As with many ranking systems, the 100 Best Nonprofits to Work For in Oregon is a survey-based process. It combines the rankings of self-reported, staff survey responses and an employer benefits survey.  The scores of the organizations are then parsed into categories or small, medium, and large nonprofit agencies.  According to the Oregon Business Magazine, 170 nonprofits participated in the survey with over 5,500 individual employee surveys received from participating agencies.

Underneath the “contest element” of the 100 Best ranking, is a very important organizational management tool. From the perspective of those I spoke with at the recognition event, the ranking of “100 Best” was, indeed, the expression of an organizational culture of continuous improvement rather than a “bragging rights” contest.

Perhaps this thinking was best captured in a conversation I had with an Executive Director of an organization that has been on the list for three years.  Clearly animated she said, “The survey has each of my employees giving us feedback on our work environment, our management, and communications, along with their opinions about how well we are doing on mission, goals, career development, and compensation. The information is way more valuable to me and my board than the award” (A bit later in the conversation she did concede that the award was also important in fundraising, marketing and her agency was glad to have received it).

As I pondered the “best of event” my mind began to wander into thinking about continuous improvement as an organizational mindset.  As my consulting practice is based on nonprofit performance improvement, my first stop down the road of thinking was to do a quick math calculation.  There are almost 16,000 public charities registered in Oregon (source) and yet only 170 agencies participated in “100 Best” survey process.  That means only 1% of the nonprofit organizations in Oregon were considered for the designation of “100 Best.”  I am not suggesting that only 1% of nonprofits are interested in being named among the “best” but the statistic does beg the question, “how many nonprofits intentionally strive to be among the best?”  In this post, I want to reflect on the role of a “best thinking mindset” for nonprofits and offer some practical strategies for getting started on a continuous improvement process.

Engage Everybody: One of the first principles of continuous improvement is that it is not a “solo practice” or even a top down “management event.”  Continuous improvement is foremost a shared culture and only secondarily is continuous improvement a practice. Here is a simple diagnostic. Stop and think about how often in a board or staff meeting did you hear the question, “What can we do to improve…?”  How many different people ask the question?  Does the question relate to your agency’s programs, operations, evaluation –or all the above?  If your self-reflection suggests that continuous improvement is not as active as a value as you would like in your organization, then start a conversation about the critical need for continuous improvement in the nonprofit sector today.  A few reasons for continuous improvement include: a) growing demands for services require high quality services delivered effectively, b) funders are increasingly demanding continuous improvement, c) high performing organizations are more stable and thriving work environments. (here is an interesting masters thesis on the topic)

Self Assess: Once you have a critical mass of interest in continuous improvement then it makes sense to identify the opportunities for improvement. One way to assess your opportunities is to facilitate a conversation using an appreciative inquire approach that identifies your Strengths, Aspirations, Opportunities and Results (see here & here).  This can be either preceded or followed by a more detailed assessment using more formal assessment tools (great online tool database here).  With an assessment complete, prioritizing your needs is an exercise of determining which of the needs map with your organizational aspirations and hold the greatest potential of a positive return on the invested time and energy required to make the improvement

Develop a Focus: At this stage of the process, it is important to develop a way to focus the energy and attention of the entire organization.  Focusing organization attention can be accomplished using tools such as a written workplan (see here & here) or a visual organizer (see here).  Further, developing a focus includes creating a tracking process to ensure process is being made on performance improvement plans developed.

Rapid Cycle Test: Performance improvement is operationalized with the use of an iterative process to create, measure and monitor changes over time.  One such process is to frame change as a “rapid cycle test” that is a four step cycle of Plan, Do, Study Act (here is a great primer).  In short, this process suggests change is: a) planned, b) implemented as a pilot (do), c) followed by a study of the results, and d) the results acted on (either further implementation of the change or revision of the change in another cycle of piloting).

As this performance improvement cycle becomes an embedded cultural practice, your organization will become stronger. Indeed, operationalizing a performance improvement culture is clearly the mark of a “best of” organization.  I would like to reiterate,  performance improvement is a critical nonprofit management competency to master and increasingly is not optional. The rapidly changing times demand that nonprofit organizations focus myopically on developing the highest level of organizational functioning and still reach higher. Borrowing from the iconic Harry Potter books, getting to where you want to be requires, a clear destination, determination to get there, and deliberate effort.  Performance improvement requires no less.

As always, your thoughts are welcome.

• Economic Restructuring: It almost seems like stating the obvious to write that we are in the middle of one of the most dramatic restructuring of our economy that  we have seen in decades.  One only needs to look at the growing disparity gaps that is creating a tsunami of declining wealth, as evidenced by double digit real unemployment, increasing poverty, and growing housing and food insecurity. The damage is evidenced most profoundly in already marginalized communities and is driving unprecedented demands for the basic services that the nonprofit sector provides. Coupled with this economic decline and stagnation is the failure of our elected officials, at all layers of government, to create rational public policies that adequately sustain the physical, social, and cultural infrastructure of our county. The fiscal stability of many nonprofit agencies is additional collateral damage caused by the restructuring.  To survive and thrive, many nonprofits are fundamentally rethinking the way programs and services are funded and sustained.  The economic threat requires all nonprofits to invest the time and energy into creating, not just a fundraising plans, but a revenue development plan, which focuses on the total capital requirements required to support agencies and builds tenable long-term funding models.

• Political Indifference:  The second threat that faces nonprofit organizations is political indifference. We are facing a radically polarized political environment where there is a relentless pressure to cut domestic spending with little tolerance for increasing tax revenues.  In this environment, domestic spending is slashed repeatedly in a “death by a thousand cuts” scenario.  If there was ever a time that demanded political engagement from the nonprofit sector, it is now.  As nonprofit leader turned congresswoman Donna Edwards was recently quoted as saying, “This is not a time for sitting on your hands. It’s a time to be involved and be active and to care about what’s happening, not just in your community, but what’s happening in our country.”  Nonprofit leaders have the moral obligation to advocate for the communities they serve as nonprofits know, from the day-by-day experience, the human impact that are in the faces and stories  connected directly to budget cuts. It is no longer acceptable for nonprofit leaders and board members to hide behind the false, sweeping generalization that acting politically  jeopardizes the legal status of their nonprofit agency. These times, demand a politically engaged nonprofit sector.

• Community Fragmentation: In this hostile environment, there is also a tendency for community fragmentation.  At the surface, this fragmentation can bee seen in the polarized political debates that are pitting those with resources against those without.  On a secondary level, fragmentation can be a seen within the nonprofit ecology. Many organizations talk about coordinating services, collaborate on projects, and often serve together on issue-focused community coalitions. However, when the conversation nears the waters of service efficiency, duplication and effectiveness, collaboration tends to fragment. Such fragmentation threatens to undermine the sum total of services provided to the community.  Without thoughtful discussions related to providing high quality services, with high efficiency and measuring our collective impact, we do a disservice to our clients, communities, and donors. It takes courage to build nonprofit community because it forces us to look at sharing resources, consolidating programs and services, and perhaps even restructuring organizations through partnerships and mergers.  Such courage is needed now more than ever.

• Unfocused Message: A fourth environmental threat to the nonprofit sector is that we tolerate an ambiguous and unfocused message about our work and our collective impact as individual agencies and collectively as a nonprofit sector. Polling data repeatedly demonstrates that the community has an unclear understanding about the nonprofit sector.    In part, this ambiguity is tied directly to the nonprofit sectors’ struggle to  communicate a clear message about the critical role that nonprofit organizations play in contributing to the social, cultural and economic health of our communities. As we move forward in coming years, most nonprofit agencies will find success to the degree that they develop and execute a clear, intentional, and visible, communication strategy.  In short, if the community does not know your agency or what you contribute to the quality of life in the community then why should they care about your success?

• Lack of Meaningful Impact Data: In my opinion, the lack of meaningful impact data is the greatest threat to any nonprofit agency.  The clarion call for accountability and performance is a call that is becoming louder on from foundations, government grantmakers, and even individual donors.  We now live in an emerging context of “impact funding,” where decreasing resources are aggregated and targeted to address significant needs that can be leveraged and scaled (external link). In this environment, nonprofit agencies need clear and compelling data to compete, thrive, and effectively serve their communities.

These five threats create an environment that fuels public skepticism of the work of nonprofits.  In an environment of scarcity, a politically indifferent and fragmented network of nonprofits, with an unfocused message and a lack of demonstrative impact, will slide from relevancy towards irrelevancy. Yet turning this page upside down, a new image appears.  It is an image of nonprofit organizations with a strategic opportunity to dismantle these environmental threats.

While economic restructuring may feel like standing on the shifting ground during an earthquake, nonprofits engaged, with a collective political voice, carrying a focused and clear message about the needs and values of a strong  sector, can take limited control during the disaster and take the lead in the rebuilding effort.  From this aspirational viewpoint, I personally believe that better days are ahead for nonprofit organizations. With vision, focus, discipline and strategy, nonprofit organizations have the opportunity to seize the day, even in the midst of environmental challenges.

As always, your thoughts are welcome.

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Postscript: It is to this end of creating smart strategies and lasting impact that I began my consulting practice nearly two years ago.  Since that time, my firm has partnered with a number of agencies to create and operationalize bold strategic directions in a hostile environment.  I invite you to learn more about us and our services and should you need a partner in success, contact us for a free consultation.

This blog is a follow-up to a couple of emails I received in response to my last post about how useful the information was.  One question I received was “Do you have a checklist that we could use to help us in our next board meeting?”   You asked. I deliver. In this post I present “Ten Steps for Building an Effective Nonprofit Board: A Checklist for Action” This free 12-page PDF document is  not designed to be an exhaustive guide to developing and staffing a board. Rather is a practice-based assessment tool that summarized ten nonprofit board essentials that boards can use as a conversation starter about its strength and effectiveness. It also offers a short list of actionable ideas to improve board functioning for each element.

In addition to overviewing the ten principles, I included a board composition worksheet, a short bibliography, and an action planing worksheet. It is my goal to empower boards to excel through self-exploration. Yet I am also aware that there are times when you need a fresh, imaginative, and objective perspective. For those times, facilitation and Process would love to partner with your agency to meet your strategy and performance goals.

Download a Free Copy of :  

Ten Steps for Building an Effective Nonprofit Board: A Checklist for Action

At the same time while conservation may temporarily preserve the status quo, in the face of an every growing demand for nonprofit services and solutions, a conservative strategy is untenable in the long-term.  Senior nonprofit executives and nonprofit boards engaged in operational planning may find comfort in budgeting to “known” revenues but “revenue-driven” budgeting may undercut growth and undermine the long-term health of an agency.  Under-investing in administration and infrastructure, leveling or reducing salaries and benefits, underfunding reserves, or a host of other conservative fiscal moves, can amount to the proverbial “death by 1,000 cuts,” where the cumulative effects temporarily deferred, may suddenly manifest as an organizational crisis or  an  inability of the agency to meet the organization’s mission.

This post is part of an ongoing series related to strategic planning.  As a precursor to strategic planning, I believe that an agency needs to cultivate a culture of courage.  So here is one take on the outlines of  principles that embody organizational courage.

Be Authentic: More than once I have interviewed an executive director or board chair who has confided that the constant adapting to changing funding streams shapes and reshapes in subtle (and not so subtle) ways, the organizational mission and vision. One exasperated director shared, “Some days I’m not even sure if I am walking into the right building.”  While mission-drift often starts unintentionally, such incremental creeping is prevented by a myopic focus on authenticity.  Every program, every funding decision, every grant application,  must be guided by a clear mission and vision in the context of the compelling need(s) it seeks to address.  Authenticity provides the focus an agency needs to envision a future that is greater than the current economic reality.

Be Intentional: Too often boards of nonprofit organizations get mired down in the operational details of the current agency operations.  The mundane and immediate, such as a year-to-date 10% revenue shortfall, adding a new policy or procedure to the organizational canon, or figuring out how to improve the computer network, while all important, can impede and intentional strategic focus.  When a focus on the operational becomes a cycle routinely eclipsing the strategic, it becomes harder to be intentional about the future.  To be successful an agency needs an intentional focus on strategy that is clearly palatable throughout the organization.

Be Large: With a conservative mindset, many nonprofit organizations are constantly engaged in fundraising, grant writing and trying to keep together a patchwork of revenue streams.  Messaging to the community and potential funders is “we are worthy of support because we are doing good things on virtually no overhead.”  Large, turns such thinking upside-down.  Large re-frames the message from “we are worthy “ to “there is a compelling community need and we are catalysts to effectively address that need.”  Fundraising becomes resource development and in a coordinated strategy, an agency seeks investors interested in creating a social return on investment. Being large supports the  assertions of being a catalyst with clear and measurable outcomes as well as benchmarks for quality and continuous improvement.  There is little question about the presence and leadership of the organization in the community.

Be Radical: While being conservative can preserve the core, being radical can expand the core.  Yet, radical needs to be defined.  While radical may carry the perception of risk or polarization, radical is simply the ability to ask the hard and profound question “what if?”  The “what if” questions spawn radical ideas that can be translated into strategy and action.  Questions like: “In the context of the compelling need, our mission and vision, what if we could do things differently to create a larger impact?” or “If we were to fundamentally rethink our relationship to our community and our supporters, what new models for service delivery would emerge?” need to be asked. Creating a culture that thinks radically is one that expands the agency’s horizon even if when the current economic clouds partially obscure the view.

Authentic, intentional, large, and radical are four terms that illustrate a strategic organizational culture that is applied rather than an abstraction.  Such terms provide a base that an executive team and board can use to measure progress and be accountable to. By operationally defining a strategic culture, an agency enters into the process of strategic planning from a position of strength, opportunity and aspiration, which are prerequisites of a results-driven process.  So it bears repeating – Be authentic, intentional, large, and radical.

As always, your thoughts are welcome.

Linking compelling social needs to the ideas of innovation creates the construct of of social innovation. Social innovation is the “holy grail” of nonprofit, philanthropic or government in search of finding new ways of creating community level solutions for social needs. As a contemporary overused buzzword, social innovation writers, consultants and scholars emphasize social innovation as the process of inventing or creating novel approaches to social change. Unfortunately, we too often hear words such as “catalytic” or “disruptive” to magnify the scale of the implied change. This “shiny new object” focus only on disruptive or catalytic social innovation distorts social innovation because it emphasizes only one point on a four point matrix.

In this blog, I want try and bring dimensions to social innovation to remove it from the abstract buzzword category. In this way, I hope to offer the starting point for strategic conversations within and across organizations about innovation.

It is not a new thought to think on innovation across two continuum (see reference 1). So if catalytic or disruptive innovation is at one end of a change continuum then the other end of the spectrum is process innovation that day-to-day work of continuous improvement for organizations. Positioning social innovation as adaptive or disruptive/catalytic is a very useful way of anchoring the basic dimensions of the social innovation concept.

Process innovation and disruptive/catalytic innovation need to be considered against the continuum of leverage or scale. For example, the Obama administration has developed a new partnership between government and philanthropy heralded under the banner of the Social Innovation Fund. The purpose is described as targeting millions of dollars in public-private funds to expand effective solutions across economic opportunity, healthy futures and, youth development and school support. The approach is to “create a catalog of proven approaches that can be replicated in communities across the country.” (see reference 2) The Social Innovation Fund clearly provides leverage by aggregating philanthropic and government dollars and uses that leverage to scale programs. However, given that the Social Innovation Fund requires grants to be based on existing programs and services that meet an “evidence-base” criteria, some have argued that true innovation is missing from the initiative. For example, one can read in various opinion blogs, statements such as this one:

“The central mission dissonance of the Social Innovation Fund has always been the question of what its real objective was. Was it meant to be a fund that really pushes an experimental agenda and deploys capital in favor of new approaches to social change that have both high risk and high reward? Or was it alternately a chance for the government to get a hand in on organizations whose models started as innovative and who were reaching an inflection point where new resources and government support could help them achieve the scale their proven model demanded.” (see reference 3)

So considering the larger context of social innovation, we can see that the two dimensions of the construct include the dimension of continuous verses discontinuous innovation and the second dimension of leverage and scale. Placing the two dimensions across each other, the concept of social innovation can be represented as four typologies as illustrated in the figure one.

The patterns and practice describing innovation that emerge when we consider the degree of change coupled with the degrees of leverage and scale can be described as follows:

Process Innovation: When the degrees of change are low (as in consistent and continuous) and the resources available for leverage and scale are inadequate, social innovation is largely consists of process improvements. This category of change is not simply trying “doing more with less,” but it is the sum total of the intentional, systematic, and strategic efforts of an agency to improve its processes largely within its existing structure, programs, and services.

Growth Innovation: When an organization is focused on innovating within its existing structure, programs, and services, in the context of collaborative relationships or increased financial resources (leverage and scale), the innovation results in program growth. Typically this growth is driven by intentional program expansion, program replication, or program dissemination. It is in this quadrant that innovation might be opening branch operations in a new geography, training others in an affiliate or dissemination model, or expanding service hours. Innovation is typically about about scaling systems to serve more people, creating value chain efficiencies, or creating rigorous evidence-base that encourages the adoption of program or service models by others.

Adaptive Innovation: Going back to an operating environment of constraints (in relationship to leverage and scale), adaptive innovators are those willing to move ahead of or beyond its existing structure, programs, and services to achieve a higher degree of social impact. Innovators in this might move out of preventive or secondary program and services and begin devoting limited resources to working upstream on policy or advocacy. In this quadrant, innovators do not simply ask “how can we improve what we are doing” but rather ask, “could we be more effective if we moved outside of our existing strategies, programs and services?

Catalytic Innovation: The final quadrant of innovation is where large-scale change is sought and is supported with ample leverage and scale. It is not seeks to grow and scale an idea but also seeks to amplify innovation by considering discontinuous ideas in addition to continuous ones. As suggested previously, Disruptive innovation is pursed as if it were the holy grail of social sector. Indeed, catalytic change can create powerful change (see reference 4) but giving disruptive innovation an unequal weight compared to the other three quadrants can skew with meaning of social innovation and actually be a disservice to the field. Disruptive innovation is the current concept with cachet and gravitas relative to the “mundane” work of systematic program improvement and hence, there is the potential that solid process, adaptive, or growth strategies might be overlooked.

The point to be underscored is this. We need to create a shared understanding of social innovation as a critical foundation for building a local perspective for social innovation. Common language is essential to creating a local social innovation approach to compelling social needs. In this overview I have proposed a more robust seed bed for considering approaches to innovation. By broadening the dimensions of social innovation, we can now turn our attention to creating a social innovation framework. It is not about catalytic innovation or adaptive innovation as if it were either/or. Rather social innovation is about both/and. The community needs the investments and strategic thinking to create catalytic innovation that disrupts business as usual. The community also needs the skills and tools to engage in process, adaptive, and growth innovation.

Thinking critically about when to focus on innovation from a process, adaptive, growth and disruptive perspective and how to combine such innovations will result in a stronger social-citizen sector addessing compelling community needs. It is my perspective that only with a broader view of innovation can nonprofits, philanthropy, and government organizations can engage individually and collectively in more thoughtful and strategic conversations about social innovation.

As always, your thoughts are welcome.

References

1. For a useful policy overview see:  “Social Innovation”: What is it? Who Does it?

2. Source: Corporation for National and Community Service – Social Innovation Fund

3. Source: The Social Innovation Fund Grants Focus on “What Works”

4. See as an excellent example: Catalytic Philanthropy

As I have written previously, a functional board is comprised of members capable of serving four functions that include 1) governance, 2) capacity support, 3) content expertise, and 4) resource development.  This is a critical framework to understand as it serves as the foundation of a functional board. However, a high performing board requires a different level of operating. High performing boards are based on “the highest and best use” of the talents and skills of board members.  Most nonprofit organizations seek to recruit board members who are talented individuals who are often business leaders, critical thinkers, and community activists. Unfortunately, more often than we would like to admit, the use of such  talented board members is limited to review of policies and procedures, looking over budget reports for accuracy and assisting in fundraising events. While such board activities might define some of the duties of a functional board, a high performing board is defined by engagement in ongoing strategic thinking and strategic action. Reviewing meeting minutes, agency financial reports, and blessing changes in HR policy are necessary duties of a Board but if the balance of board meetings is consumed with such pedestrian administrative tasks, then the “highest and best use of board talent “is likely missed.

A classic Harvard Business Review article published over a decade ago, suggests that high functioning boards, discover, focus and organize around “what matters” (External Link).  According to this article, what matters is “harnessing the collective efforts of accomplished individuals to advance the institution’s mission and long-term welfare.”  It goes on further to suggest that the board’s contribution is meant to be strategic, “the joint product of talented people brought together to apply their knowledge and expertise to the major challenges (and I would add, opportunities) facing the institution.”  So, if this is the description of a high performing board, what does it take to create such a board?  From my experience and a review of the literature, I would suggest five starting points.

Assess where you are and define where you want to be.  The first task of developing a high performing board is to figure out where are the gaps in performance.  A Google Search will unearth several board self-assessment tools that range from overly simplistic to overly complicated. Such tools might be useful to help a board think about its governance functions, member commitments, or help identify “holes” in a board’s operating structure.  Such a self-assessment can be a good place to benchmark the strengths of your board operation but many of these assessments do not have a strong strategic intent.  An alternative assessment would be to benchmark practices against the variables presented in the Grant Thornton 2009 National Board Governance Survey for Not-for-Profit Organizations (External Link).  In my opinion, this survey offers a timely and more strategic perspective on board operations. A third approach to assessment is to shift away from a narrow assessment of the board and conduct a larger capacity assessment.  I have written elsewhere about capacity assessments and in that article I linked to a useful assessment spreadsheet (External Link).  A capacity assessment would help the board not only reflect in its strengths and opportunities but would also be useful in discovering the “what matters.”  Whichever route you take, knowing where the board is now will help identify the performance gap related to where you want to be.

Build the Board’s Skills:  I have argued before that board development starts at a board orientation but continues as an ongoing process of raising the skills and competencies of board members.  The reality is that board members become effective as they engage their heads, hearts and hands in the work of the organization.  To me, this calls for a meaningful development agenda that includes a) ongoing board training on topics related to governance and strategy, b) opportunities for boards to get their “hands dirty” in the work of the organization, and c) learning about the larger service context in which the nonprofit agency works.  Building board skills is a strategic and long-term process that is not segregated into an annual or semi-annual training event.  Ideally, participating in a strategic agenda for board skills building should be built into board practices and be built into the expectations of board service.

Engage Strategically:  A simple yet useful exercise to help gauge the strategy of a board is to do a quick content analysis of two sources.  First, examine the pre-meeting packets sent out to board members for the last three or four months and sort the contents into the two piles of administrative and strategic.  Second, review the meeting minutes for the same time period and highlight everything that is strategic in yellow.  The balance of the piles and the presence or absence of yellow highlights will give a board a good indication of how much of the board’s time is spent in administrative review and how much of the time is spent engaged in strategy.  The second part of the exercise is to ask the question, how much of the historic content was actually dependent upon face to face meeting?  For example, could board members review and approve fiscal statements and other administrative approvals after a simple review of emailed documents?  The answer is likely to be yes.  I am not suggesting that boards should conduct business by email rather I wanted to create a perspective of time.  If board members can read and approve by reviewing email attachments, then the time allotted at board meetings should be proportional. Simple administrative review should be done in advance of meetings and, when there are no concerns about the subject matter, such tasks should take relatively little time at a board meeting. Unfortunately, too many boards are conditioned to process the nuances of organizational administration, mistaking such administrative processing for strategy.  Board meetings need to be oriented around strategy and board members engaged in the work of solving big challenges of the agency and thinking strategically two and three years out.   Performance of boards would improve dramatically if administrative review were limited to a tightly narrated quarter or a third of a total board meeting time.

Measure Performance:  Another starting point for improving board effectiveness is to measure performance.  Too often a board will measure the performance of the agency and neglect measuring their own performance. At best, many boards’ self-performance evaluation is limited to evaluating the start and end time of meetings or the quality of the takeout food served at the event.  High performing boards create meaningful measures of board performance. While it might be tempting to measure performance by attendance, percent of board members donating to the agency, and the on-time completion of the executive director performance evaluation, these are fairly un-strategic measures. Strategic measures go further and might track such benchmarks as the regularity and content of executive or planning sessions, engagement of members outside of board meetings, or the percent of meeting time spent in strategy versus administration. Additional measures might be tracking the time required to recruit skilled board members or membership retention.  For many boards shifting to performance-based board management can represent a sea change in culture and is likely only achieved after carefully facilitated strategic conversations and thoughtful planning.

Get the Right People on Board:  A final starting point is to conduct a thoughtful review of board recruitment strategies.  Does the agency have clear board member job descriptions?  Are members sought out individually for skills and expertise? Do board members invest time in cultivating potential board members?  Many small to midsized nonprofit agency have difficulty staffing their boards let alone staffing their boards with highly qualified community leaders.  Having worked with many such boards, I will not underestimate the challenge of this task.  However, establishing a clear recruitment strategy and creating a meaningful board structure with the expectations of continual learning, performance-measurement, and strategic engagement will become reinforcing cycle that raises expectations and organizational optimism.   Energy and engagement creates energy and engagement.

Developing a high performing board is not a trivial task.  Indeed, I would contend that for many agencies, creating a high performing board may an intentional process that spans a year or more. However, despite the challenges of reinventing a board, facilitating a process to develop a high performing board is critical as nonprofits seek to thrive in the continuing economic uncertainty and instability.  High performing organizations of  tomorrow are those that develop and maintain high performing boards today.

I recently attended a panel discussion geared towards grant makers on the topic of nonprofit capacity building.  The panel discussed capacity assessments, the role of training, coaching and consulting and evaluating capacity building efforts.  As with many lunch presentations there was much more content than time, however, it was interesting to hear the “30,000 foot view” of capacity from funding agencies’ perspectives.   As one who has worked with nonprofits in capacity building for many years, the discussion of tactics by the panel revealed little new information.  However, what was interesting in the presentation was the discussion of the “disconnect in thinking” between funding agencies and nonprofit agencies around the concept of capacity.  The disconnect in thinking can be summed up in this way:  When nonprofit agencies think about capacity building, especially in the context of seeking a capacity building grant, they really are asking for operating support for specific projects.  When grant makers talk about capacity building, they are talking about developing infrastructure.  Adapting an illustration that one participant gave, it is like a vegetable garden where the nonprofit is concerned about a particular plant in the garden and the grant makers are increasingly interested in the root system and soil that supports the entire garden.  In previous posts I have discussed the concept of initiating a capacity building conversation and also discussed capacity building in the context of resource development planning. In this post I want to discuss facilitating an organizational capacity planning process.

Before discussing the process, we first need to define what is meant when we discuss capacity and capacity building. As we are reminded in that now classic primer on nonprofit jargon “in other words,” (external link) capacity is one of those “vague, quasi-occult terms” that evokes the need for outside “expert” consultants who understand the deep mysteries of the concept.  The unfortunate byproduct of such a misunderstood word is that the ambiguity of the term makes the concept of capacity and capacity building seem daunting to an organization.  So as an opening premise, I would like to suggest a clear and concise definition of capacity as “the sum total of the  strategy, management, staffing, infrastructure, resources and operation of an organization.” The process of capacity building then becomes the deliberate assessment and improvement of those core elements of capacity.  The following is a suggested facilitated process for capacity building.

Assessment:  As with most organization development and performance improvement projects, the first step in the process is to take a systematic assessment of where you are right now.  There are several nonprofit organizational capacity assessment tools that can be found with a simple web search.  The grandfather of tools was developed for Venture Philanthropy Partners by the mega consulting firm of McKinsey & Company (external link).  This tool has been adapted by Marguerite Casey Foundation (external link) and has also been adapted by Social Venture Partners International (SVPI) and is available as an Microsoft Excel spreadsheet (external link). Taking the SVP tool as an example the rubric addresses: financial management, fund development, information technology, marketing and communications, program design and evaluation, human resources, mission, vision, strategy and planning, legal affairs, leadership development, board leadership.  Future versions of the SVP tool will address cultural competency and policy advocacy as additional areas.  My experience (and the experiences of a few colleagues) in using the SVP tool has been that the level of depth of the tool may be less relevant for smaller or grassroots organizations.  In these cases, another useful tool to consider is a “Tool for Assessing Startup Organizations” that was designed to be a due diligence supplement for grant makers (external link).  As I suggested, a web search will help identify additional approaches to capacity assessment. The point of drawing attention to several tools is less about “what  tool  to use” and is more about illustrating the need for a framework for systematically assessing your agency capacity.

Once you decide on an approach, implementing a capacity assessment ideally takes a 360 degree approach that solicits relevant input from staff, board, clients, funding agencies and other stakeholders. The wider and more inclusive the process, the wider and more inclusive will be the insights on capacity.  Note:  I would be remiss to point out that online surveys can be an effective way to conduct an assessment.

Dialogue and Planning:  The second stage of a capacity building process to create and intentional dialogue around the findings with three important goals that include: a) creating a shared understanding of where the agency is starting from and where it is going, b) deepening the spirit of community and commitment to strengthening the organization, and c) creating workplans that support capacity building.  While workplan development can be a time intensive process as I have suggested elsewhere I do want to underscore that reflecting on a capacity assessment should also be a time of building community and commitment.  The dialogue and planning process lends itself well to an “intensive” like a board and/or staff retreat, but also could be the basis for a “learning community” process that spans 4-6 months and includes spaces for homework and reflection.

Action:  The third stage of is the action stage of implementing capacity building workplans.  Recognizing that capacity building is an ongoing commitment to continuous improvement, there needs to be the intentional structures to manage and monitor progress over time. Since capacity building is really about improving an entire system is also useful to think of implementation as a series of “rapid cycle tests” using a model such as the Plan, Do, Study, Act (PSDA).  There are a number of good primers for this model online, (external link). Finally, it is important to keep in mind that the action stage will likely taking an agency into new organizational territory and will likely require some investments in the professional development of the agency’s staff and board.

Leverage:  The final step in a capacity building process is to be intentional about leveraging your efforts for capacity building.  This brings us back to my opening discussion of grant makers’ perspectives on capacity building.  The organization that invests in the systematic planning for capacity building is uniquely positioning itself to pursue a capacity development grant.  For example, I know of one agency that received a three-year capacity building grant after taking an entire year to asses and begin to implement a plan to build capacity that the entire board stood behind. Based on the demonstrated movement towards capacity, the agency was well positioned to seek a capacity building grant. A grant-writing acquaintance once stated that when it comes to capacity building grants that funding agencies “want to improve organizations –not rescue them,” and so it is imperative for organizations to start from a position of strength.  I believe that the leverage of capacity building grants is most effective when agencies are already engaged in the forward motion of capacity building.

I recently read a great article titled “On not letting a crisis go to waste: an innovation agenda for Canada’s community sector” (external link) that reinforced the concept that the nonprofit community/social sector is being tempered as we continue to struggle out of the economic recession of the last several years. Implied and stated in the article is that agencies demonstrating vision, leadership, adaptability and innovation are the ones who will not only strengthen themselves but help strengthen and reinvent the social service and community sector.  For many nonprofits this journey of innovation and opportunity begins with an intentional facilitation of a capacity building process.



References:
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(1) Enabling Knowledge Creation: How to Unlock the Mystery of Tacit Knowledge and Release the Power of Innovation
(2) Cultivating Communities of Practice: A Guide to Managing Knowledge
(3) In Good Company: How Social Capital Makes Organizations Work

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As I speak to potential clients, it is not too infrequent that I have to say, “When looking for a facilitation consultant it is important to separate and keep separate the concepts of facilitation goals and facilitation tools.”   To unpack this concept, let me illustrate with a personal story. At a couple of different times in my life, I worked in construction.  On one project, I worked closely with Dan, a highly experienced finish carpenter, who became a mentor as he taught me finish carpentry.  Our goal was clear, trim windows and doors so that the end result looked spectacular. The tools however, were varied.  Table saw, miter box saw, levels, files, hammers, As I was learning how to work with power tools, a very nuanced process, Dan would ask a lot of questions, sometimes guide my hand and, at other times, would intervene and save me from wasting an expensive length of trim molding.  Dan taught me a variety of alternative ways of looking at, what on the surface, is a simple process of measuring twice and cutting once.  Finish carpentry, I learned was a craft that is executed best by those rich in a tacit understanding of the process as well as the tools. So what does this have to do with facilitation?

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Coming back to my opening sentence, I once was talking to a potential client who was describing his board’s interest in hiring a facilitator to help his organization create a new strategic plan.  He waxed eloquent about how the board was looking for innovative approaches to the process of creating a strategic plan.  His passion for innovation raised my eyebrows, because the written specs for the project clearly asked for a scenario planning process.  When I suggested that “innovation” in creating a strategic plan might not involve scenario planning, the response was basically that a board member attended a scenario planning process and that is what they are looking for.  To me, this is a great example of confusing facilitation goals with facilitation tools.  In this one conversation the potential client was asking for both innovation as a goal and at the same time prescribing a single tool that might or might not be terribly innovative.

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When I heard that dichotomy being expressed, I remembered back to working with Dan.  We needed to cut a corner piece on a complicated trim molding and Dan said, “How do we cut it?” I answered, “The finish table saw, set at 45 degrees.” Dan smiled, “Too complicated of a cut. Hand saw in a miter box at 47 degrees.” Dan’s method resulted in a near perfect match.  Dan not only knew both what was needed to be done but also tacitly knew how it should be done.

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When facilitation goals and facilitation tools are confused, the best outcome is rarely achieved.  So when seeking the assistance of a facilitation consultant one needs to clearly separate goals from tools. This is an important task and both clients and facilitation consultant have a role to play in the separation process. Here are some simple questions to help you think about this separation.

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Where do you want to be? The critical first step is to clearly figure out where you want to end up when the facilitated process is over. Rather than focusing on facilitation tool that will get you there, it is important to first clearly know where you are going. The goal is more important than the tool.   “We want to develop a strategic vision,” or “We want to create an implementation plan for our strategic vision,” are clear goal statements.  “We want you to facilitate a retreat,” is not so clear. Being clear about the goal helps you ask the right questions of a facilitator.   If the goal is to create an implementation plan, then you know to ask questions about implementation planning. What is his/her experience in the area of implementation planning?  What are his/her foundations of practice?

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Do you have strong feelings about how you get there? A second question reflects on the tools.  Does the tool matter to you?  If so, then you need a facilitator who has experience helping agencies with similar goals and has a deep content knowledge of the specific tool you require. If “doing a SWOT analysis,” or “facilitating scenario planning” are critical tools to use then be intentional about looking for a facilitator with expertise in using those tools. However, if you separate the goal from the tool then your preference for a tool might be influenced as the facilitator helps you reflect on the goal.  A finish table saw is good choice to get the job done, but there are times when a miter box is a better choice.  Keeping the goal and tools separate allows you to have a wider lens in assessing potential facilitators.

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What is the organizational fit? The third question is to consider how the facilitation goals and tools fit with your organizational culture and structure. Elsewhere, I wrote more extensively about cultural and organizational fit but the reminder in this post is to consider the impact of the facilitation process on your organization.  For example, if you are a smaller grassroots nonprofit agency and you are seeking for someone to assess your organizational capacity, traditional capacity assessment tools likely have little relevance to your organization.  In your case, capacity measurement needs to be forward thinking and aspirational rather than the use of a “present or absent” capacity checklist.

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Do you have the resources to make it work? The final question is to think about the resources available to make a facilitation process work.  While this includes thinking about money, it may also be influenced by such factors and time and space.  In some urban areas, the cost of a face-to-face meeting might include 60-90 minutes of commute time on top of meeting times.  Such a commute might negate planning a series of face-to-face meetings.  Commuting time becomes a geographic cost barrier.

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Remember that facilitation consultants should be able to help you untangle the differences between where you want to get to and how to get there.  If you have worked out the four questions above, it is completely appropriate to discuss your rationale with prospective consultants and seek validation or invite alternate ways of triaging the context.  Beware of the consultant who jumps too quickly to, “of course I can facilitate your retreat what date do you want me to do it?”  Remember, hiring a facilitator is starting a strategic relationship that ideally is the beginning of a long-term partnership  rather than a one-time event.

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Coming back to our example of the director looking for innovation in strategic planning but requiring the use of a scenario planning tool, his confusion of goals and tools was easy to reframe.  This agency was looking for a facilitation consultant who uses scenario planning to develop a strategic planning process.  There is nothing wrong with this intentionality because the process fit the culture and resources available.   The point that needs to be made is that hiring a facilitator needs to consider the goal, tools, culture and resources and to the degree that you think through these four issues the process of assessing potential consultants becomes easier.

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The process of hiring a facilitation consultant is challenging.  In fact, much of the traffic that comes to my site via search engines is often driven by variations of the phrase “how to hire a facilitator.”  Hopefully, this post on clarifying facilitation goals and facilitation tools, along with other posts in this occasional series, will better equip your agency to find consultants that will not just “run a good meeting” but will significantly advance your organizational capacity.

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As always your thoughts are welcome.

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Considering the strategic agenda is indeed a critical conversation related to strategic planning.  In addition to exploring what framework supports the culture of an agency, organizations need to assess the strategic domains and create a strategic agenda that will guide a strategic planning process.  If you reflect on the organizational domains of practice it becomes clear that there is a wide range of possible agendas that can inform a strategic planning process.  Let’s consider a few of these organizational domains.

Foundational Agency Capacity:  At the core, agencies grow and prosper based on a clear and bold mission, vision, goals, strategies and operating practices and performance outcomes.  For many organizations this capacity is established and enduring and, in the absence of a significant environmental change (e.g., the periodic disruptive technology in software and computer industries), these foundations will rarely be the primary agenda for strategic planning.

Operating Infrastructure:  At a more tactical level, organizational systems include such functions as human resources, finance, business process, marketing, and governance that each has unique strategic needs as organizations grow and change. Growth, down-sizing and changes in the external environment all keep pressure on the operating infrastructure to adapt and continuously change.

Service Delivery & Products:  Every organization that is healthy and growing strives to improve the delivery of services and products that supports the mission and vision of an organization. Having a strategic, performance improvement mindset about service delivery and products is critical to any organization. Active strategic agenda for managing improvement is critical to contemporary organization.

Resource Development: Still another strategy domain is the volatile domain of revenue development.  How resources flow into an organization need to be considered from the perspectives of reliability, autonomy, concentration and diversification.  Unfortunately, as the recent brutal economic downturn has taught us, the resource development domain does not neatly fit into 3-5 year strategic planning cycle.  Managing resource development is more aptly described as a process of ongoing opportunity and risk management.

Performance Measurement: In an age where advantage goes to those who demonstrate ongoing performance outcomes, thinking strategically abut how an organization measures success is increasingly a standard practice for organizations.  Investments increasingly come with demands to document performance.  Performance measurement, whether it is gauged as return-on-investment, changes in community-level social indicators or some other metric, is one more strategic domain that agencies need to consider in planning.

Organizational Crisis:  A final domain for strategy related to those challenges born out of an organizational crisis.  Some of these challenges or crises are predictable and come with some lead time.  For example, when an organization founder chooses to step out of a leadership role or a new large investment (like a grant in the nonprofit world) is secured. Other crises are caused by random and unpredictable events such as a lawsuit by an employee or an unexpected cut in revenues that force talks of merger.

Considered individually, each of these six strategic domains (and there are likely others) have the capacity to create, expand or narrow a strategic planning agenda.  When taken together, however, it becomes resource intensive and perhaps even daunting to imagine a single strategic planning process capable of adequately addressing all of these domains.  So as the concept of strategy is explored, even as casually as we have in this blog, we can see that critical step in considering a strategic planning process is to define the strategic agenda.  What is the purpose of the strategic plan?  What domain or domains are you addressing and for what purpose?  Without such consideration the strategic planning process can quickly become a consuming task splitting efforts in multiple directions.   “We need help creating a strategic plan,” is not the complete statement but rather it is the stem that is followed by “for the purpose of….”  The focus, clarity and agenda of a well planned strategic planning process needs to be carefully considered before embarking on the planning journey.

In building the case for strategic planning, we move from identifying a planning framework that culturally fits with your organization and now considers the important question of defining the strategic agenda.  However, before embarking on a strategic planning process there are still two more conceptual overlays that include momentum and accountability, which will be the subjects of the next two posts.

*some of the details of the case study have been changed.