Averting a crisis due to lack of funding

Thursday, May 7th, 2009

Those of you who know me know that I’m a big fan of Thomas Friedman. His book, The World is Flat” changed all of my perceptions about the effects of globalization on marketing.

Tom (p. 357) warns that “niche businesses can get turned into vanilla commodity businesses faster than ever in a flat world.” Companies must constantly assess their competitive strengths and make critical decisions regarding products or services that aren’t differentiated from the competition. Friedman uses the example of the Bank of India. The Bank of India was facing increasing competition and realized that it needed to adopt Web-based banking and become more customer friendly. The Bank of India did an assessment of its core competencies and decided that it needed to outsource data warehousing, document-imaging technology, telebanking, Internet banking, and automated teller machines. Guess who got the outsource contract from the Bank of India? An American-owned computer company. Hewlett Packard.

Today’s marketing strategy is knowing your core competencies and knowing what you don’t do well.

Why do I bring this up? Because nonprofits need to perform, as Friedman calls it, an X-ray of their organizational capacity — before there is a funding crisis. The Virginia Treatment Center for Children (VTCC) was created in 1962 by the Virginia Legislature to provide state-of-the-art service, training and research in the field of child mental health. When the state faced budget cuts and told VTCC they needed to shut down, leadership needed to come up with a new strategy — fast. The lack of stable leadership in the past and fragmented, functional silos within the hospital had caused the staff to feel “under siege.” All were doing their jobs, but did not feel supported by other teams or the state bureaucracy. Asking two critical questions was a brilliant move by administrative leadership:

1. What are the most critical child and adolescent mental health needs and problems in the Commonwealth of Virginia?
2. Within its current resource base, what should the treatment center do to most effectively respond to these needs and problems

Instead of asking “What’s wrong with this institution?”, the leadership asked for people to identify what was right; what critical needs were being met, and how the VTCC could effectively build on those services. The right questions were asked to affirm what was working well. VTCC also sought to stop doing things that it didn’t do well.

Overall, the VTCC sought to establish connections with other human services agencies to provide the services that VTCC did not do well. In essence, the VTCC created a network of service support for the community to enable the VTCC to focus on what the VTCC staff did best. Staff were educated on the opportunities provided by an improved network of services; and a framework and processes to enhance staff communication was developed. As Cohen and Cohen note, “In an era of scarce resources, human services organizations are increasingly forced to establish priorities. The treatment center attempted to establish a balance between responding to a small group of children whose needs required intensive intervention and focusing on enhancing the knowledge and capacity of the broader community through research, training, and consultation.”[1]

[1] Cohen, R. & Cohen, J. (2000). Chiseled in Sand: Perspectives on Change in Human Services Organizations.

What do nonprofit governing boards do?

Tuesday, February 17th, 2009

Defining governance is not easy. If you google “definition on governance,” you will find over 500,000 entries. Governance is a generic term with applications in information technology, Website management, research, corporations. I’ve found that how the term governance is applied in various disciplines is somewhat confusing. That’s why a simple definition for nonprofit board governance may not be enough to gain clarity and understanding.

For nonprofits, relating the process and practice of governing to a familiar or commonly shared experience helps. In my post “On board service“, I use ships. In April, I wrote an article for the Charity Channel Nonprofit Boards and Governance Review. In this one, I use the train analogy. It seems I’m attracted to transportation analogies when describing governance!

From the review in Charity Channel:

Executive Directors who dump a pile of financials in front of board members, expecting them to have the background and expertise necessary to make heads of tails of them, are not meeting their obligations to the board, according to the latest NBGR article by Sherry Jennings. Taking the point of view of a new board member, she writes, “Most of the financial information was incomprehensible to Martin. What was nagging at Martin was that he didn’t feel like he had a complete ‘picture’ of what was going on. The information he had plodded through last night seemed like a box of spare parts.”‘
In If I’m Not Running the Train, How Do I Know We’re On Track? the author uses a down-to-earth story-telling method to drive the point home and offer up the solution.

Caroline Oliver (brilliant author and consultant on governance) likens practicing good governance to riding a bicycle. You need to take the appropriate steps and practice to do it right. She said that the traditional approach to governance is okay but it’s a bit like pushing the bicycle along rather than riding it. Riding a bicycle is difficult at first. One needs to learn a new way of balancing and may fall a few times. But once one is confident and dancing on the pedals, it feels effortless and like flying (another transportation analogy!)

From Caroline’s reflections:
“Most of us want practical solutions and would prefer to skip the theory bit. However, the boards that tend to excel in the way that they practice governance are the boards that have an idea of what they are doing and why – in other words – the ones that have a good theory!”

I would add a good process and good balance.

See Caroline’s article on Creating a Board Dashboard, also at the Charity Channel and her new book Getting Started with Policy Governance