The Support Center for Nonprofit Management is dedicated to improving society by increasing the effectiveness of nonprofit leaders and the organizations they lead. Focusing on three key areas —organizational change consulting, executive search and transition management, and professional development for nonprofit managers — Don Crocker and his team have been helping foundations support their grantee investments in the tri-state (NY/NJ/CT) area since 1986. Laura Cronin, a regular contributor to PhilanTopic, spoke with Crocker recently.
Laura Cronin: While foundation endowments have started to come back and giving trends aren't as bleak as we might have predicted two years ago, the uneven economic recovery has been difficult for most nonprofits and the people they serve. It seems clear that nonprofit executives will be navigating very rough waters for the foreseeable future. How do things look from where you sit?
Don Crocker: It's not a pretty picture. Although it appears that foundation assets may be stabilizing, many organizations have had their foundation funding cut back and are scrambling to replace it. In addition, many of the organizations we work with rely on gifts from individuals, state or federal funding, and federal reimbursements, and we've seen major cutbacks in each of these areas. If you're an organization that relies on these sources, you probably feel like you're in the middle of a perfect storm: you have less money to meet growing demand for your services. At the same time, we do see many foundations that are fulfilling commitments to their current grantees, even if they don't have the resources to be open to as many new grantees as they might like.
In this environment, nonprofit organizations can't assume that their past funding strategies will support future needs. In fact, we need to raise our game, focusing on the core programs that most benefit our communities and clients, demonstrating that we are well run and have strong, engaged boards, that we are efficiently staffed, and that we have healthy fundraising and revenue-generating capacities.
Many of our best and most critical organizations are working hard to adjust to the new reality and could benefit from capacity-building support from their funders. But funders who have not traditionally given in this area are sometimes slow to see the need. More grantmakers need to see investments in building organizational infrastructure as an integral part of their funding priorities — to understand how strengthening an organization's management and governance will lead to a greater return on investment from their grants.
LC: Building organizational infrastructure is never easy. And today, in the wake of the Great Recession, it is both more difficult and perhaps more important than ever. How can funders help ensure that their grantees have what it takes to be effective?
DC: There are several approaches funders can take to protect their investment in their grantees. First, consider multiyear funding, which allows a nonprofit to plan better for its future and also frees up time for it to focus on programming. Second, be transparent with both your current grantees and the larger nonprofit community. Sometimes funders are not clear enough when talking with grantees about their own strategy and focus. Being clear and open about a potential grantee's funding prospects obviously saves time and effort that could be put toward other revenue-generating activities. Third, provide more general operating support so that organizations can be flexible in how they pursue their work. Once a grantmaker has done its due diligence and decided that an organization warrants support, it needs to trust that the grantee will use the funds wisely. And lastly, when a grantmaker decides that an organization is critical to a community or cause it cares about, it needs to make more of an investment in building that organization's infrastructure. This is especially important for small- and medium-sized organizations, which almost always need to build their management capacity in order to grow and thrive.
LC: Many grantmakers have been strong advocates for nonprofit capacity building and are familiar with the professional development workshops offered by the Support Center. A less-well-known offering, but perhaps one that is even more important, is the high-engagement consulting you provide to nonprofits. What do those consulting projects typically look like?
DC: Funders engage the Support Center to assist in capacity-building efforts in different ways. In northern New Jersey, funders like Prudential and the Victoria Foundation have engaged us to perform organizational assessments of grantees that may be in crisis or have a critical capacity-building need. Among other things, these assessments furnish objective data to both the funder and the nonprofit that help them identify the capacity-building assistance that will be most effective in that situation. We then focus our efforts on those areas where we can get the most traction and make the biggest difference. In New York City, the JPMorgan Chase, Clark, and Altman foundations support this type of assistance.
Our approach with all nonprofits is to look beyond the deficits each organization may have and to focus on their strengths. Focusing on strengths allows us to be more effective in building the other areas they need to work on. In one case, our assessment identified the need for a major change in board leadership and the development of fundraising goals and objectives. Building on a committed core of board leaders —and a grant provided by the Victoria Foundation — this organization today has revitalized its board leadership and has a comprehensive fundraising plan with clear time tables and measurable goals. In other situations, the need might be for better financial management, for a restructuring or reduction of staff, or even for a merger with another organization.
Each situation is different, but all benefit from the objective viewpoint of an outside consultant who is engaged in the process, change oriented, and has dealt with similar situations before. At the Support Center we understand that funders tread a fine line in wanting to help grantees who may have a problem. Often, we can be the broker in facilitating a conversation and mitigating the more emotional aspects associated with change.
LC: Are you seeing many CEO retirements or leadership transitions these days? And what should donors know about this critical event in the organizational life of a grantee?
DC: A few years back, if you recall, three different foundation-funded studies suggested that a significant turnover in nonprofit leadership was looming. In all three reports, at least 70 percent of the executive directors surveyed said that they planned to leave their jobs within five years. The reasons cited ranged from retirement to dissatisfaction with the tools and/or support they needed to advance their organization's mission. Now, half a decade later, we are seeing a tremendous uptick in nonprofits coming to us for assistance with leadership transitions and transition issues.
You know, when an executive director or CEO or president leaves a nonprofit, the organization is at tremendous risk. But if managed professionally, it can also offer significant opportunities for change, including clarification of the organization's priorities, increased engagement and communication with stakeholders, and even restructuring, including strategic alliances and mergers. It's a pivotal moment in the life of an organization, and grantmakers can help foster the kind of change that leads to a stronger organization.
Modeled after work pioneered by the Annie E. Casey Foundation, our Executive Search and Transition Management program is designed to maximize the possibilities and minimize the risks typically associated with leadership transitions. Using a holistic approach, we help organizations facing a leadership transition to assess the current environment, evaluate their own strengths and weaknesses, and articulate the imperatives for change. Next, we help them conduct a comprehensive search and provide post-hire assistance. And we conclude the process with transitional management services.
Let me give you a recent example of how the process benefited one of our clients. Through the organizational assessment, they were able to see how their staffing needed to change, how the board needed to be restructured, and what qualities they should look for in a new executive director. At the same time, we assisted them in finding an interim transitional executive director who could oversee the staff and communicate with major stakeholders during the transition. After the organizational assessment was completed, a thorough search for a new director was launched. Reaching out to the community for qualified candidates was part of the process, and they eventually hired an excellent new ED. After he was in place, we provided the new ED with background on the organizational assessment that had occurred before he was hired and continued to support his full integration into the organization. All these steps helped position the organization for change — change that wasn't likely to occur without a lot of soul searching on the part of the board and an outside transition specialist to guide process.
What can funders do? They can let their grantees know that they are open to supporting these kinds of transitions when the time is right. They can also help foster a safe environment for candid conversations between staff and other stakeholders. And they can help educate board members on the delicate nature of executive transitions and the need for enhanced support during this critical time in the life of an organization.
LC: Tough economic times always seem to revive talk of mergers and the idea that similar organizations can find efficiencies through merging. Are you seeing or helping to facilitate more mergers these days? When are they the answer? And what role should funders play in possible merger situations?
DC: A few thoughts. Although there has been a lot of talk about mergers since 2008, it is hard to tell whether the number of actual mergers in the sector has increased. We do know that more of our clients are exploring mergers and that more grantmakers are willing to support nonprofits looking to explore the possibility. Of course, many funders assume that fiscal constraints and/or a reduction in the duplication of services are the driving forces behind merger explorations. While that's often the case, the Forbes Funds, in Pittsburgh, supported a study of nonprofit mergers which shows that "expanded mission scope, rather than cost-effectiveness, is the primary factor and outcome in mergers."
When exploring a merger, the process works best if both organizations are candid about the issues they are concerned about and the outcomes they hope to achieve. Equally important is the framework that will be used to reach a final decision. And a third critical issue is organizational culture, which can be as much of an obstacle to a smooth integration as any factor. The Foundation Center's Nonprofit Collaboration Database is a great place to start looking at the merger and collaboration experiences of nonprofits. And, of course, organizations that are thinking about the possibility of an alliance or merger, or grantmakers that are interested in supporting merger exploration, are welcome to talk to us.
— Laura Cronin