#480 Musings Beyond the Bunker (Wednesday October 12)
Good morning,
MANAGEMENT CONSULTING FOR NONPROFITS
Yet another musing on nonprofits…
In being a non-profit board member, some of the discussion inevitably comes to questions of growth. Increasingly, I think the discussion may evolve to one of consolidation. First, growth is not always the objective—the objective is to serve the people whom the organization is pledged to serve. If the goal is to have universal preschool in underserved communities, it doesn’t matter whether it comes from your organization or another. It is not a question of competition for “market share.” Each organization should be concerned with results, regardless of the source of those results. There is no reason to trip over other nonprofits that are providing the same or similar services in the same area. The responsible thing is for the organization to move on and reposition to provide services to others.
While growth needs to be considered carefully, the greatest challenges over the coming years will come from economic conditions, the inter-generational wealth transfer, the competition for dollars, and questionable continuation of governmental support for some programs.
We live in complicated times. Inflation is with us, as is economic disparity, isolation, and increased need for services. Fundraising is getting more difficult all the time, particularly as more traditional nonprofit structures are not attracting the next generations of volunteers and donors. The most difficult aspect of non-profit management is coming to grips with financial limitations, possible shrinking of the organization, and considering the effect of overlap with other institutions. Looking at the landscape from “30,000 feet,” rather than at the organizational level, one can see that consolidation and merger can make organizations more effective and provide more and better services more efficiently. Organizations with similar missions would be wise to consider consolidation, even at the risk of being the “junior partner” in a merger. Consolidation can bring reductions in fixed costs, economies of scale, greater political/fundraising clout, and larger budgets. But organizations often are loathe to consider such actions because to do so might shrink the board and/or force the CEO and other staff to “fit in” to a new organization. I serve on the boards of two organizations that have consummated mergers and, notwithstanding all the arguments for how it’s tough to make cultures work together, each was remarkably smooth and without all the sturm und drang one might expect.
Forward thinking organizations see the handwriting on the wall and can act as honest brokers to break the logjam and begin discussions. By way of example, the Jewish Federation has had mixed success acting as a “midwife” to organizations that could grow stronger through partnership.
To ignore the early signs necessitating rethinking an organization’s ability to survive is to witness a slow decline in effectiveness or membership, followed by depleting endowments and reserves, until nothing is left. Better to merge and utilize the dollars and other resources effectively. Depleting resources to act as “life support” only prolongs the inevitable and leaves the community with fewer resources.
All organizations should consider in their next five year strategic plan the impact of demographics, the economy and fundraising and consider whether merger, consolidation or closure might be in the best interest in the community. Umbrella organizations and funders should require such analysis as a condition of their giving. Instead of trying to micro-manage an organization’s activities, funders instead should leave the business to management, while requiring an evaluation of survivability. Advice of consultants should be sought—the USC and UCLA business schools will provide such studies at little or no cost. Make it a condition of future funding to engage in this sort of analysis. Smaller organizations need the help of organizations with a broader vision to provide the impetus and support—and demand that creative solutions be considered.
AND THE LAST OF THE MOVIES EVOKING A STATE (Part III)
This is the last of three segments listing movies that take place in a particular state and evoke the nature of that state (or, sometimes, the region):
Minnesota: Fargo
Mississippi: In the Heat of the Night
Montana: A River Runs Through It
Nevada: Casino, Bugsy, Fear and Loathing in Las Vegas, Leaving Las Vegas, Hangover
New Jersey: A Beautiful Mind
New Mexico: The Good, The Bad and the Ugly
New York: Dirty Dancing, Goodfellas
North Carolina: Bull Durham, Cape Fear
Ohio: Rain Man, Heathers
Oklahoma: Oklahoma!
Pennsylvania: Rocky (could it be anything else?!)
South Dakota: North by Northwest (that plane chase scene remains a classic)
Tennessee: The Firm, Nashville (Robert Altmann, a genius)
Texas: Friday Night Lights (It’s all about football in the Lone Star State, and the TV series is even better)
Utah: 127 Hours
Virginia: Remember the Titans
Wyoming: Brokeback Mountain
Have a great weekend,
Glenn
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