Thursday, September 30, 2010

The Listening Project

Connecting Up Australia recently released the Listening Report, prepared after twelve months of active research throughout Australia into issues faced by the not-for-profit sector.

It's a great report. Well, it's a great read, it is very pretty, well laid out, full of case studies, professionally researched and presented. Fantastic. I have just one little, tiny, almost insignificant concern. The report is very short on ideas about how nonprofit organisations should adapt to face the future. There you are, I told you it wasn't a really important thing!

So what does the report tell us? In short, much the same as we have known for a considerable time. What is the main conclusion? It's this. What the sector is doing at present isn't sustainable. So it needs to do something different. That makes sense. What it doesn't do is explain what doing something different will be in a sector dominated by parochial and territorial Boards and Committees more intent of being trustees than leading into the future. What about those over stretched, burned out corps of management and staff involved in service delivery. Have they the energy, time or desire to look up from their tasks and plan for the future?

The report identifies four key issues. (1) Government Funding. (2) Alternative revenue sources. (3) Human resources. (4) Research, capacity building and evaluation. The author's three paragraph conclusion (at the end of 365 days of research, a period of reflective writing and a 36 page report) is this. This project has been useful in that it gathers rich data, highlights common themes and suggests that if the sector was to unite for its common causes, the value proposition would be strengthened and the doors unlocked to a paradigm shift within the sector. Yep. Okay. I get it, not. The way forward is now clear!

It's not that the project was worthless or bad in any way. I just feel the sector, all the Boards and Committees, management teams and those involved in service delivery deserve something better. They deserve some sort of roadmap into the future.

So here it is, well my roadmap at least -

Government Funding - is an oxymoron. If you choose to operate your nonprofit solely on Government funding then you have to accept the restrictions that will be placed upon you. Despite all our dreams, Government funding will never be sufficient. Therefore those management teams that continue to rely upon Government funding as their sole source of revenue or the dominant source of revenue may be doing a disservice to their staff and their clients. The choice of whether staff sit on apple crates and type on outdated computers is made by the governance and management team, not the Government. It is no good blaming beaurocrats for being short-sighted, they live and work to their masters (or mistresses) election time frame. The proliferation of non profits and community organisations mean they have to distribute a finite pool of money to an ever growing number of organisations. I believe the Government should take heed of Carol Mead's suggestions for simplifying the funding process. I also believe that while the nfp sector continues to engage in activities on behalf of Government that are poorly funded, then Government will continue to underfund. Maybe its time to say no to some of the projects available! Any thoughts about the Government providing money without some form of checks and balances into how that money is spent is an idea long past its use by date and should be taken into retirement along with those Baby Boomers unable to adapt to a new and uncertain future. The Board and Management team in any funded non profit need to develop and implement an integrated funding plan that identifies a variety of sources of revenue and develops a range of strategies for accessing additional revenue that then enables more creative solutions to be applied to a wider range of community needs.

Alternative funding - It's time everyone, Government, those in the sector, stakeholders and most importantly Boards and Committees and the general public arrive at an understanding that 'not for profit' does not mean we should not make a profit, it means profits should not be distributed to stakeholders and must be used for service delivery. Yes I accept there are theoretical limitations to the amount of funds held in reserve (try telling that to old established sandstone charities) however it is not about making money for the sake of making money it is about making money to add value to service delivery, to enable creative solutions to be applied outside of the Government funded 'boxes', to ensure sufficient reserves to pay an equitable and competitive salary to key staff, to ensure adequate professional development and where necessary to shore up the gap between Government funding and community needs. Let's stop being precious about our funding sources and our financial surpluses and get on with the job of doing what needs to be done to attract and retain good people and deliver good services. Don't use other revenue to reduce the level of Government funding, use it to reduce reliance upon Government funding and to give your people true choice.

It is also time the sector clearly explained the unique characteristics that define a funded nonprofit organisation. Funded organisations that provide services on behalf of Government are not the same as your local football club. At the community level it is expected volunteers will work for love. This perception cannot be carried over to funded service providers. Yet we persist with a model for funded providers based around the old volunteer community organisation model. Along with that come outdated perceptions of Governance, funding, expenditure, recruitment, working conditions and demarcations between passion and profit.

Human Resources - Stop waffling about the lack of professional development. Yes it's important, however professional development is only a small part of developing an effective workforce. More important is learning how to do more with less. That doesn't mean working people to the point of breakdown, quiet the opposite. Let's find ways to make work easier to do, less stressful, more enjoyable. Let's redesign the workforce. What we have has worked to date but it is becoming dated and less effective; the labour resources of the past twenty years will not be the same for the next twenty years. If we continue with the same workplace strategies used in the past then the sector will go backwards. We have an entire core of predominantly Baby Boomer managers who cannot get over the fact that they dont know the answers. Go to your workforce and ask them how to do it. You might not like them telling you how to run your organisation but I will bet my fee anytime that they know exactly what needs to be done to get the job done. Yes they would likely seek more money and more people, as we all would, however when people realise that hanging onto that belief will likely result in no one working in the sector then they will come up with better ways of doing things. One person, the head of the organisation simply does not have sufficient understanding or knowledge to impose such a change.

Research, capacity, evaluation - evidence, evidence and more evidence. The sector needs to stop hiding behind the old furphy that it is too difficult to measure outcomes that occur over a long period of time. We all know that, we also know its an excuse for not wanting to justify our expenditure. Stop believing the sector has a right to exist and spend money, provided by others without having to explain where and how that money was spent. That is irresponsible. We need to develop the means to provide evidence of community need, evidence of impact and effect of service delivery and evidence of social return on investment. It is the only way the sector can combat negative perceptions of money being wasted. Simply stating that the sector is fiscally responsible because it is audited by multiple stakeholder groups is insufficient and doesnt cut the mustard with those looking in from the outside.

Anyway those are my thoughts. I hope others will either agree or disagree with me and add their thoughts and together a variety of possible solutions will emerge which might, just might be more useful to our non profit sector than those offered in the Listening Report.

Let The Journey Continue
John Coxon

Taking You From Frontline Manager To CEO
Skype: john_coxon
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Telephone: +61 427 390376

Wednesday, September 29, 2010

Preparing for adverse events

Third Sector magazine from the UK reported recently that only 25% of charities have experienced an adverse event in the past two years yet only 44% have in place plans for dealing with threats to the credibility and viability.

Recently while working with a nfp that had weathered a period of bad publicity about internal events I became aware that in this instance, while the organisation had weathered the storm, and while the storm had been predictable, there appeared to have been little in place in the form of prior risk assessment or any form of positive publicity to counter the negative publicity. This is a short sighted practice.

It is my experience the not for profit organisations are good at telling each other how well they do but not very good at telling the whole world about the good the do. We tend to assume the term 'charitable organisation' will protect us from the evils of the world. Once upon a time when charities were entirely volunteer operated organisations there might have been a certain level of forgive and forget. In today's world where charities are managed by professional mangement teams, are responsible for the daily income and lives of corps of employees, compete for funding and for service delivery and market aggressively for donations, they are viewed in much the same way as any profit making organisation might be.

The traditional approach to risk management in a charity has been to (a) keep costs so low that it cannot spend more than it earns and (b) dont engage in activities that stray from the core mission. The traditional risk management activities have been for auditors to audit accounts, the CEO/EO to present financials to the Board or Committee, who then oversee to ensure money is not spend in a 'frivoulous' manner.

There is nothing wrong with that approach, however it is only the beginning of the process of risk management. How would your organisation cope with a major fraud incident, or if the premises burnt down, or if you were taken to court over an employment issue, or if the media exposed some form of dubious practice? The list of possible risk events is almost endless.

True, risk assessment is a bit like life insurance. You dont want to have to have it but you dont want to not have it in the event of your death. How many of you forgo having appropriate insurances in place? Not many, I suspect. We have insurance in place in case some thing goes wrong. It is to late to put insurance in place after an event. Risk assessment is a governance activity. Board members should have in place a process and a timetable for assessing risk and deciding upon appropriate risk management activities.

There are four stages to the risk management process. The first is identifying what potential risks exist and assessing the likelihood of any specific risk occuring and of it having a negative impact. The assessment should cover all areas of an organisation including governance, financial, operational, human resource and service delivery. The second stage is to implement risk management strategies, or in some instances, harm minimisation strategies. The further ahead a potential risk is identified and strategies implemented the less harmful the impact will be. The third stage is to have in place a process for coping with the fallout should a risk event occur. The fourth stage is to evaluate the lessons learned and repeat the risk assessment process.

Health care providers, due to the nature of their environment have in place very specific risk assessment and risk management processes. When your organisation deals daily with keeping people alive then the environment calls for such an approach. Outside of the health sector, where the fall out will most likely not result in death, we have a tendency to take risks for granted. At our peril.

Imagine if a client was to take their life while engaged in an activity at your premises and imagine if the media were to try to make a story of it. Would you have the processes in place to cope with the media attention, would staff know who had responsibility for speaking to the media, would you have in place a set of guidelines for staff using online media sources? How would your organisation cope with a loss of funding, or a service or a competing nfp? Do you have a relationship with the media, can you get your message into newspapers and onto radio or television? Do you have a relationship with a publicist or a media consultant? How well developed are your managers in transitioning people through change or a crisis?

Recently in Christchurch a significant earthquake caused a lot of damage to infrastructure. Another notch up the Richter scale and much of the City would have ceased to exist. Fortunately deaths and injuries were minimal however the disruption to commercial activities has been significant. If some form of natural disaster were to take place in your area, how would protect confidential records, maintain computer systems and gather together people to be able to get back into operation at the earliest moment?

Does your Board choose to plan for the possibility of such events or does your Board and Management simply assume they will be able to make do on the day?