Managing in Hard Times: How Nonprofit Leaders Can Make the Right Decisions

Tuesday, March 24, at 12 noon, U.S. Eastern time

Scott Spreier, a senior consultant in the Hay Group's McClelland Center for Innovation and Research, is an expert on leadership development and executive coaching. His articles on leadership and talent management have appeared in the Harvard Business Review, Fortune, and other publications. He co-wrote People, Performance, & Pay (Simon & Schuster, 1997), and was a contributing author to Culture Shift (AHA Press, 1997) and The Executive Handbook of Compensation (Free Press, 2001). He ran his own communications consulting business, and has worked as a writer and editor for several large news organizations.

Steve W. Batson is a senior vice president of Cargill Associates, in Fort Worth, Tex., where he advises nonprofit organizations on board development, fundraising, major gift solicitation, and public relations. He is chairman of the Governance Taskforce for the Association of Fundraising Professionals. He formerly worked as a development officer at the Camp Coca-Cola Foundation; Darton College, in Albany, Georgia; Texas A&M University; and other universities. Mr. Batson holds a doctorate in educational administration with an emphasis in educational law from the University of Georgia.

A transcript of the chat follows.

Peter Panepento (Moderator):
    Welcome to today's live discussion on managing in hard times. As the recession deepens, many nonprofit leaders are increasingly anxious about how to best guide their organizations through the tumult. Many are worried about how to communicate with their employees. Others want to know more about what messages they should be sending to donors, volunteers, and board members. Still others want to know how to make strategic decisions that will get them through the recession and position them well for the recovery. We hope to cover all of these topics today -- as well as what's on your mind.

Peter Panepento (Moderator):
    That's where you come in. I invite all of our participants today to ask our experts questions on this topic. To do so, simply click on the "ask a question" link on this page and type in your query. Our experts will then do their best to answer your question. This is a text-based discussion and it will unfold on this page for the next hour. The page refreshes every minute with the latest information -- and we'll provide a full transcript after it is over at http://philanthropy.com/live.

Peter Panepento (Moderator):
    Our guests today are available to answer a range of questions on this topic.

Scott Spreier, a senior consultant in the Hay Group's McClelland Center for Innovation and Research, is an expert on leadership development and executive coaching. He will be available to take questions on leadership, motivation, and other management issues.

Steve W. Batson, a senior vice president of Cargill Associates, in Fort Worth, Tex., advises nonprofit organizations on board development, fund raising, major gift solicitation, and public relations.

Peter Panepento (Moderator):
    With that, let's get started. Thanks for joining us.

Question from Jane, small nonprofit:
    Most nonprofit executives know what to do in these times, but how do you keep your board on the right path? Knee-jerk reactions have become all-to-familiar on our board, which has affected the staff. Any thoughts?

Steve W. Batson:
    Knee-jerk reactions during a "crisis" period are not unusual for boards. The mandatory imperative is to keep boards focused on strategic initiatives that will move the organization forward and keep the organization in a competitive advantage as competition for donors and major gifts increase. Also, make sure recruitment efforts continue to infuse quality board members into the board. Many forward-thinking boards are deciding to move forward with feasibility studies while, perhaps, delaying campaigns until a little later this year. The activities involved in a feasibility study keep the focus on organizational priorities and donor cultivation. Staff and board members have a wonderful opportunity to focus on the basics during the interim---fund raising, cultivation, streamlining the organization, enhancing its uniqueness, and positioning programs for an eventual campaign.

Question from Marcia DeBock, Girl Scouts Council is so central Indiana:
    Our Council will begin searching for a new CEO. What key personal characteristics and what key technical expertise should our search committee look for to lead us through the next 3-5 years?

Scott Spreier:
    Before you look for the person, spend some time really thinking about the role that the new CEO will be expected to fill. What is your council's strategy? What sort of issues will the new CEO need to address? What are the unique challenges he or she will face -- and with that -- what are the unique skills and competencies that will be needed?

Once you've answered these questions, you can start seacrhing for candidates who fit the profile you need.

Too often organizations begin searching for a new leader based on past experiences and leaders, rather than first thinking about where the organization is going and what is needed, really needed, from the new leader.

Question from Lane Brooks, Food & Water Watch:
    Corporations have long sought to improve their images through high profile sponsorships. Smart non-profits have always been choosy about which corporations they link their name to. Now that so many corporations are thoroughly discredited at the same time that sources of income are down, how are you seeing non-profits evaluating past sponsorships and/or changing criteria for accepting new ones? Are non-profits lowering their standards for immediate financial needs, raising them for their long-term protection, or doing nothing?

Steve W. Batson:
    Non-profits, especially some of the larger ones, hopefully learned this lesson some time ago coming out of ethical conflicts. Many have always been very protective of their reputation and brand. The criteria for sponsorships should always be high, realizing the corporation's and the non-profit's reputation are linked for the long-term. Even food companies have their challenges...look at the recent peanut scare. Obviously, most donors are persons, not companies. When a nonprofit seek support through a sponsorship, it is making certain trade-offs, including risking conflicts with the company's current or future reputation against the non-profit's brand. Long-term protection should always be the goal.

Question from Erin Lewis, Medium-sized arts organization:
    How would you suggest organizations make sure they are asking themselves the right questions right now as we anticipate drop-offs in foundation funding and uncertainty in the economy?

Steve W. Batson:
    Great question with no easy answer. As a leader, this is not the time to simply hunker down and hide in the weeds and play safe. Yes, you still have to drive the organization forward. But you also have to continually scan the horizon for new opportunities.

Even though this sounds counterintuitive, now more than ever you need to set aside time to plan and brainstorm -- to think out of the box.

One key here is to manage your own stress and fear and that of your team -- and keep your team focused on the 'the prize.' It's hard, but critical.

Comment from Anonymous:
    With all due respect to Mr. Spreier and Mr. Batson, how are two consultants the best people available to discuss non-profit leadership in tough times? Consultants, by nature, work outside the internal restrictions, limitations, politics, etc. that greatly affect the ability of any non-profit leader to manage every day. It continues to amaze me that the Chronicle of Philanthropy, who need only look within its own pages to find brilliant non-profit leaders, looks to for-profit consultants as the best people to discuss non-profit management.

Peter Panepento (Moderator):
    In response to your comment: We work hard to provide an array of guests for all of our live discussions. In some cases, we bring in consultants who have a demonstrated experience in the topic we're discussing. In others, we invite those who are working for nonprofit groups. In recent weeks, we've had two nonprofit event planners from Minneapolis, the recently retired head of the American Heart Association, and the leaders of several other prominent nonprofit groups join us as guests. That said, we are always looking for new, willing voices to participate in these live events. If you know of good potential guests who would be willing to give an hour or two of their time, please feel free to e-mail me your suggestions at peter.panepento@philanthropy. We strive to bring you the best possible guests each week.

Question from Cecelia Buechele,Community Health Clinic of Butler County,small non-profit:
    What are other non-profits doing in this tough economy? We offer primary medical care for uninsured and under-insured people in our county and are looking for grant opportunities. To date we have not received. state or federal monies, but are open to any and all input. Thanks!

Steve W. Batson:
    I strongly advise all of my clients and workshop participants to return to the basics---remain strong to their mission and vision, review their budget and trim where needed. Most grants are really up in the air at the moment until federal and state budgets are settled. Many of them are being seriously trimmed. Non-profits should always practice diversity in fund raising, not relying on one source of funding (i.e., grants). Organizations should look to annual donations, special events, major gifts, gift shop receipts (if relevant), memberships, planned gifts, memorials, foundations, corporations, naming opportunities, and other unique sources...the more diverse, the better.

Question from Fred Lane, Management Consultant, Sandwich, MA:
    Most nonprofits are already quite lean. Doesn't doing more with less seem unlikely? In this era of instability, isn't it really a question of priority setting and cutting back?

Scott Spreier:
     Yes and no. Certainly you need to rethink priorities. Again this requires occasionally raising your head in the heat of battle, and surveying the landscape for new opportunities, not simply playing it safe.

But be careful about cutting back, especially when it comes to people. Many organizations did that during the last downturn, and simply can't make further cuts now and continue to survive.

That said, I believe you can do more with less. When that comes to people, however, that means providing them clarity, trust, vision, and an energizing, engaging climate in which to work -- not an easy task during tough times.

Comment from Cathy Brown, CAAF:
    I disagree with anonymous-- as the leader of a West Coast small nonprofit that has had to downsize our revenue goal for this year substantially, I want to hear from experts that are working with multiple organizations and continuously scanning the environment

Question from mona, small non profit:
    Hello, With the increase in "foreclosure dogs" adding to what was already a problem with unwanted and abandoned pets, we are filing to form a 501c3 dachshund rescue, aimed at both rescue and community education. Is this a really bad time to try to get start-up funding--even though the need is greater now? Will there be seed money out there? Any tips? Thanks.

Steve W. Batson:
    As with any endeavor, I would state that first you must meet a significant need, find a group of passionate supporters (individuals, corporations, foundations), including high-profile spokesperson(s), and develop a strategic plan to move forward, and work closely with an adviser or consultant. It is true that start-up operations are more challenging generally, since you do not have an established group of donors, a recognizable brand (reputation), or a history of support. Be passionate and work smart by strategically planning your next steps.

Question from Cathy Brown, CAAF:
    After downsizing the staff and scaling back our budget, naturally, there is more work to do among continuing staff. Low-budget ideas on boosting morale? Already giving 1/2 day on Friday if they feel their workload can handle it.

Scott Spreier:
    1. Listen. Now more than ever they need and want your ear. They are frustrated and frighted.

2. Talk. Give them continual feedback and coaching. If they can succeed during this time, they will come out stronger, more resilient and more effective.

3. Be honest. Provide what clarity you can. Trust right now is critical. They need a vision -- even if its only a month out.

4. Find someone outside the organization you can 'vent' to. You're probably just as frustrated as they are, but you have to be strong.

Question from Leslie Spehar, the Woodlands Foundation:
    How are nonprofits leveraging social media to fundraise?

Steve W. Batson:
    Many organizations are using YouTube, Twitter, and other social media to get their message out and to connect with potential donors. Many are using video messages from the CEO, a client, or a donor to frame the case for support. Even more are using electronic methods to expand the potential donor database or to solicit donations on-line.

Peter Panepento (Moderator):
    Hi Leslie. Today's guests aren't social media experts. However, we've had some great recent discussions on that very topic that you should investigate to get a better answer to your question.

We ran a really interesting discussion on social-media fund raising a few weeks ago. You can find it here: http://philanthropy.com/live/2009/02/social_media/ .

I also invite you to read our recent discussion with Tom Watson on social media for nonprofit groups: http://philanthropy.com/live/2008/12/online_tools/index.shtml . And we produce a monthly podcast called “Social Good’ that focuses directly on how nonprofit groups are using social media to raise money and awareness. You can find the Social Good series here: http://philanthropy.com/media/audio/socialgood/

Peter Panepento (Moderator):
    A reminder that we have about a half hour left in today's discussion. I hope you are finding it useful. Please know that you are welcome to ask questions or offer comments at any time during the discussion. To do so, click on the "ask a question" link on this page and type in your questions or thoughts. Thanks.

Question from Kate, small/med NonProfit:
    We have a 10 member advisory board that is for the most part not involved in any aspect of our work. What is the best way to engage a relatively defunct advisory board in this time and what role should they serve in relation to organizational fund raising?

Steve W. Batson:
    Whether it's an advisory board or a governing board, it is critical to recruit the "right" members for your organization and to keep them connected (but not worn out!). I would suggest re-interviewing them to test connection and continued interest. Then you know who you need to keep and who needs to be replaced. This group should be your strongest "cheerleaders", armed by you with the mission, vision, expectations, talking points, elevator speeches, etc. Then you need to insure that they meet on a regular basis to review their "toolbox" of materials, skills, and possible connections (prospects, etc.). This group can also be a recruiting pool for your board.

Question from Hilda Chihak:
    How do you keep a board motivated to fund raise during this economic downturn?

Scott Spreier:
    It's easy to be reactive now. Don't be proactive. Maintain a vision and make sure it's clear to board members and that they buy into it. They, like staff, are nervous and frustrated right now. Listen to their concerns. Engage them in productive discussions. Try to keep them focused.

If the board has been ineffective and struggling, this may be a good time to innovate, to make much needed changes in strategy, perhaps even board makeup if possible.

Some of the best organizations view times like these as opportunities.

Comment from Michael Chihak, Communications Leadership Institute:
    The social media tools to which Peter referred are all good ones. If I may add a thought: They won't do any good if they are not part of a structured, strategic communications plan. Simply diving in because everyone else is using Facebook or Twitter is not going to be useful. It must fit the organizational strategy.

Peter Panepento (Moderator):
    Good point, Michael. The resources I offered earlier should help offer some suggestions on how to accomplish that goal.

Question from Heather, medium nonprofit:
    How much detail do you provide in your appeals about the financial condition of your agency? If, for example, you get to the point where you either stream line or eliminate some programs in order to preserve other core activities do you share that with your donors in asking for assistance? If you are streamlining the management team or cutting pay are those things you should share in an effort to inspire financial support?

Steve W. Batson:
    You want to walk a fine line here. You certainly want to share with potential donors the steps you are taking or have taken to be a more efficient organization. But you do not want to sound like an unwise investment. Be honest but not negative. The steps you are taking or have taken should be in line with your current strategic plan. Sophisticated donors will appreciate this process and action.

Question from Heather, small to medium nonprofit:
    What advice would you give to an organization that started a capital campaign in 2008 and has not generated over $200,000 in donations (of $2.6 million needed)? Is it better to focus on community awareness (we work with adults with severe disabilities and have struggled for community buy-in) or other outreach programs or is it best to keep plugging away at the capital campaign? I am the only staff person focused on the capital campaign and I work part-time, so clear priorities need to be set.

Steve W. Batson:
    Heather, you almost answered your own question. Clear priorities are being set, one way or another. If you're the only (and part-time to boot) staff member working on the campaign, that's a challenge. Did the organization do a feasibility study? Did it show a $2.6-million campaign as feasible? Do you have counsel working with you? Did the feasibility study involve a number of potential donors that could support that level of campaign? Do you have a strong volunteer leadership group guiding the campaign by connecting with friends, opening doors, and making those sacrificial gifts themselves?

Question from Kylie Pierce, Rome Capitol Theatre:
    I work in a one-person shop, and our board has not had a history of assisting efforts in fund raising beyond some token assistance with some of our events. I have been educating them about the benefits and necessity of their participation in these activities. Are there any compelling new arguments that I can make in this economy that will sway any remaining holdouts?

Scott Spreier:
    At the risk of sounding overly blunt: If they want the good times to return, they better help you out during the bad.

Seriously, now more than ever you need their help. What little funding is available will go to other organizations if yours (and your board) isn't doing everything it can to get its share.

Again, I think you have to be very specific in what you need from them, and why and how it will benefit the organization.

As uncomfortable as it sometimes is, this may be the time for some very direct, even coercive leadership on your part.

Peter Panepento (Moderator):
    I'd like to point out another resource we offer to help nonprofit leaders guide their organizations through this recession. It's a page called "How Charities Cope With a Troubled Economy" and it offers an extensive list of links to all of our stories, discussions, and blog posts regarding the recession and its impact on nonprofit groups. You can find it here: http://philanthropy.com/financial_crisis/

Question from Brenda, small faith-based nonprofit:
    I manage a charitable clinic that provides primary health care for uninsured. Since 2003, we've been supported by private donations. No federal or state funds. We have about two years operating in reserve. With the state of the economy, the board is pressuring me to apply for federal and/or state funds. Many donors support us because we are NOT government funded. (We are located in the South, deep in the Bible Belt.) Is there any way to predict the cost benefit of state or federal funds vs. possible private donations lost? Thanks!

Steve W. Batson:
    State and federal funds, particularly these days, come with a price tag that does not usually occur with private donors. I always recommend diversifying of income, with private donors, foundations, state/fed agencies, corporations, etc. With the changes currently underway in D.C., your area is obviously in the state of flux regarding future environment and support. In your geographic area and type of organization, many of your supporters and potential supporters would not want you to accept government funds and mandates. I am working with several now. With your operating reserve, I would work to strengthen your private donations, major gifts, planned gifts, etc. and wait to see what changes occur in the political landscape before moving into governmental funding.

Question from Dianne, small non-profit:
    In this economic climate, board members who may also be one of the association's founders may be very protective of the organization. Have you had any experience with "Founder's Syndrome" and, if so, could you offer suggestions as to how to address it in a productive, forward-thinking manner?

Steve W. Batson:
    Honestly, this is a challenging concept, from the smallest ARC to Habitat for Humanity earlier. A founder must be respected for what he/she has created and fostered. Their protectionism should be embraced but in a positive, strategic manner. Work closely with him/her to allow them to see a broader picture of the possibilities to be experienced with expanded programs, different approaches to fundraising, new board members, etc.

Question from Patrick, national / international nonprofit:
    One decision that may be unavoidable is a reduction in force. With that in mind, what Web sites (e.g, Idealist.org, Monster.com, etc.) and recruiting firms would you recommend one use to locate senior management positions?

Scott Spreier:
    Unfortunately I don't have a good answer for you. On a more general note, before you start looking, this may be a good opportunity to step back and really re-examine how you see yourself as a senior manager, and what you bring to the "party." Too often as managers and executives, we get into a rut of sorts and "typecast" ourselves with outdated self-images, limiting our opportunities.

Peter Panepento (Moderator):
    Hi Patrick. I'll follow up by encouraging you to make our Philanthropy Careers page part of our search. We offer executive-level jobs listings and lots of how-to advice at http://philanthropy.com/jobs.

We also have a very active LinkedIn group that allows nonprofit professionals to network, make new connections, and trade information about current openings. If you are on LinkedIn, I invite you to search groups for Chronicle of Philanthropy's and ask to join. We have nearly 1,500 members -- and there's a lot of great info there.

Question from Parker, small nonprofit:
    In general, what fund raising or income sources are available for nonprofit start-ups in this economy?

Steve W. Batson:
    The strongest source of funds for any nonprofit is individual donors. As mentioned earlier, start-up operations come with their own set of challenges---shaping the "brand," getting the communications plan strong, acquiring new donors, building a strong and passionate board, and having a track record to show donors and foundations. You will find some donors and foundations excited to join in partnership with new, well-planned initiatives if the initial planning is done well.

Question from Maria, The Wall Foundation Inc.:
    After working my youth program under the umbrella of other established non-profits I was not happy with the way they were being handled so I started my own. I recently received my 501(c)(3) for my foundation but in this economy I really want to network and work with other established non profits on community projects. Do you know of any Web site or contact that specializes in non-profits working together for common goals?

Steve W. Batson:
    In most large cities (Dallas, San Diego, Atlanta, etc.) there are centers for philanthropy or nonprofit management who are anxious to blend the efforts of nonprofit organizations to better coordinate fund raising and increase efficiency. If you're in a smaller community, look at nonprofit organizations with missions similar to yours (drug rehab for men and drug rehab for women). Consider joint programs, joint fund raising (special events), or even a merger.

Question from Carol, arts education nonprofit:
    In tough times, how can boards that have been small and struggling before the downturn re-energize themselves and become not only effective, but attract new members?

Scott Spreier:
    I guess I'd go back to an earlier response: If the board was struggling before, this may be a good opportunity to make some much needed changes. Some questions to consider:

1. Is there a clear, agreed-upon vision?

2. Do you have the right strategy in place?

3. Do you have the right members?

This actually may be a great time to attract new members. There are a lot of very talented managers, executives, professionals out there right now who are depserately looking for something worthwhile to do with their once very full lives.

Question from Kate, small/med NonProfit:
    In this economy donors are being bombarded more often with appeals. Generally, we send two appeals a year plus an appeal for our annual fund raiser. How much is too much? Also, I work for a human services agency that provides for refugees and immigrants. What are some innovative ways to make our appeal stand out from the rest?

Steve W. Batson:
    Let me back you up one step. So many times in feasibility studies and other interviews, I hear potential/current donors say "I only hear from them when they want money!" There can be "too many" appeals, but a donor base that's regularly cultivated (not solicited), feels good about the organization, and understands the needs will want to support the organization at different levels for various activities. A comprehensive program should include annual funds, major gifts, planned gifts, and special events. Some will opt out of one ore more of these opportunities of course.

Make sure your message is clear, the needs are substantiated, and your organization and its services are UNIQUE.

Question from Kathrin, med NonProfit:
    We are re-evaluating our three-year individual donor plan. Are there any good (inexpensive or free) resources out there that will help us breath new life into our fund raising plan?

Steve W. Batson:
    There are a number of publications available addressing strategic fund raising planning. Also, reputable fund raising consultants will professionally assist you in evaluating your annual and overall fund raising plans.

Peter Panepento (Moderator):
    We are out of time. Thanks to everyone who took the time to join us today. A special thanks to our expert guests, Scott Spreier and Steve W. Batson for taking your questions. Mr. Batson battled through some problems with his Internet connection early in the discussion, so he deserves a special mention for his perseverance in getting to all of your questions. Please mark your calendars for next Tuesday at noon Eastern time for our next discussion. The topic: Retaining Your Best Donors.

You can find the discussion link here: http://philanthropy.com/live/2009/03/retaining_donors/

Thanks again.

Steve W. Batson:
    Good questions!
I appreciate everyone's interest.

Scott Spreier:
    Good questions all -- and challenging. Thanks for the opportunity to chat. Hope I provided a bit of insight. I realize it's a tough world out there now with no easy answers.

If you want to talk further you can connect with me at scott.spreier@haygroup.com