert, his aunt through marriage, and a semi-retired philosophy professor at the University. He had written down in his pocket notepad two hypotheses that he wanted to test out with Gert:
- This is the right time for making significant change in a non-profit organization.
- Non-profit leaders should explore engagement strategies, and strategic restructuring at this time.
Sam twirled his fountain pen between his fingers, awkwardly spraying some black ink onto his favorite blue pin-striped shirt, just as Gert bustled into the room. As usual she was wearing a show-stopping hat. This one was a large-brimmed woven straw affair with some red, white, and blue silk petunias popping out from the front and along each side. Her hat in combination with her blue flowered dress reminded Sam that he needed to water the plants that populated his window box if it wasn’t already too late. “Hi Sam, Stella told me you had some ideas that you wanted to test out with me, so we better get started, I have some oral dissertation defenses starting in about an hour.”
“Sure, thing Gert, I knew you would be in a rush so I ordered up some food for both of us. I went with the basics today: Sardine and roasted red pepper and sweet onion sandwiches on toasted white pullman’s bread, with a side order of thin sliced cucumbers, onions, dill, and sour cream. We can top it off with a nice bottle of Prosecco.” Sam smiled as he watched Gert lick her lips over the thought of lunch.
Sam didn’t miss a beat as he laid out his hypotheses to his aunt. Gert took off her hat and put it on the chair at the table next to her as she responded. “It is definitely the right time to make significant changes in a nonprofit. You remember the change formula that we discussed last time we lunched - well as a reminder it looks like this:
Change = D x V x 1st < cost
“Michael Beer, at Harvard developed this change formula, and I think that you will find it helpful. It states that for change to happen one needs to have D (high dissatisfaction with the current situation or condition) as well as V (a vision of how things might be better in the future) and 1st (the first steps to move one from dissatisfaction to that vision of the future). Now the cost (emotional, energy, financial, etc.) of doing this must be perceived as being less than the cost of the staying as is. Do you remember, Samuel?”
Sam nodded agreement and Gert continued as the wine and food arrived at the table. “Well, what makes it a great time for change is the first and last variables of the formula. Most people are dissatisfied with the current economic situation and the dissatisfaction is high enough to make staff, board and volunteers more accepting of a high cost of making the change. Does that make sense Samuel?”
Sam had just taken a big bite of his sandwich which he moved to his right cheek, imitating a squirrel carrying nuts to his nest. “If I get your point, Gert, right now is a good time because board and staff leadership do not need to convince people that it is time to make a change, they understand why the times demand that organizations cannot operate as they always have. This heightened awareness also increases the perceived cost that people are willing to take on to make the change happen. They will expend more time, money and energy in order to get to a better place — that vision provided by the leaders. In other words staff and volunteers will cooperate more readily with leadership to make change happen.”
“Right you are Samuel!” Gert took a sip of her glass of sweet, sparkling wine. “So this dynamic is what people mean when they say ‘never waste a good crisis’. It is all about willingness to make change if you believe that there is a big problem.”
Sam took another large bite of his fish sandwich and spoke with his mouth full. “Yah, Gert, the current economic environment means that you do not need to waste a bunch of time convincing the board and staff that times warrant making change. I buy that; and I even think that this is a time that you can consider doing things that otherwise might be viewed as too radical. But, do you think that non-profits should look at engagement strategies and strategic restructuring?”
“You bet Samuel, and I can give you three good reasons for non-profits to consider these approaches. First, often the best way to increase your resources during tough times is to find a partner whose mission fits with a program that you want to operate. It can be a two-for-one in terms of outcomes, and there are often opportunities to increase access to a target population. For example, a social service organization providing employment services to unemployed individuals can partner with a non-profit organization that works closely with a specific immigrant community to increase their access to that community. At the same time there may be an opportunity to increase the resources that support the program for each organization.”
Sam crunched on a hunk of pickled watermelon rind and made a face. “Doesn’t that mean that a nonprofit leader has to give up control in order to get more resources for their program? That may not be the kind of trade-off I’d be willing to make.”
“Yes, Samuel, it is certainly true that a nonprofit does give up decision-making control when collaborating with others. Let’s not forget though that it only makes sense to collaborate with others if the partnership is in the self-interest of all those participating. If any partner does not feel that it is in their self-interest, then they should not stay in the collaboration. Anyway, everyone worries way too much about 100% control. How much complete control do non-profits have over what and how they serve the community? Funders, regulators, competing organization and other stakeholders have much more say than many nonprofit leaders like to admit. So how much control do non-profit leaders really have?”
Sam nodded his head as he drained his glass. “You are right, as usual, Gert. Most of us worry about control way more than we should. What is the second point that you wanted to make?”
“Donors, foundations, and corporations who provide funding to nonprofits seem to want to see organizations working in partnership, because, rightly or wrongly, they believe that collaborations eliminate duplication and provide more cost effective services. Therefore, if a nonprofit wants to attract resources, whether or not they are part of a collaboration can often be the deciding point for a funder. Why, some funders even specify that collaborations will be shown preference all else being equal.” Gert drained her glass and reached for her hat in preparation for leaving.
Sam grabbed the check and motioned for Gert to make her third point as they walked toward the door.
“Merger is getting to be less of a dirty word in the nonprofit sector, Samuel. There are many reasons for that including:
- Fully 25% of nonprofits may be facing going out of business over the next 12-18 months. Merger is certainly preferable to shutting down. Many more leaders are willing to discuss a whole range of strategic alliances, including the M word.
- As the baby boom population, many of whom have held leadership positions in nonprofits, prepares for retirement, there is a window of opportunity open to many organizations. Merger is viewed as a real option to replacing the executive director for many boards of directors.
- Finally, given that many organizations have participated in collaborations over the past few years, and that some have been involved in shared services which have resulted in combined back-offices, there is greater receptivity to taking the next step, in some cases, which is to merge offices.
Well, that is all I know Samuel, thanks for lunch, and I gotta go.”
With a flourish Gert perched her flower-covered hat on her head, and motored out of the Shack reminding Sam of a run-a-way float in the Rose Bowl Parade. As Sam paid the bill, he started to wonder about some of the barriers that nonprofit leaders saw and how he might address them. He knew who he wanted to talk to next. He just hoped that he could find her.
If you have ideas that can help Sam as he works on his current case, or if you have "cases" that you would like to see Sam take on, please email me.