External Challenges for Your Nonprofit

Nonprofit leadership is comprised of 70% passion, 20% cash, and 10% acrilo-polyester! And it’s the ten percent that often creates discouragement, doubt, and self-blame. Certainly, I agree that you could have prepared better, read more and made better decisions and removed the 5% acrylic. There is no perfect Executive Director although I thought I was ??.

But today I want to talk about the 5% polyester. That is made up of constraints for your agency that are external! They make you feel bad and they have to be handled. But you didn’t cause them. You’re feeling false guilt. And I’ve got some intel ideas to respond.

1.??????? Competition - Nonprofits compete with each other and are structured that way. Most of us feel bad because we hate to lose and we are told that it’s wrong to think about nonprofit work as competition. It’s reality to use the word!

Competition, Competition, Competition.

There are a finite number of clients in each niche. There is a finite amount of cash in government contracts to disburse. Your gain is my loss. In New York City, there are networks of churches and service agencies that distribute food. It was a relatively stable environment until the COVID crisis. Suddenly most public schools were giving food out free every day. There are only so many hungry people in a given area. Did the new provider care how it might dislodge or interrupt the delivery systems of others? As one director said after her application was rejected for an RFP, ‘The only thing I hate worse than a sore loser is a good winner.’

Private companies expect competition, but the nonprofit mystique is that we are all a community of providers joined at the heart. The real metaphor is a food court. The court gives everyone visibility, but we hope everyone will choose our stall.

How can you respond? You can study competitor behavior and impact gaps. At times, a new and smaller nonprofit agency is agile and efficient compared to a historic and larger competitor. I have a tool to analyze nonprofit 990 reports, and trends over ten years can be fascinating. What opportunities does your smaller size give you that a large agency cannot duplicate?

Similarly, look for impact gaps. Constanza Counseling has received city contracts and private clients to reach a revenue of $1 million. Highline Community House in the same area offers counseling and its budget is over $20 million. No one expected Title 42 immigrants from the Texas border to come every day. ?Constanza pivots quickly and hires Spanish speakers for refugee trauma counseling. Highline has a three-year strategy and reviews it twice a year. By the time they adjust their strategic plan, Constanza has received another million in city contracts and now has a revenue of $2 million. While this is just an illustration, the truth is timeless. Outsider organization size makes them agile and established larger organizations often have cumbersome processes to protect against loss instead of maximizing gain.

2.?????? Oversight and Control - The government oversees human service activity much more than its review of private companies. When Trump wanted to build a new hotel in Manhattan, he got a 40-year tax exemption. But if you want to start a new homecare service for seniors, you will find regulators and inspectors running in crowds as you scale. Not to give you a 40-year tax exemption either! While some regulation is needed, inspectors also delight in checklists where something bad can be found during a visit. Preventing fines drains energy from mission and vision for most CEOs. They're too tired.

What’s the determined answer? Ramp up efficiency. Government contracts assume an operation's efficiency comparable to their own workplace. So they come out to measure our activities instead of results and expect a large middle management team because that’s what they have in government. If you are under $6 million in revenue, try to work with three levels - staff, manager, and C-Suite. This can be done with effective communication. Delegate more authority to front-line managers and pay them well. They are smarter than you think they are. Your managers will feel pressure, but their self-respect and confidence will soar! What can you do with the extra cash? Develop additional missional impact in the contracts as though your mother, brother, or granddaughter were the client.

3.?????? NonProfits of Privilege ?- If we could draw a marketing map for your area, we would observe that alumni from a few universities, politicians, and entrenched civil servants have secret backchannels to help the nonprofits of privilege. How do you know? One indicator is that suddenly you turn around and Noblesse Nonprofit has started a program at your back door. You scroll through emails fruitlessly, trying to find which email you missed of the contract opportunity. Of course, there was none. It was the NonProfits of Privilege system at work. Often the nonprofit that you envy got large by collecting a lot of quietly offered programs and cash from foundations and government.

Determined answer? Buy your way in! Govindarajan says that we always need to be working on a project outside of our competence. He says that you may have to hire a consultant or buy a smaller company that already does what you want. Some nonprofit consultants move in these areas of privilege. Work out a plan of the type of contracts or grants that you need and engage them to carry the ball.

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4.????? Ecosystems – Is your nonprofit geographically based or communication-based? In each case, ecosystems develop. The baker, the banker, and the candlestick maker all know each other. A staff member at Horizon Homeless Services is married to a staff member at Elgonto Pediatrics in the same neighborhood. A rich communication system develops either online or in the street or hybrid. It’s not destructive. It’s the normal gossip that is generally good for an ecosystem. The trouble happens when you arrive with your excellent nonprofit program. You offer a critical resource but it’s unconnected to the ecosystem. As John Maxwell says, ?‘One is too small a number to achieve greatness’. You may get to the top of a hill by yourself and get the program launched, but the effort feels like you just climbed Everest.

What can you do? Either enter an ecosystem or Find a partner to start your own. Rogers Park After School partnered with a pediatrician. Both partners work with kids in noncompetitive ways. They are both helped a lot by access to the clients of their partner. Ecosystem magic.

5.?????? Giving – Giving of gifts under $100 declined by 14% last year. Giving of gifts of $100 and up declined by 5-6% in every category.* This is a structural issue in society. Your pressures in fundraising would not have changed if you went to one additional training or wrote a better email. Charitable giving is in decline.

Where does determination take you? There was one source of gifts that went up 9%. Donor Advised Funds. Approach your community development agencies and they often have smaller pools of donor-advised funds. While they don’t control the fund, they can make suggestions. Make sure that they know about Valley DropIn Center and when a donor wants to make a youth development gift, your agency will be a possibility.

This is a mixed blessing because wealthy people can use large gifts to reorder the basic work of a nonprofit. So Richie RIch says to the Valley AfterSchool DropIn Center, ‘I’ll renovate your building for $5 million if you stop supporting gay teens after school. What is the determined Executive Director going to do? What will you say to the Board if you refuse the gift? Are you determined enough to go for donor-advised gifts and maintain your core values?

There is more material on my app at 10xExec.passion.io . Check the modules for Courageous CEO, and Marketing and Development.

Stay determined!!

Ronald Tompkins' coaching website for determined leaders is at www.TAConsulting.Live

*Independent Sector Report