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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.

Sustainability: Increasing Revenue

John Bauer December 22, 2015 blog, News

Whenever I hear the question of sustainability raised by nonprofit boards and CEOs, it usually reflects a concern about not having sufficient, stable sources of revenue to meet the operating expenses of the organization. Obviously, continuing annual losses in operations will inevitably lead to organizational demise if balance between revenue and expense can’t be achieved. Because nonprofit charities which rely on government funding have virtually no control over the rates at which they are reimbursed for services, other “non-operating” sources of revenue have to be sought.

On the assumption that nonprofit organizations are doing their best to control expenses – a subject best left for another blog post – the concern about sustainability most often gets expressed by CEOs in terms of ramping up fund raising efforts. Four general strategies seem to emerge from the dialogue: 1) hire a grant writer, 2) hire a congregation relations director, or 3) launch a major gift fund raising campaign, or 4) hold more fund raising events. There are a number of problems with thinking that any or all of these fund raising strategies is the goose that will eventually lay the golden egg.

First, with respect to grant writing, there are more nonprofit organizations today seeking more dollars from about the same number of foundations. Among the 1.5 million nonprofit organizations in the U.S., about 950,000 are classified as “public charities,” that is, those organizations serving families, children, people with disabilities, aging, as well as educational and health care related organizations. This number is up over 20% from a decade ago and represents 67% of all nonprofit organizations, up from 57% in 2003 (National Center for Charitable Statistics, 2013 Report). And while the assets of foundations have shown modest growth, that is due almost entirely to the improved economy and the stock market. In other words, it is not due to an increase in the number of foundations or to significant amounts of new investment in those foundations. That isn’t to say that effective grant writing to sympathetic foundations shouldn’t be pursued. It is only to point out the increased competition for funds from an asset pool that has not shown much growth.

Another problem with reliance on grant money comes from the fact that most grants are written around specific projects or programs. In other words, very few foundations fund grant requests for operating revenue. They are looking for high-impact projects with measurable results. While this may be a way for an organization to jump start a new program or service, or help with building or expanding needed facilities, it is not generally a viable option for increasing general operating revenue. In fact, I have seen numerous instances in which a grant-funded project required additional organizational resources to maintain, and once completed, was not financially sustainable.

The second flawed strategy is the notion that nonprofit organizations which had their roots in faith communities should further engage those churches or synagogues to increase their financial support. For a variety of reasons mostly having to do with accepting government funding, nonprofit charitable organizations have grown far beyond the capacity of churches to support them. While many faith-based organizations had their origins in one or more local congregations, most nonprofit agencies of this type have long since moved beyond relying on limited dollars from the members of those churches. In this case again, the statistics tell the tale. Mainline and traditional denominations have experienced precipitous declines in membership over the past four decades. Why some nonprofit leaders think that greater engagement of congregations in the mission of the organization is going to generate more revenue at a time when those churches are experiencing their own budget declines due to membership losses is a mystery to me. And if greater engagement with congregations is intended to identify potential donors from within the membership rosters, well, I have seen firsthand how defensive some pastors can get when it comes to soliciting funds from their members.

The third faulty idea is the notion that if you just hire the right fund raising professional to launch a major gift fundraising campaign, long term sustainability can be achieved. I have nothing against hiring the best available fund-raising professionals, but resource development is a long term, incremental, and complicated process. Identifying, informing, cultivating, engaging and eventually soliciting major donors takes place in the context of a long-term, trusting relationship between the donor and a significant representative of the organization – usually the CEO. Also, major gifts are rarely the first gifts given by a donor. They are the result of numerous other giving opportunities that have been developed and expanded over many years. These might include event support, responding to direct mail, becoming a regular contributor to the annual fund, and participating in other intermediate giving vehicles such as charitable gift annuities or creating a charitable remainder trust. Arriving at the point where a donor can be solicited for a major gift, and hopefully a planned estate gift, takes more time than is available to an organization that is already experiencing budget stress.

Another factor to consider is that major gift campaigns are not always the best way to generate revenue for ongoing operating needs. Major giving campaigns certainly may contain aspects of operating support, but are usually directed at bigger and more “sexy” initiatives such as capital projects, scholarship funds, program launches, or new market startups.

And for smaller organizations that depend on annual fundraising events such as banquets, golf outings, rummage sales, etc., simply holding more events would seem to make sense. But does it? I have seen first hand the time and effort it takes to mount a successful fund raising event. These tend to be exhausting to staff and rarely generate the net profit that justifies the time and effort. That’s not to say that events shouldn’t be held as part of a comprehensive fund raising program. I am personally familiar with two very successful private schools in Milwaukee that raise considerable revenues through their events. They would be crazy to discontinue these events. But if anyone suggested that holding two such events per year would double the revenue…well, I think the staff would laugh as they walked out the door.

Instead, fund raising events should not be thought of exclusively as vehicles for raising money, but also as means to engage and cultivate potential donors. Good fund raising professionals know that events can play a significant role in donor development. But these are generally considered entry level activities to attract new supporters. The real key to resource development is to follow up on event attendance and begin to develop a personal relationship with attendees and donors.

So, if there are limitations to these traditional forms of fund raising, where can additional revenues be found to help ensure mission sustainability? Let me give you a short list of some of the ways nonprofit organizations can diversify their sources of revenue:

Supporting foundation
Enterprise ventures
Alternative energy
Online giving
Monetizing existing assets, e.g., real estate
Strategic collaboration
Fees for services
Government contracts

I’ll start to explain these in more detail in my next blog post, so stay tuned! I also plan to share some good information with you about looking at the expense side of the budget as well. In future posts I will share some strategies for making tough priority decisions related to program viability and relate these to building a strategic vision for sustainability and growth.

Have questions or comments? Feel free to respond.

Board Engagement: What’s In It for Them?

John Bauer December 3, 2015 blog, News

A recent national survey of CEOs of Lutheran social ministry organizations revealed a fairly wide-spread concern about the challenges they face in identifying, recruiting and engaging qualified individuals for their boards of directors. Almost universally, CEOs talk about how hard it is to find board members who are committed to the mission, bring important skills and experiences to the table, and maintain a high level of engagement and support throughout their terms of service.

Some boards and their CEOs have found it valuable to map the skills of board members to determine gaps or deficiencies in the composition of the board, highlighting areas of need that should be sought in prospective board members. I have been the author of elaborate matrixes which document the education, professional experience, qualifications and interests of board members. I have created elaborate processes for ensuring that the right mix of age, cultural and ethnic background, professional expertise, church involvement and a host of other attributes are represented. And I have worked to create portfolios of potential board candidates to make sure that a good pool of successor candidates was always available. And of course, as the CEO I always wanted to make sure that I was in a position to recommend just the right candidate for the Nominating Committee to consider. And yet, I can’t begin to tell you how many times I was disappointed when outstanding candidates would decline my invitation! How could they? I needed them! They had everything our board needed!

As I have thought about this challenge, it now occurs to me that a very important perspective was absent from the process. Of course, we know what value we want board members to bring to our organizations, but do we ever think about what value we can bring to them through their involvement on the board? In other words, what’s in it for them?

Reflecting on the various reasons I either agreed to or sought membership on boards of directors, I realized that the reasons varied considerably, depending on the board and its organization. The reasons I chose to join a particular board had more to do with what I wanted from the experience than did consideration of the skills or qualities I thought they needed from me. That isn’t as selfish as it sounds. It just reflects the reality faced by many who are asked to serve on boards and the factors that go into their decision.

Let’s assume that all good candidates are altruistically inclined and have a genuine interest in your organization. They admire your mission and may even be willing to support it financially. But let’s also look at some of the things they might hope to obtain from membership on your board. If you desire greater commitment, engagement, and support from them, consider their perspective and what they hope to derive from their membership on your board. Here are a half dozen values you could cultivate with your board to help meet their needs:

Fellowship. I have talked to board members who rave about their experience on a particular board because of the opportunity it provided to interact with like-minded professionals, people like themselves in terms of interests or passions, or colleagues who had become very close friends because of their board experience. Does your organization promote collegial interactions among board members by providing enough free time for fellowship?
Education. I recall my mentor describing his involvement on a board of directors as one of the most enriching learning experiences of his life. That board’s meetings always included guest speakers of some significance to educate the board on some facet of the business or the economy. Is board education part of every meeting?
Intellectual stimulation. High quality board members do not find fulfillment in listening to operations reports. They wish to be engaged at a high level in such a way that they feel they can contribute their knowledge and expertise while also being challenged by the diverse perspectives of others. Some call this “generative thinking.” Is your board’s agenda structured to give board members the opportunity to use their intellectual capital to advance the organization’s mission through issue-focused dialogue? Are board meetings fulfilling to them intellectually?
Connections. Besides the fellowship and friendship that can be cultivated, many board members look at their membership as a way to make business, professional or community connections. For example, when I was the CEO of a large social service organization, I actively sought membership on the local hospital board of directors as a way to become more involved in community affairs and to create points of engagement between our organizations. Do you think about the connections you can offer to prospective board members through their membership on your board?
Social Engagement. Board membership doesn’t have to be only about work and meetings. Many organizations invite spouses to accompany their board members to selected meetings and support socializing through dinners, fund-raising banquets, events, picnics, parties, tours of facilities, or volunteer opportunities. I have seen many close friendships develop among board members and spouses which endure well after their terms of service on the board come to an end.
Stewardship. High quality board members have an intrinsic need to give of themselves to something that will make a difference in the world. Whether it is money or insight, influence or time, talent or companionship, the best board members are those who, out of the richness of their hearts, desire to give to your organization’s mission. They have a need that you can meet. CEOs should start thinking like fund raising professionals who know that their job is really helping donors do with their resources what they have a passion for. Do you provide opportunities through your organization for board members to fulfill their need to give of themselves?

The bottom line is that searching for high quality board members might be more fruitful if current and prospective board members were actually asked about what they desire to get from the experience, and then organizing their participation in such a way as to provide value to them. I can guarantee that you will have a more highly engaged and committed board as a result.

Mindful Leadership

John Bauer November 1, 2015 blog, News

I recently had occasion to read Harvard psychologist Ellen Langer’s seminal work entitled Mindfulness (De Capo Press, 1989).This ground breaking book has spawned many subsequent studies which have taken her findings and applied them to diverse fields. The word itself has become a term of art for the practice of staying intellectually attentive, creating new contexts and categories of meaning, and implementing new frameworks or perspectives for work, play, problem solving, and life in general.

The opposite of mindfulness, of course, is mindlessness and the impact of the latter on organizations is evident in phenomena such as conflict, fatigue and burnout in leaders and stunted potential, boredom, and feelings of helplessness among employees. Organizational effectiveness can also be diminished and opportunities for growth hindered.

This has me thinking about my own experiences working with leaders who seem to be struggling, who seem to be drowning in the repetitiveness of their jobs or who have lost the joy and excitement of leading others, and whose organizations have plateaued as a result. In contrast I have observed executives who always seem to find ways to get a “second wind” and to bring new energy and motivation to their work – who periodically reinvent themselves and their organizations for even greater accomplishments.

Langer’s research has demonstrated that “changing of contexts…. generates imagination and creativity as well as new energy. When applied to problem solving, it is often called reframing.” However, “changing contexts is only one path to innovation. Creating new categories, exploring multiple perspectives, and focusing on process all increase the possibility that a novel approach to a problem will be discovered” (p.136). The challenge to managers is to risk deviation from the routine way of doing things.

It is possible for organizational leaders to find their “second wind” if they can become more mindful. Stepping outside one’s comfort zone is often difficult, however, especially for managers who have become entrenched in a consistent style or who have cultivated employee relations based on stability and consistency. If managers can take the risk, challenge their previous ways of thinking and acting, and engage employees in similar exercises of mindfulness, a great deal of energy can be generated with employees feeling more energized and valued for their contributions.

If managers feel they can’t function as the internal “disrupter,” they may have to identify an “outsider” who has the capacity and the credibility to challenge the status quo and who can stimulate this kind of mindful thinking. Such outsiders may come from within the company, but very often independent consultants can fill that role more effectively. An outside consultant is typically engaged on the basis of recognized knowledge in mindful leadership, has demonstrated skills and experience in leading others into new modes of thinking, and can constructively challenge others, including top management.

This is where I come in. Many CEOs of smaller nonprofit organizations lack the insightfulness or courage to employ individuals to serve as disrupters of the very systems and processes they developed to keep the organization functioning. And rare is the CEO who is confident enough to be challenged by contrarians within the organization who are willing to “rock the boat” or “step outside the box” in order to encourage innovation or greater efficiency. A skilled consultant, on the other hand, can notice things that others take as untouchable givens. “Just as a traveler to a foreign culture notices what people indigenous to that culture take for granted, an outsider in a company may notice when the corporate natives are following what may now be irrational traditions or destructive myths. When routines of work are not familiar, they cannot be taken for granted and mindfulness is stimulated” (Langer, p. 137). As an outside expert, a consultant’s perspective has a measure of objectivity and credibility, as much because it is being paid for as it is because of the unique or revelatory insights it brings.

The question for CEOs of nonprofit organizations is, “To what extent is the mission of our organization being hindered by mindless thinking and action?” And the correlative question is “How can I become a more mindful leader?”