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Sins of Omission

John Bauer February 19, 2016 blog, News

Theologians distinguish between “sins of commission” and “sins of omission.” Ethicists devise systems for deciding what makes a right act right and a wrong act wrong. Most religious people feel guilt over breaking of the Ten Commandments as opposed to those things they could have done but didn’t. I guess that’s natural. People aren’t generally held accountable for things they fail to do, especially if there is no rule or command that obligates them to do something. For example, driving past the motorist who is broken down on the side of the road and donating to charity are generally believed to be good actions, but nobody gets punished if they choose to withhold such mercy.

At the same time, we know that most people do feel regret over things that they didn’t do in their lives more than they do for overt mistakes. These are often in the form of missed opportunities or failure to spend more time with family or friends. Some sins of omission can cause significant harm, though. For example, parents who withhold love and acceptance from their children can do damage to their children’s long-term psychological health. Failing to study in school can lead to severe career limitations.

I find it interesting that in Jesus’ story of the sheep and the goats found in Matthew 25, the goats were condemned, not for their evil deeds (sins of commission), but for what they failed to do (sins of omission):

(41) Then he will say to those on his left, “Depart from me, you who are cursed, into the eternal fire prepared for the devil and his angels. (42) For I was hungry and you gave me nothing to eat, I was thirsty and you gave me nothing to drink, (43) I was a stranger and you did not invite me in, I needed clothes and you did not clothe me, I was sick and in prison and you did not look after me.”

(44) They also will answer, “Lord, when did we see you hungry or thirsty or a stranger or needing clothes or sick or in prison, and did not help you?”

(45) He will reply, “I tell you the truth, whatever you did not do for one of the least of these, you did not do for me.” (NIV)

So what does this have to do with executive leadership and board governance?

I have been writing about the responsibility of chief executive officers to cultivate a culture of engagement in their boards of directors. I have even suggested some practical ways in which such engagement can be enhanced. I would further argue that this responsibility of the CEO to “feed and clothe” a positive environment extends to the entire organization.

What I find interesting in most organizations is that you won’t find this critical responsibility listed in the CEO’s job description. In most organizations I am familiar with, the CEO could perform his duties as described in his position description perfectly, and the board could still be highly disconnected and the staff culture remain largely dysfunctional. This may be due in part to the highly subjective nature of interpersonal relations and group dynamics. But it is also because organizations are very reticent about legalizing acts which would most often fall into the affective domain. It is just assumed that an effective CEO is going to be a good person to work for and one who cares about employees, clients, board members, donors, etc., and will do what is necessary to cultivate positive relations. On the flip side, I don’t know of many boards that would fire their CEO for not being loving enough!

Notice, however, that Jesus did not suggest that those on the left violated any kind of commandment such as “Thou shalt feed the hungry.” Nope. The only commandment Jesus ever gave in the realm of human relations was “Love your neighbor as your self.” And therein lies the nub of the matter. Those on the left were not guilty because they withheld food or clothing. They were condemned because they did not show love to their fellow man.

I am writing this primarily to the leaders of mission-driven nonprofit organizations, but the principle is applicable across the entire spectrum of human organizations. If leaders truly believe their role is to serve (be it people, clients, shareholders, board members, investors or whomever) rather than to be served, then there is only one rule to follow: love the people you lead. Examine your heart and test your motives in all your corporate relationships:

Do your employees know that you care for them and appreciate their work to the point that you have their interests above your own, or are you perceived as indifferent and more concerned with your status or control?
Does your board feel that you “feed, clothe, visit” them so their service on your board is not only professionally enhanced, but their engagement is received by you with gratitude?
Does the organization’s culture of service delivery demonstrate love, care and compassion to the people who are supported, or are they viewed as commodities to be managed?
Does the community in which you operate associate your organization with care, love, concern, justice and compassion, or are you viewed more as a business or just another employer?
If your leadership team is not functioning up to its potential, is it “hungry, naked, sick or in prison” and in need of the support, encouragement, coaching, training and leadership that only you can give?
Do you and your organization bring value to the world by enhancing lives, or are you more concerned with monitoring key performance indicators to make sure it is operationally efficient?
Where do you spend your time? With people, or on tasks? And what do you really care about? Getting the job done, or helping people fulfill their potential?

I doubt if these acts will be found in a job description. Active engagement in these activities won’t necessarily lead to big pay increases or a positive bottom line. Nor does failing to address them necessarily represent dereliction of duty – however that may be defined. But failing to do these things can cause harm. Your work will be less fulfilling. Your organization will be emptier. Your board and staff will be less engaged. Your quality of services, support by donors, and loyalty of employees will be diminished.

Sins of omission do have negative consequences. In your leadership role, try to be mindful of how you have been shown love by people who care for you and for whom you care, and then try to reflect that love through your leadership. It is, after all, the most fundamental and universal human need.

If you would like to talk more about what this might mean for you and your organization, please give me a call or drop me an email. I’d love to talk more about this important dimension of leadership.

Photo Source: http://www.philoptochos.org/outreach/projects/feeding-the-hungry-250000-meals

Board Engagement: Creating a Conducive Culture

John Bauer January 26, 2016 blog, News

One of the most common complaints I hear from nonprofit CEOs is that the members of their boards of directors are not ‘engaged.’ What this means can vary, but in general the complaint seems to be about a lack of interest and involvement between board meetings, lack of preparation and participation in board meetings, and minimal support for fund raising efforts.

There are numerous reasons often cited for this apparent malaise. Some suggest that the recruitment process is flawed, or that the CEO has minimal input to board nominations. The notion here seems to be that if more rigor was applied to identifying high-quality board members, the quality of engagement would improve. Better board members would lead to better board engagement. As I have previously written, I was among those who thought that using sophisticated evaluation tools to generate asset matrixes would help identify those individuals who could really supercharge our board and elevate board engagement. And even though I had plenty to say about nominations, usually by feeding candidates to the governance committee, the results were often less than expected.

Others have suggested that ambiguous policies about roles and responsibilities for board membership might be the root cause. The thinking goes that when expectations are clearly articulated, board members would have no choice but to step up their involvement, especially if accompanied by periodic evaluation of director performance. There was a time when I held to this view also, especially as it related to expectations for board members to contribute financially to the organization. Strangely, getting such policies adopted by the board which laid out those expectations in crystal clear language didn’t do all that much to improve board member giving or participation in board meetings. And incumbent director evaluations tended to be ineffective, owing mostly to the reluctance of board members to hold their colleagues accountable.

Still others suggest that the model of governance is to blame, pointing to the need for greater emphasis on policy-based board governance. The thinking is that the use of such a method can lift boards above the traditional milieu of passively listening to staff reports or approving routine recommendations with little discussion. Keeping the focus on policy issues would seem to engage directors intellectually around things that really mattered and away from management issues. With all due respect to John Carver and the good work he did to elevate the quality of board work, in my experience the form or structure of governance, though important, has little to do with board engagement.

Finally, some like Richard Chait have looked at board governance as a critical form of leadership that is best expressed through generative discussion, in contrast to the traditional functional or strategic forms of board leadership. This view considers the intellectual capital provided by board members as the greatest asset to the organization. Generative discussions are those which are focused on the essential challenges facing the organization and are stimulated at board meetings by introducing a critical question and allowing prime time for debate. Background knowledge is provided either before the meeting or as a preface to the discussion. In my experience, such meetings can be incredibly stimulating and valuable to the board and the organization’s leadership. But they can also be painfully awkward periods of silence during which few directors care to engage in debate.

From these experiences, I have come to conclude that board engagement has little to do with any of the foregoing. Don’t get me wrong, they are all important contributors to effective engagement. Getting the right board members is important. Having clear policies around roles and responsibilities is a essential. Using a governance model that works well for the organization is a good thing. Engagement in generative discussion is a good use of board member gifts and abilities. But whether any of these leads to effective board engagement is debatable. I have concluded, instead, that board engagement is a function of something else entirely.

And what might that be? I believe effective board engagement is the result of the “culture” that exists in the board. From a sociological or anthropological perspective, culture consists of the language, interpersonal relations, values, rites, rituals, tools and behaviors of the group. If one thinks about the board in tribal terms, one can begin to see how the board has an identity of its own that is influenced by leaders and followers as they demonstrate the behaviors which are judged to be essential to group survival or functioning.

To illustrate my point, think about any type of human association or organization such as congregations in a particular denomination, or Rotary clubs, or even athletic teams. They all may follow the same liturgy, rules of the game, or agenda. They may all adhere to the same principles (e.g., creeds, 4-Way Test, playbook). They may have within the category the same membership qualifications and a shared vocabulary. But I think you’d agree, if you have been a member of more than one of the aforementioned, that even within a narrow category you will find wide variations among the individual organization’s cultures. Some congregations are dying and worship is boring. Others are bursting at the seams. Some Rotary clubs are adding enthusiastic younger members while others are shrinking or dying out. Some athletic teams find ways to win while others of apparent equal talent can never seem to work together. All within the same narrow categories of type.

Why do some thrive and others fail? In my opinion, it is ALWAYS about leadership. Whether it is the pastor or the club president or the coach, quality leadership is the principal driver of the organization’s culture. The leader shapes the tone, the vocabulary, the values and models of behavior. The leader makes participants feel that their belonging is valuable to him/her and to other members. The leader makes sure that every member of the organization has a critical role to play. The leader creates the environment (service, meeting, game) in which members can express their value and contribute to the benefit of the whole. And no matter what the membership looks like, or the rules of participation consist of, effective leaders find ways to keep members engaged in supporting the raison d’être of the group.

In most nonprofit organizations, this responsibility falls to the chief executive officer. Of course, the board of directors is technically his/her employer and has a chairman who represents the board in its dealings with the CEO. But I would argue that the CEO who is an effective culture leader is one who works in close harmony with the board’s chair to ensure the success of the chair and the board in achieving mutually agreed upon goals. Isn’t that, after all, the very definition of leadership?

My good friend, Byron Tweeten, describes it this way: “In my experience, the most successful nonprofit organizations have developed a partnership between the board and senior management that engages leadership more strongly in a relationship that ensures a smooth transformation and sufficient resources during a time of change.” This means frequent conversations around direction, ownership, vision, engagement, big issues, and how to effectively engage every board member in the process of leading the organization through its governing practice.

Here is a short list of ideas that CEOs might consider if they wish to create a culture that nurtures and supports board member engagement in the manner I have just described:

Use the board meeting’s agenda as the canvas on which to paint the picture of engagement. Is every agenda item crafted to maximize the value of the board?
Dump all non-essential reporting items into a consent agenda and send the reports out ahead of time. That way, if there are any questions, it is up to the board member to actively remove the item from the consent agenda for discussion. Otherwise, all routine reports are approved or accepted en masse. Make sure every item on the agenda is engaging.
Structure the board’s meeting agenda around the strategic plan in order to keep the focus of the organization on mission and vision. Report only on key performance indicators and debate progress.
Allocate a significant amount of time for generative discussion on critical issues.
Task the Executive Committee of the Board with conducting the annual fund solicitation of board members, setting a goal and working collegially to achieve it. In other words, engage board leadership in engaging all board members in reaching a shared goal.
Promote free discussion by resisting the temptation to provide answers to every question. Accept criticism and don’t get defensive. No one expects the CEO to know everything or to be perfect. Getting defensive is a sure way to lose board commitment.
Make sure that board members are having their needs met through meetings. (See my previous post: Board Engagement: What’s In It For Them?
Is shared leadership truly valued? Or does the CEO view the board as a necessary nuisance? That attitude will be evident to perceptive board members and will kill engagement in a hurry. Boards are valued partners and should be treated as such. Do an attitude check.
Set aside sufficient time to educate the board on important issues or challenges facing the organization. Help them in their roles by providing the knowledge tools they need to be more effective.
Hold an occasional board meeting at a location where services are provided so the board can see first hand the good work being done by the organization. Give board members opportunities to interact with people supported, to live out part of the mission.
Conduct an annual board development retreat which focuses on them, their needs, and what they think are ways in which they could be more effective.

So, when CEOs complain to me that their boards just don’t seem to be engaged, I’d suggest they look at themselves and examine their effectiveness in shaping and leading the board’s culture to embody and express the values they wish to see. The fact is that the attitude, disposition and behavior of the CEO as they combine to shape a corporate and governance culture have more to do with effective board engagement than any do any models, policies, tools, or agendas.

Want to comment? Feel free to add to the discussion, disagree, or offer your own theory.

Works Referenced:

Carver, John and Miriam. (Rev. ed. 2006). Reinventing Your Board: A Step-by-Step Guide to Implementing Policy Governance. Jossey-Bass Publishing, San Francisco.

Chait, Richard. (2004) Governance as Leadership: Reframing the Work of Nonprofit Boards. Wiley and Sons, New York.

Tweeten, Byron. (2002). Transformational Boards: A Practical Guide to Engaging Your Board and Embracing Change. Jossey-Bass Publishing, San Francisco.

Sustainability: Alternative Sources of Revenue

John Bauer January 14, 2016 blog, News

Aside from cutting expenses and ramping up the traditional forms of fund raising, what alternatives are there for nonprofit organizations to improve their financial position for the long term? Assuming you are willing to step outside the box regarding fund raising and explore other options with an open, growth-oriented mindset, there are a variety of options available to consider. Here is my short list of a half dozen strategies you might wish to explore. Some of these may seem obvious while others would require expertise above the usual intellectual and professional assets available internally to most nonprofit organizations. Nevertheless, some leaders have found ways to exploit these strategies to their benefit, so I’m not suggesting anything that hasn’t already been tried.

Monetizing Existing Fixed Assets. If your organization is property rich and cash poor, you may wish to explore ways of monetizing your real estate. This is particularly true of organizations that have fully depreciated properties that are paid for. Even if you have no desire to relocate, selling such property to an investment firm with the intent of leasing it back from them might be an effective strategy. Firms that manage large pension funds are especially interested in buying property that has cash flowing through it. Group homes, nursing homes, clinics, office buildings, etc. are good investment vehicles for such firms. The advantage to the nonprofit is that it infuses immediate capital into the organization that can be invested, used for needed capital projects, or placed in a fund to subsidize operating losses. It may even be feasible for groups of nonprofit organizations in the same state to pool their real estate assets and form a real estate investment trust (REIT) or a single purpose vehicle (SPV) to buy the properties, manage their upkeep, and return a portion of the revenue stream back to the organization. Senior services organizations have utilized this strategy effectively.

Renewable Energy. This may not be a viable option for organizations that are situated in urban areas, but I know of nonprofit organizations located in rural parts of the country which own land that could be used to support energy production. Whether wind, solar, waste processing, or biomass, there are companies ready to build and manage turn-key operations to produce electricity and/or natural gas. What they don’t have are the tax credits, renewable energy credits (green tags), bond financing, land, permits, suppliers, buyers, licenses and subsidies that are available to nonprofit organizations. So, being able to lease land to developers in exchange for energy and/or a percentage of the net revenues that are obtained from selling power to the grid may be a possible source of revenue. It may be worth having a conversation with an energy consultant. And if access to the energy that is produced is possible, reduced dependency on a large power grid is seen by many as important in times of crisis.

If you are interested, I can put you in touch with an outstanding renewable energy consultant who is a knowledge pioneer in this field.

Supporting Foundation or Endowment. Of course, it would be great to have a supporting foundation which would kick off earnings every year to offset operating losses, pay for improvements, or enhance services. Who wouldn’t want that? But most nonprofit leaders would say that the first priority has to be making sure salaries are paid and that the lights still go on. I get that. But we are talking about long term sustainability here so what I’m suggesting is that you ask yourself what it will take to ensure the future ten, twenty or fifty years from now. Assuming your organization has an active development function that is working with donors, one strategy might be to impose the discipline needed to create such a supporting foundation through a policy that requires all undesignated legacy gifts to be placed into the foundation or endowment fund.

A foundation is a separate legal entity with an independent board of directors. An endowment fund can be governed by the organization’s board but is restricted by policy. Depending on the size of the organization, either option can work. I’ve had experience working with both models. The key is in developing policies that achieve the objective and meet the requirements of the law.

In my humble opinion, every organization without regard to size of budget, should have a fund set aside to support long term viability.

Social Enterprise. Many nonprofit organizations have supported enterprise activities which generate non-operating revenue. For example, who hasn’t considered starting a thrift store or holding an annual garage sale as a way to raise money? However, through personal experience at an organization that had a network of 22 thrift stores around the Midwest, I can tell you that the days of huge profit margins built on free volunteer hours and low overhead costs are going away. Volunteers are aging and the costs of leasing and utilities are shrinking profit margins. Requirements for paid managers, police background checks for volunteers, and the diminution of qualified employees add stress and expense. Unless you have the capacity to go “large scale” like Goodwill, your return may not be at an acceptable level.

What nonprofit organizations might consider as an alternative, is investing in a for-profit enterprise that addresses a particular supply need within the service area and which could channel some of its earnings to the nonprofit as operating revenue. One example comes to mind in which a large, national service provider acquired a manufacturer of adult diapers. Not only was the business profitable, but the agency had a huge on-going need for its product, which it could now obtain at cost. And if employment opportunities are made available for people supported by the organization, well, that’s gravy on the mashed potatoes!

Another form of social enterprise builds on the in-house expertise of the organization. Sharing that knowledge with others through online webinars, videos, and subscriptions to resources has emerged as a very cost-effective way to generate additional non-operating income. Nonprofit human care organizations are required to conduct a significant amount of employee training. Capturing such training in the form of audio, video and print materials that can be marketed and sold online may provide a return from activities that are already a part of doing business. For ideas on how to explore this form of enterprise, I recommend reading Jeff Walker’s book, Launch. (See the reference below.)

A Google search for “social enterprise” will yield a plethora of learning materials, models and resources. I encourage you to check them out for ideas.

Strategic Collaboration. Sometimes, the cost of operating a nonprofit charitable organization is too great for the agency to remain viable in the long term. Numerous factors may contribute to its vulnerability: competition from other agencies, lack of volunteers, increased overhead expenses, increased regulation, diminishing reimbursement rates for services, and geographic constraints. Still, the mission is noble and good work gets done. To contemplate the organization’s demise is almost immoral. If the mission is relevant and the services meet critical human needs at a high quality of service, then leaders must consider those aspects of the organization that are not “mission-centric.” And what are those? How about all the back office operations that keep the place running like finance, HR, communication, maintenance, technology and all the other things that together comprise “administrative expense?”

What if the mission could be sustained without having to support large administrative staffs? Such thinking opens the door to consideration of forming strategic partnerships with other nonprofit (or private or public) organizations. There are a multiplicity of models and options available that range from very informal cost sharing of utilities to creation of a holding company, and all the way to acquisition or merger. Nonprofit leaders have to at least be open to exploring such options when the very existence of their organizations is being threatened by administrative costs.

However, even if you are open to the prospect of a strategic partnership, don’t kid yourself. There are many forces of inertia that work against such consideration, not the least of which are the feelings of pride, ownership, belonging, identity, and control. Nevertheless, when demise is the other alternative, strategic collaboration must be considered. I would encourage you to at least think about the prospect by formulating a business case for collaboration. Then do a bit of exploring to locate possible organizations that might be approached. Do some initial due diligence to determine if they might be a good partner. Possible partners might be your strongest competitors or they may be private equity firms, insurance companies, or other associations or institutes. Let’s just say that, as we have already seen in the health care field, the possibilities are almost limitless. Only then should you approach “targeted” organizations for exploratory conversations. All this precedes any kind of negotiation.

I’ve negotiated and effectuated affiliations, acquisitions and mergers, both large and small. I also directed the integration of two very large social service organizations. I’d love to explore with you some possibilities that might benefit your organization. For those who are interested in learning more, I recommend David LaPiana’s book, The Nonprofit Mergers Workbook: The Leader’s Guide to Considering, Negotiating and Executing a Merger. For a much deeper dive into the tactics, techniques and tools for effecting and integrating a strategic partnership, I recommend Timothy Galpin and Mark Herndon’s book, The Complete Guide to Mergers and Acquisitions. (See references below.)

Self Insurance. A significant percentage of every nonprofit’s budget is comprised of various forms of insurance. Health insurance for employees it usually the biggest of these, although liability, workers’ compensation, unemployment, property and casualty insurances also eat up a lot of money. Most organizations look at these as costs. But what if insurance was considered an asset that the company owned instead of a product that it purchased? I know this sounds like a way to reduce expenses, and it certainly is, but if you think about your budgeted amount for insurance as a restricted fund that you need to manage in order to maximize a profit return, well, your mindset will change in many ways. For example, I have observed in companies that do go the self-insured route that they pay much more attention to employee health and well-being and work hard to improve safety in the work place. These are “investment” strategies aimed at growing the asset. They also recognize the fact that the organization now carries the investment risk. You can still use an insurance company to administer the program, but when you are carrying the risk for the growth of the asset, the mindset changes completely.

More and more medium to large sized-companies are self-insuring and are finding considerable savings. And there are an increasing number of options available through firms that specialize in constructing such vehicles without having to look at offshore investment firms to shelter funds from taxes. And you don’t have to be a big company. Smaller agencies can pool resources with other agencies to create their own insurance services. In my experience, however, self-insurance is a very viable method to improve financial sustainability.

It may be that none of these options is possible for you. Or you may be saying to yourself, “I don’t know enough to even begin to think about one or more of these alternatives.” That’s ok. That’s probably not why you were hired into your position. But I would say this, if you are interested in learning more about these or other strategies to promote sustainability, I’d love to have a conversation with you. I have experience in all of them and I have connections to professional resources that can give you answers to technical questions. Hopefully, I can point you in positive directions so you can at least gain a better understanding of what’s possible.

Give me a call. I’d love to help.

References

Galpin, Timothy and Herndon, Mark. (2000). The complete guide to mergers and acquisitions: Process tools to support M&A integration at every level. Jossey-Bass. San Francisco.

LaPiana, David, (2008). The nonprofit mergers workbook: The leader’s guide to considering, negotiating and executing a merger. Fieldstone Alliance.

Walker, Jeff (2014). Launch: An internet millionaire’s secret formula to sell almost anything online, build a business you love, and live the life of your dreams. Morgan James Publishing. New York, NY.

Mindset and Sustainability

John Bauer January 4, 2016 blog, News

I just finished reading Carol Dweck’s book entitled Mindset: The New Psychology of Success, in which she describes the difference between having a “fixed” and a “growth” mindset. A fixed mindset tends to view the world as having a limited or fixed amount of just about everything. For example, when we ask if the glass is half full or half empty, we are really limiting our thinking to the capacity of the glass. Take that attitude into the personal domain, and we end up thinking about things like love, money, friendship, work, personality and even intelligence as if they are fixed quantities. In reality they are not. Science has shown that intelligence, for example, when viewed as a constant that can’t be changed, actually leads people to either perform to prove their higher intelligence or fail to perform to confirm their lower intelligence. In contrast, those who have a growth mindset look at challenges as opportunities to grow and learn. They view the world as full of love, and welcome the possibility of positive change in personality, status, and even intelligence.

As simple as this dichotomy may be sound, the ramifications for people in their personal and professional lives are deep and complex. The inescapable fact is that we all have fixed mindsets about some things in our lives. We’d like to say we are open minded and growth oriented, but that certainly isn’t true of us at all times, and certainly not in all aspects of our lives. Cultivating a growth mindset is important if we are to overcome prejudices and limitations that hold us back from achieving our full potential, whether personally, or organizationally.

After re-reading my most recent blog post on sustainability and increasing revenue, I had to acknowledge that I’ve been “hoist on my own petard!” While claiming to have a growth mindset in most things, I wrote the post with a very closed or fixed mindset. So, I believe the honest thing to do for my readers is to call myself out. The second thing I need to do is to talk about it so we can all learn a thing or two about developing and maintaining a growth mindset. Why? Frankly, because in my opinion, having a growth mindset is critically important if we are to successfully lead our organizations through increasingly challenging times!

The other reason I had to yell “Ouch!” when I reread my post was because this is the very essence of the research I did in the 1980’s for my doctoral dissertation. At the time, I was the academic dean of a small, struggling Lutheran liberal arts college. It was a time of stress for private higher education and numerous small colleges had closed or merged. I certainly didn’t want my institution to become another casualty of bad decision-making. So, I set out to determine if the way in which college leaders thought about their institutions strategically was in any way related to their financial resilience – what we now call, “sustainability.”

The model I chose to use was developed by Ellen Earle Chaffee when she was at the National Center for Higher Education Management Systems and consisted of two very different views of the organization. The first view looked at the organization as an organism. Think of an amoeba, for example. It contains a nucleus, cell membrane, and various other common elements of cellular life. Its well-being is influenced by its environment, to which it reacts in order to survive. The types of strategic thinking that emerge from this view of the organization are very akin to Dweck’s “fixed” mindset. If things like the number of available students, the reputation, the amount of tuition that can be charged, the physical constraints of the campus are all quantitatively limited, then the strategies which need to be employed are things like adding high demand majors, lowering admissions standards, appealing to adult learners, cutting overhead costs, etc. The adaptive strategies that come out of such a fixed mindset are all aimed at sustainability within a quantitatively limited environment.

In contrast, the interpretive model of strategic decision-making comes out of post-modern linguistic work and looks at the organization in terms of its meaning to various stakeholder groups. It focuses on interpreting the mission, focusing efforts on telling the compelling story of the institution, interpreting its worth, creating and living by core values, and creating physical spaces that reflect its mission and values. In other words, it interprets meaning.

My research actually demonstrated a strong statistical correlation between the use of interpretive strategies and financial resilience (i.e., sustainability), especially in the areas of fund raising and student recruitment. It also pointed out that those institutions which relied almost entirely on adaptive strategies were among the least financially resilient. In actuality, almost all organizations utilize both types of strategy, but it was those colleges and universities which placed the emphasis on the use of interpretive strategies that had the highest level of financial resilience.

What does all this have to do with mindset and sustainability in nonprofit organizations? Well, as I often say, “It’s always about leadership!” How leaders think about their organization is going to have the biggest impact on the sustainability of their organization. In fact, I believe it is the defining difference between leadership and management. Leaders look for ways to grow their organizations. Managers try to keep them running. Leaders seek to expand the impact of their organization’s mission. Managers try to perform operational tasks more effectively and efficiently. Leaders strive to gain support for the mission and its impact from more stakeholders. Managers rely on established sources of revenue to support operations. Leaders focus on revenue. Managers focus on expenses. Is the organization a machine or organism that has to be kept running? Or is the organization a construction of meaning in a universe without limit?

Ultimately, your mindset affects the way you view your organization’s mission and how you define “mission fulfillment.” If you believe your organization exists to provide a fixed number of services at a set level of quality to a fixed number of clients within a fixed geographic area within a fixed budget, well….. I think you get the drift. On the other hand, if you are passionate about your mission and truly believe in the value you provide to people’s lives, wouldn’t you want to serve more people in more places with more services with higher quality supported by more resources? Of course you would. So, what’s holding you back? Maybe your mindset?

So, back to my previous post about sustainability and increasing revenue. I believe everything I wrote is true. Grant writing in an increasingly competitive foundation market is tough. Improving congregation relations as a means to increase member support is difficult in an era of membership decline. Major gift fund raising takes years and has to be part of a comprehensive, multi-faceted resource development strategy. Special events have their place and can bring valuable stakeholder connections, but require a great investment of staff and volunteer time. At the same time, I confess that the way I wrote about those things gives evidence of my having a fixed mindset – as if there was only so much money to go around in the world. And as a result, I fear that my post came across sounding negative, critical, and even <gasp> pedantic. Sorry.

The important lesson I hope to impart with respect to increasing revenue is this: If we view the world as having only so much money, then we are going to limit ourselves to strategies that help us compete for our fair share of a fixed asset. On the other hand, if we view the world has having opportunities to create capital, to grow or convert assets, or to generate new sources of revenue, then our strategies for sustainability will creatively take us to new places.

Exploring some of those new places will be the subject of my next post, so stay tuned! In the meantime, I’d love to hear your thoughts on how mindset affects you and your organization’s ability to create sustainable growth.

Works cited:

Bauer, John E. (1987). An analysis of the relationship between the use of adaptive and interpretive survival strategies and financial resilience in Lutheran colleges. Unpublished dissertation. Marquette University, Milwaukee, Wisconsin.

Chaffee, Ellen Earle (1984). Successful strategic management in small private colleges. Journal of Higher Education, 55, 212-241.

Dweck, Carol S. (2006). Mindset: the new psychology of success. Random House, New York.