NANOE Advocates for Abolishing Your Board

Somehow, I got on the mailing list of the National Association of Nonprofit Organizations and Executives (NANOE). The brainchild of Jimmy LaRose, NANOE is part of the charity skeptics movement that I don’t often talk about. It’s a champion of the idea that the nonprofit sector should be largely replaced by a socially conscious version of the for profit sector.

The latest email I got from NANOE outlined LaRose’s vision for nonprofit board members. According to LaRose, ‘boardsmanship’ is not about governance, visioning, policy making, or volunteerism.1It’s also clearly not about gender-inclusivity. It’s about advice and accountability. Specifically, it’s about doing a weird handful of things:

Complying with IRS regulations. That seems reasonable, but remember that the board shouldn’t be governing or making policy. So, I’m not sure how they should make sure that the organization is complying with IRS regulations.

Supporting a strong CEO by hiring them, evaluating them, supporting their vision, and providing them with expert advice. NANOE believes that actual power should rest with the strong CEO. That is the person who should determine the course of the organization.

Attending three meetings each year, and approving the meeting agendas. And, of course, getting paid for those meetings. NANOE recommends a board of six people, getting paid $300 per hour for teleconference calls and $1,000 per day for in person meetings. Plus expenses. That means a one hour conference call would cost the organization $1,800. And a one day meeting would cost the organization $6,000 plus expenses!

Approving and amending by-laws. But, again, not making policy.

Choosing and reviewing independent financial and program audits. But, again, not making policy. And, since these are independent audits (and I’m an advocate for independent audits), this really means deciding who to pay for them.

And, according to NANOE, this group should include an entrepreneur (as the chair), a program expert (as the secretary), an accountant (as the treasurer), a lawyer, a communications expert, and a nonprofit expert.

Let’s be absolutely clear: this is not a board. This is a group of paid professionals supporting the executive director’s vision and providing advice for realizing that vision. These are consultants.

Now, I have nothing against consultants; I provide consulting services. But this is a recipe for disaster.

First, NANOE is suggesting abolishing any oversight for the executive director. Notice that no one who the nonprofit serves is on this board. No donors or volunteers are on this board. No members of the general public on this board. Only experts are on the board. And they are commissioned to support the executive. Since they are not empowered to set vision or policy, this severely limits their ability to serve as a check on a ‘strong CEO’.

Second, by suggesting that board members be paid, NANOE comes close to advocating for a conflict of interest. Let’s imagine for a moment that the organization’s donors are from a rare breed that won’t revolt at the idea of a conference call costing $1,800. Paying board members – especially at a generous rate like $300 per hour – creates a risk that board members will see service as an opportunity for self-enrichment.

Together, both of these ideas create an environment that will erode trust in the nonprofit sector. Donors, volunteers, and others are not going to accept the idea that an unsupervised CEO is using their donations to pay a crew of consultants. And they shouldn’t. Members of our communities should be able to trust that the organizations they support are using their gifts of time, talent, and treasure for the the greater good; not for personal gain.

There are bigger issues here, of course. NANOE isn’t just advocating for replacing your board with consultants. It’s advocating for remaking the nonprofit sector in the image of the for-profit one. And that’s a huge problem. But it’s a problem that starts here: with the idea that nonprofits should be about money over mission.

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How Edwins Leadership & Restaurant Institute Is Changing the World

A while ago, I had dinner at the amazing Edwins Leadership & Restaurant Institute in Cleveland, Ohio. I went to Edwins for two reasons. First, it’s an absolutely amazing French restaurant. Second, it’s changing how people in its community move from prison back into society.

Let’s start with the food. Between the four of us (me, my wife, and my wife’s parents), we had roquette salad, a salad special, tofu grillé, steak au poivre, horseradish encrusted salmon with cucumbers and cream, créme brulée, and orange sorbet. All of it was amazing. Even a couple of people who had doubts about whether they would like sophisticated French cuisine left satisfied.

But Edwins is more than an excellent restaurant and a special treat when I’m visiting the in-laws. It’s also a business that’s taking a very purposeful approach to changing the world. And the problem that it chose to address – how ex-offenders reenter society after prison – is a perfect problem for the restaurant industry to address. After all, as anyone who has spent time in the industry knows, there are plenty of former – and, often, current – criminals working in both the back and front of house. Restaurants are where people with no other job prospects end up. And, at their best, they’re where people find real second chances.

Edwins takes that fact and turns it into a mission. It began as a six-month culinary arts program in prison. Now it’s a full service restaurant where former prisoners learn basic culinary skills and other aspects of the restaurant industry while having access to free housing, clothing, healthcare, job coaching, employment placement services, and literacy programs.

And this brings me to the most powerful fact about Edwins. Edwins was started because Brandon Chrostowski saw a problem and got to work solving it.

The most common response to seeing people without jobs today is to create job training programs. We assume that they don’t have skills so we teach them skills. We assume that they don’t have soft skills or middle-class cultural competencies, so we teach them soft skills and middle-class cultural competencies. We might help them with their resume or interview skills. We might help them find some likely employers.

What we (usually) don’t do is give them jobs.

Edwins started as a six-month culinary training program in prison. But the goal wasn’t just to provide training, it was to help people reenter society. So Edwins grew into a place that doesn’t just provide job training… it provides jobs. When Chrostowski saw that housing was an issue, Edwins began providing housing. It provides clothing and healthcare and literacy programs. And, I imagine, it will provide more next year and the year after that and the year after that.

It’s empowering people by meeting needs. And that’s a good thing.

So, if you’re in the Cleveland area, make a reservation. Bon appétit.

Why I Get Nervous about Importing Ideas from the For-Profit Sector

The Obama administration recently banned ITT Technical Institute schools from accepting new students who receive federal loans or grants. Since ITT relies on that federal money for about 68% of its revenue, this could end up forcing the closure of one of the largest for-profit college chains in the country.

This is important. But to understand why it’s important, it’s useful to understand how for-profit colleges like ITT make money.

When a student takes out a student loan, that money goes from the lender – in this case, the government, to the school. For a for-profit school, every student who pays tuition is a net plus.

A good school will provide something of value to those students: a good education ending with a degree that helps those students gain employment. The good school – especially if it’s nonprofit – may even rely on its graduates having good jobs and positive feelings for the school in order to keep going. It needs the voluntary donations of its alumni.

A bad school will maximize profit by keeping the cost of having students as low as possible. It won’t provide a good education ending with a degree that helps those students gain employment. The bad school doesn’t care about the life of it students after they graduate. It made its money as soon as they paid tuition.

The best move for the bad school is to find people who are desperate for a degree, charge the highest tuition they can, and provide very little in terms of education. If the student can pay that tuition herself, the school takes her money. If she can’t, the school can steer her towards a loan; that way, the school makes the money without assuming any additional risk.

Not all for-profit schools have to be bad, of course. And not all nonprofit schools are good. But the ethos that motivates a bad for-profit school like ITT is rooted in the need for profit: maximize revenue, minimize costs. In that regard, it’s no different from other for-profit institutions. If the interests of investors and students align, it might be great. If those interests don’t align, then the students end up debt-ridden, unemployed, and living in poverty.

And that’s why I get nervous about importing ideas from the for-profit sector.

Both Steve Rothschild (in his book The Non NonProfit) and Dan Pallotta (in his popular TED Talk “The Way We Do Charity Is Dead Wrong”) advocate for the idea of nonprofit organizations generating profit for investors. In principle, there are ways to do this that provide financial resources to nonprofits while generating profit for investors. Rothschild provides some examples that look promising.

But we need to be incredibly careful with ideas like this. When someone makes a donation to a nonprofit, his interests are aligned with the interests of the people the nonprofit serves. For example, when I make a donation to my alma mater, I’m doing that because I want students to receive a good education; the students also want to receive a good education. Our interests are aligned.

If I invest in my school with the goal of making a profit, however, my interests don’t necessarily align with those of the students. If providing lower quality services to the students generates more profit, my interests would be met without meeting the interests of the students. And that’s what happens with institutions like ITT.

I’m not saying we can never ever take inspiration from the for-profit sector. Maybe social impact bonds or human capital performance bonds have potential. But stories like this – where we see the for-profit sector taking advantage of low-income people in order to make a profit, in accordance with the most basic motives of the for-profit sector – should make us skeptical of claims that the for-profit sector has something to offer.

After all, it’s a truism to say that the point of the for-profit sector is not to do good, it’s to generate profit.

Two Observations on the Salary Question

Joan Garry recently wrote about a big question in nonprofit circles: what to do with executive salaries? Or, as she phrases it: Is it inappropriate for nonprofit leaders to be well paid?

This is a question that comes up a lot. On the one hand, donors and nonprofit employees are trying to solve big problems, and there’s a risk that paying the executive director a large salary will pull money from other critical areas. On the other hand, nonprofits are competing for talent and a large salary can help attract the kind of executive who will increase the amount of money available to solve the problem. It’s a dilemma, and one that’s hard to find a solution to.

I’m not going to try to solve it here. I’m just going to offer two observations.

First, this question is almost always phrased in terms of executive salaries. Of course, it’s usually also being answered by nonprofit executives. But if nonprofit executives are concerned about the larger issue of pay equity – and not just trying to justify their own salaries – then this question needs to be expanded. The conversation about pay needs to include development staff, program staff, technology staff, administrative staff, custodial staff, and everyone else.

Second, the answers to this question always compare nonprofit salaries to for-profit salaries on the basis that the for-profit salary is normative. We tend to think that the for-profit leader making a $400,000 a year in total compensation is the benchmark, and that nonprofits need to be able to compete with that in order to attract the talent we need. We don’t question whether it’s reasonable for that for-profit executive to be making about eight times the median household income in the United States. This is a conversation that should include earners (and non-earners) throughout the for-profit, nonprofit, and public sectors.

Neither of these observations are meant to imply that Joan’s post isn’t a very good one. They’re just to say that the conversation about pay equity needs to be much, much bigger than a conversation about nonprofit executive pay. And it needs to reflect the values that the nonprofit sector embodies.

We Need to Have a Better Conversation about Overhead

For the last several years, the nonprofit sector has been having a very serious conversation about ‘overhead’. It’s a conversation that stems from a very real problem: many donors believe that nonprofit organizations should spend at least 77% of their budgets directly on the services they provide. That might not sound like a big deal, but nonprofits – like other organizations – also need to spend money on staff salaries, office supplies, fundraising and marketing efforts, and so on. And while there’s no agreement over what nonprofit organizations should be spending on overhead, there’s broad agreement that ‘as little as possible, even if it hurts the organization’ isn’t the right answer.

The problem is simple: the spending patterns that donors want to see (very little overhead) and the spending patterns that help organizations solve social problems (more than very little overhead) don’t match. And the very serious conversation is important.

But there are deep problems with the conversation we’ve been having. One of the big problems came to my attention in this recent post from Amy Eisenstein; it’s a post about the Wounded Warrior Project scandal.

For those of you who aren’t in the loop, Wounded Warrior Project is an organization that serves veterans wounded in the military actions that followed September 11, 2001. It’s an organization that does very well financially, receiving more than $300 million in donations in 2014. Earlier in 2016, CBS News reported that the Project was spending lavishly on conferences and events. Serious questions arose about whether the organization was wasting donor money, and in March the Project fired its CEO and COO while claiming that the core problem was that the organization ‘grew to fast.’

And normally, that would be it. Wounded Warrior Project would have to work on rebuilding trust with its constituents and the rest of us would move on.

Eisenstein, however, uses this as an opportunity to participate in the very serious conversation about overhead. In her post, Steve Nardizzi – the now-former CEO of Wounded Warrior Project – is an example of a great leader, “a real inspiration to fundraisers everywhere” who shows “provided unprecedented leadership and growth to Wounded Warriors.”

“Somewhere along the way,” she writes, “he crossed a line.”

Yes. The Wounded Warrior Project scandal isn’t about well-qualified and effective staff being paid well.1But, seriously, let’s have some humility when it comes to executive pay. Nardizzi had an annual base salary of $375,000. Many people in the nonprofit sector would defend that kind of salary because someone in a similar position in the for-profit sector would make that amount or more. That’s all well and good, but we also need to ask whether anyone needs to be making that kind of salary. It isn’t about fixing broken chairs. It isn’t about replacing outdated computers. It’s about lavish parties, first class accommodations, and suing smaller organizations. It’s about failing to deliver on the promises that the Project made to donors… and to wounded veterans.

In other words, it’s not about overhead. It’s about waste.

And a big problem with our very serious conversation about overhead is that we’re too fuzzy on that difference.

Here’s the thing. I don’t think it’s that difficult to convince supporters about the value of overhead. People understand that we need to spend money on salaries and buildings and office supplies and on community building. All we have to do is connect that spending to our missions.

People will understand… if we can show them how our spending improves their impact.

That’s going to take some work. The first step is to admit that there’s a difference between overhead and waste.

Overhead helps us work, grow, and improve lives. Salaries for staff who attain greater outcomes are overhead. Software that helps us understand out clients better is overhead. Communication vehicles that help us build communities and create change are overhead. And I believe that people will understand that.

Waste doesn’t help us work, grow, and improve lives. Custom made maracas with the logo for every staff member is waste. Entering a meeting by rappelling down the side of a building is waste. Annual conferences as five-star resorts are waste. Shiny new toys that don’t advance the mission are waste. People understand that.

In order to have a better conversation about overhead – in order to have one that really is very serious – we need to take a serious look at our spending and think about what is overhead and what is waste. It’ll be different for every part of the sector, but only once we’ve done this can we start really thinking about what an appropriate amount is and how to educate our donors about it.

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There Are Shop Boys, and There Are Boys Who Happen to Work in a Shop for the Time Being

Recently, I watched the movie Stardust, based on the novel by Neil Gaiman. A few days later, I read a white paper from ideas42 titled Poverty Interrupted: Applying Behavioral Science to the Context of Chronic Scarcity. A similar idea – or, at least, an idea that looked similar when I saw at them one after the other – appeared in both.

The protagonist in Stardust is a boy named Tristan (Charlie Cox) who lives in a village called Wall. Wall is named for the wall that runs alongside it, a wall that has a gap that leads to a magical world. Tristan has a crush on Victoria (Sienna Miller), who sends him on a quest to bring her a fallen star. That quest leads Tristan through the gap in the wall and to the magical world of Stormhold where he meets and captures Yvaine (Claire Danes), a fallen star. On their journey back to Wall, they have adventures, fall in love, and are pursued by a witch who wants to take Yvaine’s heart in order to gain eternal life.

There is a moment when Yvaine and Tristan have been captured by pirates. Yvaine notes that, when she was a star in the sky, she used to watch people having adventures and envied them. Here’s what Tristan says: “Look, I admire you dreaming. A shop boy like me… I could never have imagined an adventure this big in order to wish for it. I just thought I’d find some lump of celestial rock, take it home and that would be it.”

And here’s how Yvaine replies:

If there’s one thing I’ve learned about all my years watching Earth, is that people aren’t what they may seem. There are shop boys, and there are boys who just happen to work in a shop for the time being. And trust me Tristan, you’re no shop boy. You saved my life. Thank you.1Matthew Vaughn (writer, director) and Jane Goldman (writer), Stardust (Los Angeles: Paramount Pictures, 2007), Netflix

“There are shop boys, and there are boys who just happen to work in a shop for the time being.” That’s a big statement.

There are boys who are shop boys. There are people who, deep down in the very fiber of their being, belong in a shop. It is who they are. It is who they always will be. Even if they work somewhere else – if they become pirates, for example, or kings – they will still be shop boys.

And there are boys who just happen to work in a shop for the time being. They are something else.

Similarly, in Poverty Interrupted, I came across this:

How do you describe the services your organization provides? What about the people you serve? The role your staff members play? These questions have implications far beyond organizational “branding:” the language you use and the labels you apply can have an outsized impact—positive or negative—on who takes up your service, how they use it, how your staff treats them, and the way their participation affects their self-esteem or self-image. If you conceive of someone as a “recipient” or “case,” for instance, it’s easier to adopt a mental model of her as a passive recipient of support than it would be if you referred to her as a “member,” “customer,” or “participant.” Because your mental model will shape your behavior toward her, a “recipient” may begin to believe that she is indeed needy or dependent.

In this paper, for instance, we’ve deliberately avoided using constructions like “needy families” and “poor people” to describe families living with low incomes. When used in this way, these words subtly reinforce the widespread perception that these families are qualitatively different from the rest of us, rather than regular people caught in a particular economic circumstance. When they are people first, and low-income second, it becomes easier to acknowledge individual situations, rather than to fall back on personal or societal stereotypes about “the poor.”2Allison Daminger, Jonathan Hayes, Anthony Barrows, and Josh Wright, “Poverty Interrupted: Applying Behavioral Science to the Context of Chronic Scarcityideas42 (2015), 44. The authors also discuss the importance of how we title staff and name programs. What we call things makes a difference.

To put that another way: there are poor people, and there are people who just happen to live in poverty for the time being.

Actually – and I think the authors of Poverty Interrupted would agree – I’m not so sure that there are poor people. There are only people who just happen to live in poverty. And that’s an important distinction. A lot of organizations act as though there are poor people, as though there’s something ontological about poverty. A lot of the people making the case against charity act as though there is something ingrained about being poor.

But there isn’t something ingrained. ‘Poor’ isn’t an ontological status. There are simply people who just happen to live in poverty. And if we work together as a community, they just happen to live in poverty for the time being.

And while I can’t promise that I’ll be good about avoiding terms like ‘the poor’ and ‘poor people’, I will try to be aware that even in my writing it is important to treat people as people first and low-income second (or third… or thirtieth).

There are, after all, shop boys, and there are boys who just happen to work in a shop for the time being.

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Lansie Sylvia: How to Give: Should I Start My Own Nonprofit?

So go out onto the corner and multiply the number of bars you see by 21 and think about what it would feel like to open up a bar on that newly envisioned corner. That’s what you’re up against in the charitable marketplace, because foundations and donors range from local to regional to national, and you’re going to need all of those levels of support to survive.

Career Paths and Calling

I’m on the mailing list for Mazarine Treyz at Wild Woman Fundraising, so recently I got an email about “winning the game of fundraising careers.”

It started with a short summary of what Treyz was looking for in a career before she became a consultant: she wanted a job at a university, where she “could have resources to succeed in my job, like a decent database, plus fundraising colleagues who would mentor me, and a career structure, and move on up to a position that paid enough to take vacations to Paris.”

Of course, she’s willing to give the reader some free advice on how to get one of those coveted university positions. And she’s willing to charge for more advice.

I’m not going to begrudge Treyz her dream job or her advice. I’ve been to her webinars. I’ve read her blog. I might even pay for her conference. She is a good consultant.

And we all have our own paths to follow and our own goals to reach.

But I’m troubled by the idea of ‘winning at the game of fundraising careers’. I say that as someone who’s been accused of trying to become overqualified for the kinds of jobs I want.

There are people for whom fundraising – or other nonprofit careers – is about getting a comfortable and lucrative position. I know some of them. They’re fine people who are often very good at their jobs. But I’m not one of them.

I’m a fundraiser because it’s a way for me to make the world a better place. I’m a fundraiser because it’s how I can feed the hungry, clothe the naked, and free the oppressed. I’m a fundraiser because, as Frederick Buechner would put it, it’s the place where my deep gladness meets the world’s deep hunger.

When I take classes at The Fundraising School, it isn’t so that I can get a higher paying job. When I earned my CFRE, it wasn’t so that I could vacation in Paris. When I read the latest research or attend a conference or watch one of Treyz’s webinars, it isn’t so that I can be more comfortable. It’s all so that I can help community-based organizations, progressive congregations, and the people who support them make the world a better place.

Even more, I believe that those community-based organizations and progressive congregations deserve someone with those qualifications and more.

For me – and I suspect for most people in the nonprofit sector – this isn’t a career, it’s a calling. It’s not a game that I’m trying to win, it’s a vocation that I’m trying to live out.

And I bet that’s also true for Mazarine Treyz.