Nonprofit Executive Directors: Overpaid?

Interesting article about nonprofit salaries today in the Charlotte Observer. We have touched on the subject of nonprofit executive director salaries before and it continues to be a hot topic. Some say you must pay top dollar to get the best candidate while others see high salaries as poor stewardship of hard won donor support dollars.

The answer probably lies somewhere in the middle and you have to take all of this on a case by case basis. Some national nonprofits have a large and complex operation with all of the intricacies of a major corporation. Other smaller nonprofits have the capability to pay only one staff person who must do the work of many.

The problem is one of perception. There comes a point where the salary of the executive director smacks you right in the face when you look at the organizations IRS 990. At some point people are going to believe their donor dollars are better spent somewhere else.

There are many, many nonprofits who have a highly paid executive director and poorly paid staff that scrape to get by. This not only affects perception by some donors, but long term can undermine morale as the disparity in wages gets greater and greater over time.

Some believe that executive stay with an organization far too long and that their salaries get burdensome due to their longevity.

Boards have a responsibility to not only be good stewards in selecting and paying executive directors, they need to make sure all staff are adequately compensated for their work. Since the executive director represents all staff to the board, there is a danger of a disconnect where staff salaries come in second to the executive directors priorities. (which is sometimes themselves). The board must hold the executive director accountable and dig a little deeper to ensure the organization is functioning, competent and balanced.

Tought Times for Nonprofits:Time to Reinvent Ourselves?

Nonprofits have really taken a hit during the recession with a big drop in donations, an inability to keep programs running, greater demand for services and fewer grant opportunities. A recent Associated Press article points out just how desperate the situation has become.

In Jacksonville, it is believed that the nonprofit sector will be the last to recover from our down economy. Nonprofit payrolls have been reduced by necessity, and there is a collision among nonprofits all over town trying to get donations from the same people. Nonprofits are going to have to reinvent themselves just like many small businesses are doing in order to sustain themselves and be able the make the most of our climb out of this recession. Here is an article on how some Tampa/St. Pete nonprofits are doing just that.

Nonprofits: Many Got Burned Playing Finance Game

Many nonprofits took advantage of tax exempt bonds to expand facilities and fund endowments in recent years. According to a recent article in the New York Times, There were many nonprofits earning a 25% return prior to the bottom falling out of the economy. Now they have a far smaller return, but the same expenses. According to the article, "Those struggling now include the full range of nonprofits, including museums, colleges, orchestras and small local social service providers. struggling now include the full range of nonprofits, including museums, colleges, orchestras and small local social service providers."

Read the article: Nonprofits Paying Price for Gamble on Finances.

Nonprofit Workshop:Grantwriting

Grant Proposals – Making the Case for Funding

At the core of every successful grant proposal is the Case for Support, or Business Case. At its heart, it is the Value Proposition being presented to funders --- why should you invest in this program or project. This 3-hour workshop is a hands-on, writing exercise to develop that Value Proposition, and market it to the funding sources most likely to make the investment. Topic areas will include program/project design, budget, developing the “story” and marketing the proposal.

Date Friday, September 11, 2009 - 9:00 am to 12:00 pm Location UNF University Center 12000 Alumni Dr. Jacksonville, FL 32224 Cost $50 per person Registration Pre-registration is required. To register by phone, call (904) 620-2476

Nonprofit Grant Proposals: Making the Case for Funding

A new workshop offered to the nonprofit community by the Small Business Development Center at the University of North Florida.

At the core of every successful grant proposal is the Case for Support, or Business Case. At its heart, it is the Value Proposition being presented to funders -- why should you invest in this program or project.

This three hour workshop is a hands-on, writing exercise to develop that Value Proposition, and market it to the funding sources most likely to make the investment.

Topic areas will include:

· program/project design

· budget, developing the “story”

· marketing the proposal.

This workshop is for nonprofit organizations either starting or existing.

Pre-registration is required.

Date: Friday, September 11, 9:00 am to 12:00 pm

Location: UNF University Center,12000 Alumni Drive, Jacksonville, FL

Cost: $50 per person

Registration: www.sbdc.unf.edu

(904) 620-2476.

Developing a Learning Culture in Nonprofit Organizations

John Baldoni via Bloomberg.com, interviews Steven Gill who has written a book that talks about establishing a learning culture in organizations. The book addresses the following important questions.

How can today’s nonprofits demonstrate effective use of funds?

How can they motivate employees and volunteers and combat burnout and high turnover?

How can they ensure that they are performing in accordance with their mission and purpose?

What Nonprofits Teach Us About Learning

The recession that has staggered the world economy has leveled the nonprofit world. Endowments have lost significant value, and donations from corporations and private citizens have dwindled. But dealing with hard times is nothing new to many in the nonprofit sector. Well-run nonprofits know how to be frugal as well as creative in how they work with limited resources.

A core competency of the nonprofit world is people, men and women who are committed to a cause who know how to get effective results. A virtue of effective nonprofits is their culture; it extends beyond a gathering of like-minded people who want to do good; it is a generative culture that focuses on learning.

Recently I asked Stephen Gill, a colleague and consultant who has worked a good part of his career with the nonprofit sector, three questions about the value of creating a learning culture. This is a topic that Steve has written about in his newest book, Developing a Learning Culture in Nonprofit Organizations.

Organizations are cutting resources and headcount. Why is it important for an organization to create a learning culture?

"It is precisely because they are cutting resources and headcount that organizations, nonprofit and for-profit, must find ways to be more efficient and effective with what they have... To maximize productivity they need to be continuously learning. They must learn what they should be doing, how they can do it better, and how they will know when they have achieved the results they want...This means making information feedback, reflection, and knowledge-sharing part of the way they function on a day-to-day basis... Doing more of the same, even if slightly better, is not the answer."

What can the for-profit world learn from the nonprofit world about establishing a learning culture?

"Nonprofits tend to be values-driven. They are concerned about the beliefs and motivations of their employees. This means that these organizations ask themselves questions such as: Are we doing what we ought to be doing in the way we ought to be doing it? What's the impact on our communities and is that the kind of impact we want? Are our actions aligned with our values? In a learning culture, these questions are asked constantly. For-profit organizations should be asking these questions more often. They would have greater employee satisfaction and engagement and they would be better corporate citizens."

What is a key take away from your book that has relevance to a manager seeking to navigate hard times?

"This is no time to do nothing about improvement. Even when the economy turns around, it is no time to be doing business as usual. Rapid change will continue and unless organizations are continuously learning they will not be able to sustain themselves. They need feedback and they need to reflect on that feedback and turn that learning into action. What better time than now? A no-growth mode gives managers the time and rationale to focus the organization on the collective discovery, sharing, and application of new knowledge. This is critical for emerging from hard times and managing the economic upturn that is inevitable."

Fundamental to a learning culture is measuring impact, something in which Gill specializes. He has spent a good part of his long career helping organizations assess their learning and measure the effectiveness of their training programs. One evaluation tool included in his book features three essential questions that would be useful for any executive to use when gauging the effectiveness of any project. The questions are: one, what issues do we still have; two, how can we strengthen our organization based on what we know; and three, what challenges lie ahead. Answers to such questions can lead to honest evaluation of progress.

Next generation organizations will continue to evolve in response to the dynamic nature of bringing people together to work. Central to future success will depend on how well the organization can adapt and innovate. Those competencies will depend on creating a learning culture.

Nonprofits may see longer downturn

Tom Parsons, writing for the Associated Press features Ruth McCambridge of Nonprofit Quarterly magazine. She believes that nonprofits are in for a longer than usual downturn if they are reliant on foundations for funding.

Once again, we recommend that nonprofits embrace revenue diversification. That is, not reliant on any one funding source, but embracing a spectrum of support besides grants, that includes discretionary donors, sponsorships, endowments and event fundraising.

Nonprofit expert sees longer-than-usual downturn

Charities tightening their belts because of the recession should gird themselves for a longer-than-usual downturn, the editor of Nonprofit Quarterly magazine said Friday.

Ruth McCambridge said the asset bases of foundations that provide much of the charitable giving in the country have fallen drastically, and grants from those groups have declined accordingly.

"And many foundations are planning to give less next year than this year," said McCambridge, who spent 35 years working at nonprofits before taking the helm of the quarterly in 1999.

Still, there are many creative ways "to help us get through this period," she told an audience at the Clinton School for Public Service that included many staff for nonprofit Arkansas agencies.

She recalled working at a women's shelter in Lawrence, Kan., as federal grants began to dry up in the early 1980s during the Reagan administration. The shelter got a notice that a grant providing 90 percent of the organization's budget would be discontinued in six months, she said.

The shelter staff and board - many of them volunteers - worked hard to expand the number of people involved with the organization and do more fundraising, McCambridge said.

"In the end, we had our budget covered locally, and we had been given a new shelter house," she said.

According to McCambridge, in nonprofits' drive toward professionalism, "we have forgotten that these people who are at our door every day are big assets."

Asked if organizations should consider dipping into reserves they have built up over the years, she said a lot depends on a group's particular situation. But if an agency's board decides that the rainy day has come, it shouldn't be done without an eye to the future, McCambridge said.

"You have to have a plan of what it's going to take to get through a period when you're using your reserves," and how to rebuild them, she said.