Lessons From Leading Part III: The New Nonprofit Executive

May 2010

LESSONS FROM LEADING PART III: The New Nonprofit Executive

By Jennifer Marie Jones

Parts I and II of Lessons in Leading focused on actions taken by nonprofit leaders to weather the recession's impact in 2009 and its repercussions in 2010. The examples shared by these leaders illustrated the ways in which an economic crisis can become a catalyst for positive outcomes: renewed focus on mission, heightened awareness of an organization's finances and structural soundness, and leaders, staff and board members who are better equipped to adjust to what many consider uncertain times ahead.

One concept that recurred throughout our conversations was that of the "new normal." Against the recession's stark financial backdrop, changes within the industry that might otherwise have shifted gradually have instead had immediate impact on the day-to-day work of nonprofit executives and staff. Looking ahead, all agree that the organizations that will thrive within the "new normal" are those led by executives who are prepared for the future.

In Part 3 of our series, nonprofit executives and consultants share the experiences that prepared them for the new nonprofit landscape, and the qualities that they consider vital to the success of the next wave of leaders.

"FORTUNE FAVORS THE PREPARED MIND" ~ Louis Pasteur

Richard Altman, CEO of New York's Jewish Child Care Association, began his career as a social worker before working his way up through the ranks - not an uncommon path to leading a social service organization. But what he considers the turning point of his career development was the decision to attend business school.

Then serving as COO of a human service organization, Altman was supported by a board of directors who, as he says, "had the foresight to send me to Columbia Business School." The experience at Columbia gave Altman a "big picture" perspective on his work, he says, along with a strong grounding in business concepts, strategic planning, forecasting and budgeting.

"In the early days," Altman says, "Nonprofits were led by caring service people." Today, the increasing complexity of the nonprofit world, including contract details, deliverables, and performance-based government contracts, creates an environment in which it is crucial to plan from a business perspective.

On the other hand, he says, a leader cannot fully apply a bottom-line mentality to the ever-important human element of an organization. The human service field requires the intuition and compassion that comes from years of serving others. Altman believes that the new nonprofit leader will be both "people-oriented" and business-savvy.

"The combination is a good thing," he says.

For Sandy Cardin, President of the Charles and Lynn Schusterman Family Foundation, a turning point of a different kind occurred after the death of Charles Schusterman in 2000, when sole leadership of the Foundation shifted to Lynn Schusterman. Cardin recalls fondly the way that Charles and Lynn had complemented one another in jointly chairing the organization. "Charles was a very different kind of leader from Lynn," Cardin says. "They brought different strengths, different sensitivities."

Upon Charles' passing, the organization lost some of the balance that the two chairs had together brought to the Foundation. The adjustment to serving the vision of one individual, rather than two, required the Foundation to reprioritize. "We had to decide what kind of organization we were going to become," Cardin explains. To that end, he restructured and refocused the Foundation in order to best pursue the missions that were important to Lynn and honored Charle's vison.

Another shift took place the next year, when the attacks of September 11th sent shock waves through every industry. Cardin considers this time period one of great challenge and turmoil, both externally and internally. "We did some things well, others not well," he admits. "I learned a lot about dealing with transition and difficult times while remaining confident and optimistic about the future."

Cardin believes that it was facing these two difficult transitions in such quick succession that afforded him the perspective necessary to steer the Foundation through today's turbulence. To him, the new nonprofit executive will have benefited greatly from facing such challenges as the recession's impact early in his or her career. It is practice with adversity that allows a leader to remain steady when the ground shifts once again.

"There's nothing like experience," agrees Ken Kozloff, CEO of JSSA. Having been through difficult times early in his career in which he had to lay off over 200 staff, Kozloff learned how devastating such a measure could be to an organization. In approaching challenging budgetary situations today, Kozloff considers layoffs an absolute last recourse. In 2009, he communicated that very message to his staff, asking them to work together to help him prevent such cutbacks. The way that JSSA staff rallied demonstrated the trust that they placed in Kozloff's leadership. "I've been here three years," he says. "They know that my word is my bond."

Early experience working within teams also taught Kozloff the value of an inclusive management style. "What's most important is how you approach things," he says. "Are you a team player or out there by yourself?" If there was ever a time when nonprofit executives could lead effectively by delegating behind closed doors, Kozloff believes that that time has certainly passed. "One person in not an organization," he cautions. Leaders are only as strong as their team, and are most effective when surrounded by staff who believe in both the CEO and the direction in which the organization is heading.

"TO LEAD PEOPLE, WALK BESIDE THEM" ~ Lao-Tzu

Kozloff considers it crucial for leaders to keep their "fingers on the pulse" of what is happening on every level of an organization. "The only way you'll understand what staff is going through," he explains. "Is to walk in their shoes." Kozloff finds that valuable insight comes out of meeting regularly with staff. In establishing a vibrant dialogue with staff members, Kozloff invites tough questions and replies truthfully. Honest answers, he explains, serve to empower staff by making them more knowledgeable about the business side of the organization and how financial realities affect their work down the line. In addition, Kozloff likes to keep staff members in every department apprised of fundraising and campaign developments.

Kozloff's goal in communicating so openly is to engender in JSSA's staff the sense that they are "owners, not renters" in the organization. By demonstrating a clear link between the staff's work and the state of the agency, he is able to foster an organizational culture of pride and greater accountability. As a result, staff members step up, sometimes in unexpected ways. During 2009's budget cuts, JSSA's staff took it upon themselves to identify "ground level waste," suggesting to Kozloff that the office stop purchasing everyday items such as coffee cups and plastic utensils, a measure that ultimately saved the organization over $18,000.

In communicating honestly, Kozloff says, leaders must also remember to remain consistently positive. "People watch the CEO," he explains. "You can depress your people or make them feel comfortable and secure." Kozloff integrates staff recognition into his workflow as CEO in a concrete way. "I write a minimum of ten personal thank you notes a month to staff," he says. He asks his directors to keep their eyes open for staff contributions and pass them along to him. In this way, he trains his senior managers to value and reward their staff members as well.

Rev. Charles Gibbs also considers organizational culture vitally important. As Executive Director of United Religions Initiative, he seeks to maintain a balance between "a cold eyed approach to work" and an inspired vision for the future. "People here are highly motivated," Gibbs explains. In communicating with staff, he must realistically convey what challenges are facing the organization while keeping the overall viewpoint positive and goal-oriented. He encourages staff to continually "ask tougher questions," not because they are anxious about the organization, but precisely because they have faith that the organization is becoming more effective every day.

Gibbs strikes this balance, in part, by sharing his personal philosophy with URI's staff. As an Episcopal priest, he explains, he holds a "bedrock belief that there are larger hands at work here." He believes that he is most effective when he aligns himself with a "greater spirit working through all of us." In the case of URI, this greater force can be interpreted as the organization's mission, that of globally promoting interfaith understanding and peace. As a leader, Gibbs makes it clear to staff that their work is being guided and supported, that the "challenges of the moment are just of the moment." Those URI staff members who are religious might interpret this philosophy through the lens of their own faiths, while other staff members who are "not at all" religious are able to appreciate this perspective in their own ways.

Ann Sherman, Associate Director at consultant firm TCC, agrees that it is crucial for leaders to be able to communicate to staff and board members a shared vision for their organization. "Acknowledge that it's hard," she advises. "But express the big picture." Leaders must take time to develop a vision that is "clear, compelling and appropriate," as well as an "authentic and meaningful" way of conveying it. Once staff members have a clear sense of the organization's message, they are able to support one another, working powerfully towards a collective goal.

"Be the face of the future," Sherman explains. "Now more than ever. And people will take cues from you."

"IN TIMES OF CHANGE, LEARNERS INHERIT THE EARTH" ~ Eric Hoffer

The need for a clear and compelling message is not limited to internal communications, however. In order for organizations to remain viable in their fundraising, the new nonprofit leader must be extremely savvy about how information flows in today's society.

"Social media and the internet are now very important," Sherman explains. "No digital divide exists anymore." Where once "raising money and doing your job" was enough for a nonprofit leader, she says, it is now imperative to develop a focus on externally positioning organizations within an increasingly crowded information space. Leaders must examine ways to raise the profile and credibility of their organization, which may include undertaking a full branding process, asking board members to utilize online resources, and adjusting mission to best meet the needs of current society.

While Sherman allows that marketing does not replace fundraising, she also cautions organizations not to "confuse having computer software or a grant-writer with financial sustainability. It's a much larger, more complex picture."

Ray Happy, Managing Director of fundraising consultancy CCS, seconds that times have changed and that the old ways of looking at fundraising may no longer function. However, he believes that it is the more complex strategies that are falling away in favor of basic essentials.

"Simple things are the most important things, " Happy explains. "If you can build real relationships [with donors], they'll hang with you in the bad times if they can." Organizations that were traditionally dependent on direct mail, but did not spend time building connections on a personal level, have particularly struggled in recent years, Happy says. "Envelopes can be put aside for the year," and so, he adds, "direct mail programs are down nationwide." With a societal shift away from paper and towards online communication, these programs are unlikely to rebound.

Happy believes that another traditional fundraising area bears reexamination: special events. "Events are so labor intensive and the cost structure is so high," he says. "They can bring benefits, but many groups will work towards events without realizing the real cost of them." He advises clients to ask themselves whether the time spent on events is actually paying off, or whether major gift stewardship and other more personal endeavors might be more effective focal points for their development program.

One important area that Happy considers too often neglected is planned giving. Organizations are wise to keep in mind that their donor base is aging, Happy says. As baby boomers reach retirement, they often aren't made aware of the tax benefits of sound estate planning. "Highlighting that is a good strategy."

In discussing how estate planning plays into fundraising initiatives, Sandy Cardin points to the younger generation, and to the wealth that will be willed to them in coming years. Despite the money that was lost in the recession, he says, "an awful lot will still be transferred." The trend towards online giving also reshapes the fundraising landscape, he notes. "The intersection of these two topics is very important." The new nonprofit executive will need to be tuned into ways to steward these potential donors where they live and interact, even if that place is digital.

To Cardin's mind, the future of nonprofit leadership rests partly in the hands of today's leaders. "Leadership succession is very important," he says. "I'm not concerned that there aren't good people out there. There are great people out there." He's concerned, he says, about whether organizations looking for leaders are structured well enough to bring in, train and cultivate people in a way that empowers them to move the organization forward. It's not enough to train a leader to deal with change, he notes, the organization itself has to be prepared for the change that that leader may bring.

Cardin believes that as times appear more stable, many organizations will have to fight the tendency to "sit back and relax a little." Though the world may not move as tumultuously as it has in the past decade, move it will. Leaders who are able to "stay on their toes," constantly reassessing the capabilities of their organization and the work that they do will be the ones who are able to truly move forward in a viable way.

"OUR CHIEF WANT IS SOMEONE WHO WILL INSPIRE US TO BE WHAT WE KNOW WE COULD BE" ~ Ralph Waldo Emerson

Rev. Gibbs lives on a tidal creek and, from his dock, has the opportunity to watch what he calls "the breathtaking flow" as waters flow in and out again. It serves as a reminder to him that cycles naturally occur in this world - and that more than that, they're inevitable. In examining his work at URI, he is able to recognize the reality of what part of the cycle he and the organization find themselves in without becoming stuck in a judgment of it.

The new nonprofit executive must have the perspective necessary to ask what the next dimension of their organization is, and to imagine a "new, positive, life-giving future" amidst the challenge of the present moment, Gibbs says.

"Let the future guide you," he advises. "Rather than the sense of losing something."

When the world shifts, as it invariably will, tomorrow's executives must be prepared to gracefully respond. What our conversations with today's leaders tell us, first and foremost, is that the human element is paramount.

Those leaders who connect authentically with staff and donors, and who believe fervently in the mission of their organizations, will be the leaders who are most empowered to make a difference tomorrow.

# # #

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



	May 2010 LESSONS FROM LEADING PART III: The New Nonprofit Executive By Jennifer Marie Jones Parts I and II of Lessons in Leading focused on actions taken by nonprofit leaders to weather the recession's impact in 2009 and its repercussions in 2010. The examples shared by these leaders illustrated the ways in which an economic crisis can become a catalyst for positive outcomes: renewed focus on mission, heightened awareness of an organization's finances and structural soundness, and leaders, staff and board members who are better equipped to adjust to what many consider uncertain times ahead. One concept that recurred throughout our conversations was that of the "new normal." Against the recession's stark financial backdrop, changes within the industry that might otherwise have shifted gradually have instead had immediate impact on the day-to-day work of nonprofit executives and staff. Looking ahead, all agree that the organizations that will thrive within the "new normal" are those led by executives who are prepared for the future. In Part 3 of our series, nonprofit executives and consultants share the experiences that prepared them for the new nonprofit landscape, and the qualities that they consider vital to the success of the next wave of leaders. "FORTUNE FAVORS THE PREPARED MIND" ~ Louis Pasteur Richard Altman, CEO of New York's Jewish Child Care Association, began his career as a social worker before working his way up through the ranks - not an uncommon path to leading a social service organization. But what he considers the turning point of his career development was the decision to attend business school. Then serving as COO of a human service organization, Altman was supported by a board of directors who, as he says, "had the foresight to send me to Columbia Business School." The experience at Columbia gave Altman a "big picture" perspective on his work, he says, along with a strong grounding in business concepts, strategic planning, forecasting and budgeting. "In the early days," Altman says, "Nonprofits were led by caring service people." Today, the increasing complexity of the nonprofit world, including contract details, deliverables, and performance-based government contracts, creates an environment in which it is crucial to plan from a business perspective. On the other hand, he says, a leader cannot fully apply a bottom-line mentality to the ever-important human element of an organization. The human service field requires the intuition and compassion that comes from years of serving others. Altman believes that the new nonprofit leader will be both "people-oriented" and business-savvy. "The combination is a good thing," he says. For Sandy Cardin, President of the Charles and Lynn Schusterman Family Foundation, a turning point of a different kind occurred after the death of Charles Schusterman in 2000, when sole leadership of the Foundation shifted to Lynn Schusterman. Cardin recalls fondly the way that Charles and Lynn had complemented one another in jointly chairing the organization. "Charles was a very different kind of leader from Lynn," Cardin says. "They brought different strengths, different sensitivities." Upon Charles' passing, the organization lost some of the balance that the two chairs had together brought to the Foundation. The adjustment to serving the vision of one individual, rather than two, required the Foundation to reprioritize. "We had to decide what kind of organization we were going to become," Cardin explains. To that end, he restructured and refocused the Foundation in order to best pursue the missions that were important to Lynn and honored Charle's vison. Another shift took place the next year, when the attacks of September 11th sent shock waves through every industry. Cardin considers this time period one of great challenge and turmoil, both externally and internally. "We did some things well, others not well," he admits. "I learned a lot about dealing with transition and difficult times while remaining confident and optimistic about the future." Cardin believes that it was facing these two difficult transitions in such quick succession that afforded him the perspective necessary to steer the Foundation through today's turbulence. To him, the new nonprofit executive will have benefited greatly from facing such challenges as the recession's impact early in his or her career. It is practice with adversity that allows a leader to remain steady when the ground shifts once again. "There's nothing like experience," agrees Ken Kozloff, CEO of JSSA. Having been through difficult times early in his career in which he had to lay off over 200 staff, Kozloff learned how devastating such a measure could be to an organization. In approaching challenging budgetary situations today, Kozloff considers layoffs an absolute last recourse. In 2009, he communicated that very message to his staff, asking them to work together to help him prevent such cutbacks. The way that JSSA staff rallied demonstrated the trust that they placed in Kozloff's leadership. "I've been here three years," he says. "They know that my word is my bond." Early experience working within teams also taught Kozloff the value of an inclusive management style. "What's most important is how you approach things," he says. "Are you a team player or out there by yourself?" If there was ever a time when nonprofit executives could lead effectively by delegating behind closed doors, Kozloff believes that that time has certainly passed. "One person in not an organization," he cautions. Leaders are only as strong as their team, and are most effective when surrounded by staff who believe in both the CEO and the direction in which the organization is heading. "TO LEAD PEOPLE, WALK BESIDE THEM" ~ Lao-Tzu Kozloff considers it crucial for leaders to keep their "fingers on the pulse" of what is happening on every level of an organization. "The only way you'll understand what staff is going through," he explains. "Is to walk in their shoes." Kozloff finds that valuable insight comes out of meeting regularly with staff. In establishing a vibrant dialogue with staff members, Kozloff invites tough questions and replies truthfully. Honest answers, he explains, serve to empower staff by making them more knowledgeable about the business side of the organization and how financial realities affect their work down the line. In addition, Kozloff likes to keep staff members in every department apprised of fundraising and campaign developments. Kozloff's goal in communicating so openly is to engender in JSSA's staff the sense that they are "owners, not renters" in the organization. By demonstrating a clear link between the staff's work and the state of the agency, he is able to foster an organizational culture of pride and greater accountability. As a result, staff members step up, sometimes in unexpected ways. During 2009's budget cuts, JSSA's staff took it upon themselves to identify "ground level waste," suggesting to Kozloff that the office stop purchasing everyday items such as coffee cups and plastic utensils, a measure that ultimately saved the organization over $18,000. In communicating honestly, Kozloff says, leaders must also remember to remain consistently positive. "People watch the CEO," he explains. "You can depress your people or make them feel comfortable and secure." Kozloff integrates staff recognition into his workflow as CEO in a concrete way. "I write a minimum of ten personal thank you notes a month to staff," he says. He asks his directors to keep their eyes open for staff contributions and pass them along to him. In this way, he trains his senior managers to value and reward their staff members as well. Rev. Charles Gibbs also considers organizational culture vitally important. As Executive Director of United Religions Initiative, he seeks to maintain a balance between "a cold eyed approach to work" and an inspired vision for the future. "People here are highly motivated," Gibbs explains. In communicating with staff, he must realistically convey what challenges are facing the organization while keeping the overall viewpoint positive and goal-oriented. He encourages staff to continually "ask tougher questions," not because they are anxious about the organization, but precisely because they have faith that the organization is becoming more effective every day. Gibbs strikes this balance, in part, by sharing his personal philosophy with URI's staff. As an Episcopal priest, he explains, he holds a "bedrock belief that there are larger hands at work here." He believes that he is most effective when he aligns himself with a "greater spirit working through all of us." In the case of URI, this greater force can be interpreted as the organization's mission, that of globally promoting interfaith understanding and peace. As a leader, Gibbs makes it clear to staff that their work is being guided and supported, that the "challenges of the moment are just of the moment." Those URI staff members who are religious might interpret this philosophy through the lens of their own faiths, while other staff members who are "not at all" religious are able to appreciate this perspective in their own ways. Ann Sherman, Associate Director at consultant firm TCC, agrees that it is crucial for leaders to be able to communicate to staff and board members a shared vision for their organization. "Acknowledge that it's hard," she advises. "But express the big picture." Leaders must take time to develop a vision that is "clear, compelling and appropriate," as well as an "authentic and meaningful" way of conveying it. Once staff members have a clear sense of the organization's message, they are able to support one another, working powerfully towards a collective goal. "Be the face of the future," Sherman explains. "Now more than ever. And people will take cues from you." "IN TIMES OF CHANGE, LEARNERS INHERIT THE EARTH" ~ Eric Hoffer The need for a clear and compelling message is not limited to internal communications, however. In order for organizations to remain viable in their fundraising, the new nonprofit leader must be extremely savvy about how information flows in today's society. "Social media and the internet are now very important," Sherman explains. "No digital divide exists anymore." Where once "raising money and doing your job" was enough for a nonprofit leader, she says, it is now imperative to develop a focus on externally positioning organizations within an increasingly crowded information space. Leaders must examine ways to raise the profile and credibility of their organization, which may include undertaking a full branding process, asking board members to utilize online resources, and adjusting mission to best meet the needs of current society. While Sherman allows that marketing does not replace fundraising, she also cautions organizations not to "confuse having computer software or a grant-writer with financial sustainability. It's a much larger, more complex picture." Ray Happy, Managing Director of fundraising consultancy CCS, seconds that times have changed and that the old ways of looking at fundraising may no longer function. However, he believes that it is the more complex strategies that are falling away in favor of basic essentials. "Simple things are the most important things, " Happy explains. "If you can build real relationships [with donors], they'll hang with you in the bad times if they can." Organizations that were traditionally dependent on direct mail, but did not spend time building connections on a personal level, have particularly struggled in recent years, Happy says. "Envelopes can be put aside for the year," and so, he adds, "direct mail programs are down nationwide." With a societal shift away from paper and towards online communication, these programs are unlikely to rebound. Happy believes that another traditional fundraising area bears reexamination: special events. "Events are so labor intensive and the cost structure is so high," he says. "They can bring benefits, but many groups will work towards events without realizing the real cost of them." He advises clients to ask themselves whether the time spent on events is actually paying off, or whether major gift stewardship and other more personal endeavors might be more effective focal points for their development program. One important area that Happy considers too often neglected is planned giving. Organizations are wise to keep in mind that their donor base is aging, Happy says. As baby boomers reach retirement, they often aren't made aware of the tax benefits of sound estate planning. "Highlighting that is a good strategy." In discussing how estate planning plays into fundraising initiatives, Sandy Cardin points to the younger generation, and to the wealth that will be willed to them in coming years. Despite the money that was lost in the recession, he says, "an awful lot will still be transferred." The trend towards online giving also reshapes the fundraising landscape, he notes. "The intersection of these two topics is very important." The new nonprofit executive will need to be tuned into ways to steward these potential donors where they live and interact, even if that place is digital. To Cardin's mind, the future of nonprofit leadership rests partly in the hands of today's leaders. "Leadership succession is very important," he says. "I'm not concerned that there aren't good people out there. There are great people out there." He's concerned, he says, about whether organizations looking for leaders are structured well enough to bring in, train and cultivate people in a way that empowers them to move the organization forward. It's not enough to train a leader to deal with change, he notes, the organization itself has to be prepared for the change that that leader may bring. Cardin believes that as times appear more stable, many organizations will have to fight the tendency to "sit back and relax a little." Though the world may not move as tumultuously as it has in the past decade, move it will. Leaders who are able to "stay on their toes," constantly reassessing the capabilities of their organization and the work that they do will be the ones who are able to truly move forward in a viable way. "OUR CHIEF WANT IS SOMEONE WHO WILL INSPIRE US TO BE WHAT WE KNOW WE COULD BE" ~ Ralph Waldo Emerson Rev. Gibbs lives on a tidal creek and, from his dock, has the opportunity to watch what he calls "the breathtaking flow" as waters flow in and out again. It serves as a reminder to him that cycles naturally occur in this world - and that more than that, they're inevitable. In examining his work at URI, he is able to recognize the reality of what part of the cycle he and the organization find themselves in without becoming stuck in a judgment of it. The new nonprofit executive must have the perspective necessary to ask what the next dimension of their organization is, and to imagine a "new, positive, life-giving future" amidst the challenge of the present moment, Gibbs says. "Let the future guide you," he advises. "Rather than the sense of losing something." When the world shifts, as it invariably will, tomorrow's executives must be prepared to gracefully respond. What our conversations with today's leaders tell us, first and foremost, is that the human element is paramount. Those leaders who connect authentically with staff and donors, and who believe fervently in the mission of their organizations, will be the leaders who are most empowered to make a difference tomorrow. # # # Jennifer Marie Jones has been invovled with nonprofit executive search at DRG since 2001