‘Capacity’ a big challenge for nonprofits

By Todd Cohen

GREENSBORO, N.C. — At a workshop at the O.Henry Hotel in Greensboro in October, 80 nonprofit representatives spent four hours learning how to use social media to tell and target their stories to supporters, constituents and partners.

The session, provided by the Guilford Nonprofit Consortium in collaboration with the Cone Health Foundation, reflects growing awareness of the need for nonprofits to strengthen their organizational “capacity.”

“The good quality of life we now have in Guilford County is at stake,” says Donna Newton, director of the Consortium, a program of the Community Foundation of Greater Greensboro that works to help build the capacity of local nonprofits.

“Nonprofits change the world for the better,” she says. “To continue to do that in today’s environment, they have to become more efficient and effective.”

Capacity challenges

Organizational challenges facing nonprofit include developing their staff and board; their back-office, including technology and support for human resources, finance and accounting; their delivery of services and programs; and their fundraising and development of resources.

“If you increase a nonprofit’s capacity, you increase their sustainability, and their ability to weather change,” says Amy Lytle, executive director of HandsOn Northwest North Carolina, a Winston-Salem nonprofit that provides professional development and training, along with tools, resources and networking, for local nonprofits.

Leadership gap

National studies have forecast a looming exodus of nonprofit executives, fueled by the imminent retirement of Baby Boomers, along with widespread stress and burnout, often because of a lack of support from their boards and a lack of investment from funders.

Nonprofits “can’t fulfill their mission and serve their constituents without depth of leadership,” says Jeanie Duncan, president of Raven Consulting Group in Greensboro.

Leadership, along with the continuing need to develop resources and smart strategies, and execute the strategies, are the biggest challenges facing nonprofits, she says, and the ability to develop resources and strategy depend, in turn, on effective leaders.

The role of leaders

Duncan, former president and CEO of the United Arts Council of Greater Greensboro, says nonprofits’ ability to sustain their organizations is fragile, typically because of a lack of leadership, succession planning and leader development.

While many nonprofit leaders are well-prepared on their organization’s mission, product or service, they often lack skills to deal with fundamental leadership roles such as “influence, negotiation, conflict resolution,” she says.

“Management is more tactical,” focusing on tasks such as managing personnel matters, fundraising, marketing, conducting programs and outreach,” she says. “The problem I see is that leaders are more skilled on the management side than the leadership side.”

Developing leaders

Newton says an executive director of a nonprofit, particularly a smaller organization, “is the person who does everything,” particularly fundraising if the nonprofit cannot afford a staff member to handle fund development.

And to deal with all their other responsibilities, she says, executive directors lack the time required to work on fund development, as well as the support systems such as donor databases that are indispensable for effective fundraising.

And while they typically have experience at event fundraising, she says, executive directors often lack experience in raising money from individuals, who account for over 80 percent of charitable giving in the U.S.

The Guilford Nonprofit Consortium offers a range of workshops, roundtable discussions and other resources, including a Board Development Academy it launched a year ago.

Board relations

Duncan says the relationship between the executive director and board chair is the most critical relationship at a nonprofit.

“They have to be on the same page with the priorities of the organization overall, and together they have to ensure they have both the right staff and board leadership for where the organization is currently,” she says, and “for where it is headed.”

If the relationship is strategic, the most important role the executive director and board chair can play together is “recruiting the board leadership,” Duncan says.

Back-office support

A recent survey of its members by the Guilford Nonprofit Consortium found the top priorities for sharing services were financial services, information technology and human resources, Newton says.

Human resources, for example, is a huge issue for nonprofits, she says, mainly because many are small and lack the staffing keep up with HR rules and regulations, and deal with personnel issues.

The Consortium is considering offering a package, developed by the for-profit HR Group, to help nonprofits farm out their HR function at group rates, and also offers a lunch-and-learn series, plus a manual, presented by the HR Group.

And it offers a monthly IT roundtable lunch that looks at topics such as free online services or how to assess and plan for using technology, and it is considering ideas to help nonprofits outsource their technology needs.

Resources and strategy

Another key challenge for nonprofits is to diversify their revenue resources, Duncan says.

“If you’re over-reliant on any one or two sources of revenue, and they disappear, then your organization is left extremely vulnerable,” she says. “That goes back to leadership, being able to think creatively and strategically about how you uncover or develop revenue sources you may not have had previously.”

Equally important for nonprofits is the need to be “constantly thinking ahead,” she says.

“Thinking ahead is also about leadership,” she says. “What are you doing to develop your board and staff leadership into the future, and your programming.”

What works

With research showing investment in leaders is the most effective way to strengthen nonprofits, Lytle says, HandsOn Northwest North Carolina offers a broad range of leadership programs and workshops.

It offers a program for women who hold mid-level jobs at nonprofits, for example, providing an intensive two-day session on the essentials of leadership, followed by a course on nonprofit essentials that is offered for a half-day every month for 10 months.

“We made a strategic decision a couple of years ago to focus on leadership development and leadership capacity, both at the staff and board levels,” Lytle says. “Leadership provides the vision, and that often is what inspires your board and can inspire funders and can lead to innovation and efficiency.”

Duncan says leader development “must be part of your DNA as an organization,” with professional development built into the work of leaders and staff, she says.

That includes giving staff members projects to lead and “stretch” assignments, while also connecting them to peer networks and providing them with mentoring and coaching.

“All of those things are ways to bring leader development into your organization in a way that doesn’t cost a lot of money,” she says.

Investing in capacity

Investing in efforts to strengthen nonprofits is critical, says Lytle, whose organization receives most of its support from foundations.

“If you believe nonprofits are doing important work in building the fabric of our communities,” she says, “then you need to be able to invest in those institutions, and they need to be able to invest in themselves.”

Newton, whose organization receives support from eight local foundations, most of it from half of them, says the investment in capacity pays off.

“It sells itself to our funders,” she says, “because when they start dealing with our active members, they realize they are far more proficient at managing their organizations.”

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