Martin Melaver  @  ChelseaGreen

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Doing the Scapegoat Thing - Not So Profitably

Posted on Saturday, March 7th, 2009 at 11:54 am by Martin Melaver

During the past nine months, virtually every board I serve on has gone through crazy tumult. A few execs have lost their jobs in the process. You could say that each situation is unique, and that these terminations were called for. Perhaps that's true. But I think there are systemic forces at work that call for deeper probing and reflection.

Despite running my own for-profit business, I would contend that one of the toughest jobs in the world is to be the chief executive of a non-profit. In good times, a non-profit CEO needs to have a fundamental passion for his or her line of work (education, conservation, etc.), must possess an eye for strategic vision, have the capacity for strong organizational skills to deftly deploy a staff that is compensated more for doing good deeds than salary, be adept at fund-raising, be savvy with financial management and shoestring budgets, serve as the eloquent face of the organization with strong communication skills, and know how to adroitly manage the politics of multiple stakeholders.

Non-profit CEOs are built much like those in the for-profit world. They — or we — tend to be upbeat about prospects, accentuating the positive in good times and converting problems into opportunities when things are a bit more challenging. They learn to do more with less, shoring up financial shortfalls in one area by shifting things around and leveraging skill sets of colleagues across disciplinary lines. It's a constant juggling act, typically performed under constant budgetary constraints, competition among other groups for funding from the usual sources, and the chronic challenge of translating long-term visionary goals into measurable, shorter-term objectives. And that's during good times.

But obviously, these are not the best of times. First, there's the money question. Non-profits are appealing to a traditional donor base that is suddenly unable to pony up for needed operational funds. Corporate giving has been put on a short leash. And endowments, to the extent non-profits are fortunate enough to have investments that haven't been sucked dry by Madoff and company, are a fraction of what they were a year ago. So what's a CEO of a non-profit to do? S/he typically doesn't have the wiggle room which for-profit CEOs have, of multiple revenue-producing strategies. And so s/he cuts costs to the bone or beyond, jeopardizing delivery of services in the short-term, cannibalizing upon strategic vision in the longer term. Or, s/he tries to shuffle cost centers around and hope that the turnaround happens before all the juggling balls fall to the floor.

Secondly: time-starved lives and the professionalization of non-profits. In the last 25 years, we've added around 200 hours or an additional long month to our work year. Every 10 minutes of additional commute in the car results in an hour less community service The 20-40 year-old American is half as likely to join a group as his or her grandparents. In the past 30 years, the percentage of Americans who visit frequently with their neighbors has dropped in half (from 1/3 to 1/5). The statistics go on and on, documenting a looser communal structure becoming ever more friable. The basic point here is that as our time becomes more and more bound up in work and travel, it becomes less devoted to community give-back ─ which means that the heavy-lifting of volunteerism is taken on more and more by paid professionals who have fewer volunteer resources to draw upon.

Then there's the board governance issue. Always a sticky wicket during the best of times, a non-profit board is often made up of well-intentioned, testosterone-laded execs all too eager to weigh in with their individual pronouncements on things that must be fixed right now (including termination of non-profit heads). It's not that they are wrong. But I think most of these folks are missing the boat on two fronts: they are 1)looking in the rear-view mirror, at strategies that have worked in the past for 2) businesses managing through a downturn. As the cliché goes, images in your rear-view mirror appear closer than actual. I don't think anything has prepared us for managing for the current situation, least of all for managing our non-profits. Quick fixes, especially of a corporate nature, will fall prey to that time-honored notion of insanity: repeating the same thing and expecting different results.

What's to be done? Perhaps some basic rethinking of our nonprofits is called for, along the following lines:

  1. A deeper understanding of the role of non-profits. Alexis de Tocqueville, in his seminal two-volume study Democracy in America, famously observed that our nation was one of numerous, small associations. And that worked well in a newly-minted democracy, as these associations covered panoply of social services left unaddressed by government itself. Fast-forward, however, to the present day, when, as historian Jeremy Rifkin has pointed out (The European Dream), a society's complex needs far surpass the capacity of a nation of associations to service them adequately. We are asking our non-profits to deliver on a smorgasbord of critical services at that precise moment in time when they are both most urgently needed and most desperately under-funded. Recognizing and appreciating the critical role non-profits perform is a first step in assisting with their work.
  2. Supplementing weaknesses not peremptorily changing leaders. There is no way that most CEOs today can deliver today on the far-ranging set of competencies expected of them, especially during this economic downturn. Scapegoating a current exec, firing him/her, and finding a replacement is likely to set up the replacement for failure. Instead, what is called for is supplementing identifiable weaknesses through strengths on the management team and beyond.
  3. Enhancing volunteerism. The current downturn, along with the need to do more with less, calls for us all to roll up our sleeves and assist our non-profits in ways that we have up til now been content to outsource to a professional staff. That doesn't mean second-guessing those hired to do their jobs. It does mean doing less armchair quarterbacking carping and more getting our hands dirty and assisting with the work that needs to be done.
  4. Being wary about applying for-profit criteria of performance to the non-profit world. Yes, donors and supports want to know that their donations accomplish something. Yes, non-profits need metrics and non-profit heads should be accountable. But often the objectives of a non-profit are hazy and tricky to objectify. Rather than force non-profits into a mold of corporate accountability, we need to allow for the loftier visions that many non-profits set for themselves.
  5. Creating a new paradigm. We cannot rely solely on non-profits for the quality and quantity of services which they have traditionally provided. All sectors of society traditionally siloed from one another ─ government, academia, faith-based organizations, and yes, even and perhaps especially the business community ─ need to complement each other's efforts. We cannot continue having business externalize its costs onto society, lament the lack of governmental leadership to redress the problem, and expect our civic organizations to fill the gap.

The origin of the notion of scapegoat comes from the ancient practice of projecting the sins of a collective society onto the body of one hapless goat that was sent off from Jerusalem into the Judean desert alone, to die. It's time for a more collective form of responsibility and leadership to assert itself.

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