Let me start by giving you a sense of three places where our firm has worked with several organizations in a single community. Each has its own distinct and quite exceptional set of challenges and the nonprofit, foundation and government managers in these places do so in particularly demanding contexts.
Rhode Island is our home base and its state government is facing the worst deficit in its history…the state is short $500 million of a $6 billion budget and that number is growing every day. The "Governor's Budget" published in April offered nothing but draconian cuts to social service spending and threatened to de-stabilize several components of the sector. The battle is on to pit one group of vulnerable people against another in a resource war like no other...the elderly in nursing homes, the developmentally disabled, the mentally ill, the children of illegal immigrants, etc. The agencies that serve these constituents are facing losses of 30-35% due to the combination of increased costs of energy and health insurance coupled with revenue cuts of 20-25%...all of which will come due in the next 18 month period. Our Rhode Island work is about retrenchment, consolidation and alliances, about influencing public policy and about managing in a crisis environment.
We have worked in New Orleans for over seven years, watching with horror when much of what was accomplished before Katrina seemed to wash away over night and have also watched with awe at what has returned. Here it can be clearly said that among the unsung heroes of the recovery of New Orleans are the nonprofit managers, both service providers and foundations, who have effectively restructured their services and investments to assist in the reconstruction of an entire city, of an entire society. However, the challenges keep coming: the withdrawal of national funds that flowed into the city since Katrina has begun. The sector will need to continue its reinvention to adjust to a new city with different demographics in an economy that is affected by the housing crisis and the uncertainty of the national economy.
Calgary, has, in the words of some, experienced its own kind of disaster. Clearly, the challenge for nonprofit managers here is keeping a hold on its workforce. The upward pressure on prices of housing and energy coupled with the explosive growth of the City and the inability of immigration to keep up with workforce needs has caught the nonprofit sector in a financial squeeze that undermines the ability of many organizations to provide continuity of care and to maintain the quality of what they do. Most of health and human services are based upon the quality of the relationship between the person at the boundary and the person receiving help...rapid flux inevitably undermines effectiveness.
These are the contexts for much of our work.
There is a reason that the Chinese say that "May you live in interesting times." is a kind of curse. Clearly the sector's managers in each of these locations understand the truth in that. It is hard to interact with people who have only known how to build and expand, whose entire careers have been about expanding access, adding services, pushing out to wider geographic areas, inventing new ways to help, building teams of staff that have taken years to assemble and refine, when your message is about undoing, pulling back, shrinking, eliminating services, crafting a smaller, tighter, more nimble organization, letting people go. Too often the people who are adversely affected are not just employees, not just colleagues, but have, through a career of shared proximity, become friends. This is just painful to watch.
Of late, however, we have begun to observe an emerging skill set that nonprofit leaders, in particular, are exhibiting to adapt to these challenges and sustain and allow their organizations to prosper through periods of rapid transformation. I'd like to share with you six skills that seem to be making a profound difference for some agencies.
1. The ability to not confuse the ends with the means
This boils down to maintaining utter and profound commitment to core values, to the essence of what you do, while expressing complete flexibility in how you do it.
2. Knowing when to fold
Faced with significant cuts in one program, several agencies have had to decide whether to give up the program or support it with revenue taken from elsewhere in the organization. Faced with the potential of doing nothing well, we have watched one leader after another make the tough call to shut down programs. Facing up to the bitter truth, and helping others to face the bitter truth, is part of this skill set around knowing when to walk away.
3. Knowing when and how to fight
We have logged several examples of where groups of organizations have found their voice and used their collective power to influence how change unfolds or to postpone or ameliorate the change. This has involved quite delicate and artful negotiation but has also, at times, involved a parallel strategy of demonstrations and/or legal action. There is a time to hang tough and the leaders we see are astute at understanding the timing and circumstance of resistance.
4. The willingness to make tough calls, to place task above relationship in a crisis
Dealing with crisis requires giving orders that may negatively impact employees. It may require decisions to lay off substantial numbers of staff or major realignment of roles and responsibilities. The leaders we know don't quail at the thought of ordering major change.
5. Knowing how to shrink
There are basically two approaches to shrinking an organization. One creates a smaller organization that is exactly the same as the larger previous entity. The other tries to identify the key elements of the organization that are likely to be most adaptable or most capable under conditions of uncertainty. We call this skill set retrenchment planning and it involves the ability to make decisions about who will go and who will stay based not upon something easy like seniority, but on careful thought about who, on the other of the cutbacks, will be best positioned to rebuild the organization. Those decisions can be about identifying the core group of people with the necessary competencies, or the core programs that are most likely to recover quickly, or the core set of values that must continue to be expressed.
6. Playing well with others and the ability to make new friends quickly
Networks and collaborative models are emerging in all three locations. The ability to negotiate collaborative relationships and to recognize the need to develop relationships with CEO's who may be viewed as former competitors is our last major skill. And it may be the most important. In two of our three locations there is enormous pressure to consolidate the sector. The skill of positioning your organization within these emerging system changes may be the most important survival skill of all.
In our cynical moments, we think of nonprofit organizations as dependent entities that cannot exist without funder investment. To get that investment in any quantity, nonprofits often appear to be sheep-like and compliant, followers and not leaders. And certainly in all these contexts we see organizations who simply, like deer caught in a headlight, are standing stock still and waiting to be rescued or told what do to.
In thinking about what all of these organization leaders have in common and what that list of skills actually imply, I have come to the conclusion that it is largely a matter of locus of control. Nonprofit leaders who see the destiny of their organizations as something separate and apart and clearly in their own hands are far more likely to exhibit these skill sets and to navigate effectively in these very troubled waters. It is certainly our privilege to learn from them and to support them when we can.
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