Lessons From Leading in 2009: Part Two

APRIL 2010

LESSONS FROM LEADING IN 2009: PART TWO

By Jennifer Marie Jones

The financial challenges of 2009 forced nonprofit leaders and consultants to reexamine all aspects of their work, from fundraising to program planning to day-to-day operations. For some organizations, this meant finding the delicate balance between pursuing mission and exercising fiscal caution. For others, more immediate steps were necessary.

"EXTRAORDINARY STEPS"

Faced with increasing overhead and diminishing funds, Richard Altman needed to make some tough decisions on behalf of JCCA in 2009.

Early in the fiscal year, Altman realized that with contracted programs being scaled back, the organization would need to be "retrenched" to some extent. Even so, he delayed staff cuts until state and city budgets were revealed, ultimately eliminating thirty positions in October.

If he'd made the decision to cut staff earlier, Altman notes, the timing would have been better financially. Because JCCA is a service organization, however, Altman's impulse was to "hang in there as long as possible." Weathering 2009 required a balance, he says, between maintaining the organization's capacity for service and preserving the possibility of staying in operation.

JCCA was aided by Altman's open communications with the organization's board, which allowed endowment spending above the usual 5% annual cap. Along with budget cuts, this allotment was able to make up some of the shortfall due to the recession's fallout, says Altman.

Altman was also able to meet with the union governing JCCA's staff and set in place an unprecedented agreement. Understanding the crisis that the organization found itself in, the union voted 6 to 1 to allow both management and staff to work for four payless days during the second half of the fiscal year, "a collective community goodwill effort" intended to prevent further staff cuts.

Above all, it was open communication, Altman says, that allowed JCCA to take the "extraordinary steps" that allowed the organization to continue functioning into 2010.

BUILDING CONFIDENT DONORS

Debra LaMorte's primary strategy in the last fiscal year was to trust in fundamentals.

"I'm a firm believer that all the things we have done are the right things to do," she says. If you focus on cultivating and stewarding donors properly, she explains, they'll remain steadfast in both good times and bad.

Stewarding donors includes educating them about the fundamental role they can play in the organization's future.

"It's really important to help donors understand that even though they are less wealthy, they still have an enormous amount of ability to help," says LaMorte. She communicates to her donors how crucial their support can be for NYU "and everything it stands for." She is honest about the impact a major gift can have, she says, letting the donor know how much a gift can boost morale during a time of dire cuts to both staff and programs.

LaMorte considers donors part of the organization's "family." And like family members, she maintains relationships with donors with a view to the long-term.

"You still have to go out and see people," she explains, even if times are lean.

Despite her steadfast attitude, LaMorte allows that even she was not entirely immune to reacting to the recession. During the last fiscal year, she opted to pull back on NYU's Phone-A-Thon, concerned that the drive might offend struggling donors. "It was a mistake," she says now, and happily reports that the Phone-A-Thon is back "in full swing."

Ray Happy also believes in encouraging donors to gain perspective.

"There is some exaggeration in terms of how bad things are," he says. "This is a wealthy country. People will continue to make money."

He cites the Great Depression as an example. "Giving fell off a cliff," he says, but by the end of the decade, it was back to previous levels.

With that perspective in mind, Happy advises clients to favor a long-term viewpoint over knee jerk reactions that could ultimately harm the organization. Though he didn't encourage clients to launch projects during the "maelstrom" months of February to June, he did move existing campaigns forward. Because they were well planned, Happy says, they've been very successful.

SOUND STRUCTURES

"Crisis brings things into high focus," says Ann Sherman.

In difficult times, the existing weaknesses of an organization become readily apparent. In particular, she believes that for many organizations, 2009 showcased the importance of strong, highly functional boards, as well as the problems inherent in weak boards.

She notes that the accepted logic about which organizations are most vulnerable does not always hold true. For example, having recently engaged in a series of conversations with small arts organizations, Sherman was surprised at how well they've been weathering the recession. Those organizations that had smart leaders actively working hand-in-hand with staff and board members were adapting creatively and strategically to the challenges of the economy, she found, overcoming their status as traditionally "vulnerable" entities.

Sherman sees the strong interest in TCC's nonprofit evaluation practice as evidence of a healthy trend within the industry, an increased focus on accountability, structures and results. While she acknowledges that "it can be hard to talk about planning when you're worried about making payroll - strong leaders understand that the ability to understand and document the impact of their work is going to be part of what sustains them."

In 2009, Sherman says, organizations continued to shift from large-scale strategic planning towards smaller projects, mainly focused on the impact and relevance of their missions. She believes that the strongest organizations in the current economic climate have leaders who embrace learning and evaluation for continuous improvement, and who are therefore better able to adapt.

Sandy Cardin, President of the Charles and Lynn Schusterman Family Foundation, would agree. In the years leading up to 2009, he and his colleges made it a priority to build strong reporting systems, plans and procedures. The Foundation did so, Cardin says, by talking to other organizations, gathering information and adopting what they saw as best practices of the field. Though these efforts are continually renewed, Cardin found that the Foundation had implemented enough changes by 2009 to face the recession's repercussions.

"The stability of our systems," Cardin explains. "Allowed us to remain focused on our grantees, rather than spend a great deal of time reexamining our own operations."

Having a solid organizational framework enabled the Schusterman Family Foundation to remain true to its mission, and to deal with challenges without becoming overwhelmed, Cardin says. This sense of structure also helped the Foundation reach out to funded organizations in new ways.

"Organizations in the field were suffering terribly," Cardin says. "And yet providing emergency funding was not always possible, wise or both."

In those situations, the Foundation responded by providing increased levels of technical assistance, advice and other sources of non-monetary support to organizations open to receiving that kind of input. The Foundation proactively sought to help in supportive and nurturing ways, including a simple reaffirmation of their confidence in their philanthropic partners and by sharing information on strategies that other groups were using to cope with similar challenges.

Cardin notes that friends and colleagues at other foundations also stepped up to provide counsel and assurances to organizations. In fact, he found that the atmosphere of 2009 was more often defined by greater collaboration and collegiality than by panic.

"Everybody recognized we were all in the same boat to one degree or another," Cardin says. The empathy that funders and professional colleagues felt for organizations in unfortunate situations helped to foster a sense of "working together to survive the storm."

SILVER LINING

In addition to an increased sense of cooperation and support in the nonprofit world, 2009 had an added benefit, says Cardin.

According to Cardin, many organizations used the financial crisis to make the kind of tough decisions that needed to be made, but were easy to ignore or postpone in times of plenty. As a result, 2009 gave organizations the motivation necessary to "come out leaner, stronger and more focused."

"Crisis is a terrible thing to waste," seconds Anne Sherman.

Consolidation is the word of the day, she says. Many organizations forged strategic alliances or merged with others in 2009, while many more disappeared. Sherman says that this process of culling organizations was the unfortunate result of the economic downturn, but might have also been a natural adjustment to an oversaturated and sometimes redundant market.

Sherman sees two options for struggling organizations. Either they choose to see opportunity in tough times and move forward to pursue it, or they don't.

"Opportunity really comes when a leader, staff and board can say 'We're in this crisis. What do we do to best protect the mission?'"

It's a hard thing to do, she admits. It requires real courage and self-effacement to realize that sometimes, protecting the mission means becoming a program of another organization.

Seeing the silver lining in 2009's financial crisis took a simple and effective form for Rev. Charles Gibbs.

URI's Executive Director "practiced gratitude" in 2009, not just for the organization's growth but also for the challenges it faced at the end of the year. Gibbs says that when anxiety crept in during a meeting or tense situation, he said a silent thank you. It helped him to see the hidden gift in each situation.

He continues to look for silver linings, leading his organization into 2010 with an open, hopeful mind.

Next month's Part 3 of this series imparts and builds upon the same perspective, endorsing a long-term view through valuable lessons applicable to both current leaders as well as a new generation of non-profit employees that are, or will be, entering into executive-level leadership roles.

# # #

Jennifer Marie Jones has been invovled with nonprofit executive search at DRG since 2001



	APRIL 2010 LESSONS FROM LEADING IN 2009: PART TWO By Jennifer Marie Jones The financial challenges of 2009 forced nonprofit leaders and consultants to reexamine all aspects of their work, from fundraising to program planning to day-to-day operations. For some organizations, this meant finding the delicate balance between pursuing mission and exercising fiscal caution. For others, more immediate steps were necessary. "EXTRAORDINARY STEPS" Faced with increasing overhead and diminishing funds, Richard Altman needed to make some tough decisions on behalf of JCCA in 2009. Early in the fiscal year, Altman realized that with contracted programs being scaled back, the organization would need to be "retrenched" to some extent. Even so, he delayed staff cuts until state and city budgets were revealed, ultimately eliminating thirty positions in October. If he'd made the decision to cut staff earlier, Altman notes, the timing would have been better financially. Because JCCA is a service organization, however, Altman's impulse was to "hang in there as long as possible." Weathering 2009 required a balance, he says, between maintaining the organization's capacity for service and preserving the possibility of staying in operation. JCCA was aided by Altman's open communications with the organization's board, which allowed endowment spending above the usual 5% annual cap. Along with budget cuts, this allotment was able to make up some of the shortfall due to the recession's fallout, says Altman. Altman was also able to meet with the union governing JCCA's staff and set in place an unprecedented agreement. Understanding the crisis that the organization found itself in, the union voted 6 to 1 to allow both management and staff to work for four payless days during the second half of the fiscal year, "a collective community goodwill effort" intended to prevent further staff cuts. Above all, it was open communication, Altman says, that allowed JCCA to take the "extraordinary steps" that allowed the organization to continue functioning into 2010. BUILDING CONFIDENT DONORS Debra LaMorte's primary strategy in the last fiscal year was to trust in fundamentals. "I'm a firm believer that all the things we have done are the right things to do," she says. If you focus on cultivating and stewarding donors properly, she explains, they'll remain steadfast in both good times and bad. Stewarding donors includes educating them about the fundamental role they can play in the organization's future. "It's really important to help donors understand that even though they are less wealthy, they still have an enormous amount of ability to help," says LaMorte. She communicates to her donors how crucial their support can be for NYU "and everything it stands for." She is honest about the impact a major gift can have, she says, letting the donor know how much a gift can boost morale during a time of dire cuts to both staff and programs. LaMorte considers donors part of the organization's "family." And like family members, she maintains relationships with donors with a view to the long-term. "You still have to go out and see people," she explains, even if times are lean. Despite her steadfast attitude, LaMorte allows that even she was not entirely immune to reacting to the recession. During the last fiscal year, she opted to pull back on NYU's Phone-A-Thon, concerned that the drive might offend struggling donors. "It was a mistake," she says now, and happily reports that the Phone-A-Thon is back "in full swing." Ray Happy also believes in encouraging donors to gain perspective. "There is some exaggeration in terms of how bad things are," he says. "This is a wealthy country. People will continue to make money." He cites the Great Depression as an example. "Giving fell off a cliff," he says, but by the end of the decade, it was back to previous levels. With that perspective in mind, Happy advises clients to favor a long-term viewpoint over knee jerk reactions that could ultimately harm the organization. Though he didn't encourage clients to launch projects during the "maelstrom" months of February to June, he did move existing campaigns forward. Because they were well planned, Happy says, they've been very successful. SOUND STRUCTURES "Crisis brings things into high focus," says Ann Sherman. In difficult times, the existing weaknesses of an organization become readily apparent. In particular, she believes that for many organizations, 2009 showcased the importance of strong, highly functional boards, as well as the problems inherent in weak boards. She notes that the accepted logic about which organizations are most vulnerable does not always hold true. For example, having recently engaged in a series of conversations with small arts organizations, Sherman was surprised at how well they've been weathering the recession. Those organizations that had smart leaders actively working hand-in-hand with staff and board members were adapting creatively and strategically to the challenges of the economy, she found, overcoming their status as traditionally "vulnerable" entities. Sherman sees the strong interest in TCC's nonprofit evaluation practice as evidence of a healthy trend within the industry, an increased focus on accountability, structures and results. While she acknowledges that "it can be hard to talk about planning when you're worried about making payroll - strong leaders understand that the ability to understand and document the impact of their work is going to be part of what sustains them." In 2009, Sherman says, organizations continued to shift from large-scale strategic planning towards smaller projects, mainly focused on the impact and relevance of their missions. She believes that the strongest organizations in the current economic climate have leaders who embrace learning and evaluation for continuous improvement, and who are therefore better able to adapt. Sandy Cardin, President of the Charles and Lynn Schusterman Family Foundation, would agree. In the years leading up to 2009, he and his colleges made it a priority to build strong reporting systems, plans and procedures. The Foundation did so, Cardin says, by talking to other organizations, gathering information and adopting what they saw as best practices of the field. Though these efforts are continually renewed, Cardin found that the Foundation had implemented enough changes by 2009 to face the recession's repercussions. "The stability of our systems," Cardin explains. "Allowed us to remain focused on our grantees, rather than spend a great deal of time reexamining our own operations." Having a solid organizational framework enabled the Schusterman Family Foundation to remain true to its mission, and to deal with challenges without becoming overwhelmed, Cardin says. This sense of structure also helped the Foundation reach out to funded organizations in new ways. "Organizations in the field were suffering terribly," Cardin says. "And yet providing emergency funding was not always possible, wise or both." In those situations, the Foundation responded by providing increased levels of technical assistance, advice and other sources of non-monetary support to organizations open to receiving that kind of input. The Foundation proactively sought to help in supportive and nurturing ways, including a simple reaffirmation of their confidence in their philanthropic partners and by sharing information on strategies that other groups were using to cope with similar challenges. Cardin notes that friends and colleagues at other foundations also stepped up to provide counsel and assurances to organizations. In fact, he found that the atmosphere of 2009 was more often defined by greater collaboration and collegiality than by panic. "Everybody recognized we were all in the same boat to one degree or another," Cardin says. The empathy that funders and professional colleagues felt for organizations in unfortunate situations helped to foster a sense of "working together to survive the storm." SILVER LINING In addition to an increased sense of cooperation and support in the nonprofit world, 2009 had an added benefit, says Cardin. According to Cardin, many organizations used the financial crisis to make the kind of tough decisions that needed to be made, but were easy to ignore or postpone in times of plenty. As a result, 2009 gave organizations the motivation necessary to "come out leaner, stronger and more focused." "Crisis is a terrible thing to waste," seconds Anne Sherman. Consolidation is the word of the day, she says. Many organizations forged strategic alliances or merged with others in 2009, while many more disappeared. Sherman says that this process of culling organizations was the unfortunate result of the economic downturn, but might have also been a natural adjustment to an oversaturated and sometimes redundant market. Sherman sees two options for struggling organizations. Either they choose to see opportunity in tough times and move forward to pursue it, or they don't. "Opportunity really comes when a leader, staff and board can say 'We're in this crisis. What do we do to best protect the mission?'" It's a hard thing to do, she admits. It requires real courage and self-effacement to realize that sometimes, protecting the mission means becoming a program of another organization. Seeing the silver lining in 2009's financial crisis took a simple and effective form for Rev. Charles Gibbs. URI's Executive Director "practiced gratitude" in 2009, not just for the organization's growth but also for the challenges it faced at the end of the year. Gibbs says that when anxiety crept in during a meeting or tense situation, he said a silent thank you. It helped him to see the hidden gift in each situation. He continues to look for silver linings, leading his organization into 2010 with an open, hopeful mind. Next month's Part 3 of this series imparts and builds upon the same perspective, endorsing a long-term view through valuable lessons applicable to both current leaders as well as a new generation of non-profit employees that are, or will be, entering into executive-level leadership roles. # # # Jennifer Marie Jones has been invovled with nonprofit executive search at DRG since 2001