Five Essential Challenges that Nonprofits Need to Consider!

Appropriate executive compensation is a critical tool for every Jewish (and other) nonprofit when recruiting and retaining the best talent. Without a continually competitive compensation package, those professionals who were drawn to the nonprofit sector in the first place are apt to wander.

by Robert I. Evans and Avrum D. Lapin

Activist and fundraiser Dan Pallotta’s compelling “The Way We Think About Charity is Dead Wrong” (see below) shook up the Internet recently. As a “charitable entrepreneur,” Pallotta invented the multi-day charitable event industry with the AIDS Rides and Breast Cancer 3-Days and he now runs a full-service “brand and inspiration agency” for the humanitarian sector.

In considering five challenges in the nonprofit sector that Pallotta highlighted, we see definite messages for the Jewish nonprofit community.

Challenge #1: Staff Compensation

“We have a visceral reaction to the idea that anyone would make very much money helping other people,” Pallotta rightly noted, affirming that we rarely have the same reaction to people making lots of money by not helping other people. “If you want to make $50 million selling violent video games to kids, go for it and we’ll put you on the cover of WIRED magazine, but if you want to make $500,000 trying to cure kids of malaria you’re considered a parasite yourself.”

Securing professional leadership for any nonprofit is key to its success as the old model, counting on volunteer leaders to step in, is gone. While hiring decisions need to be made smartly and within the context of the organization’s mission, they must be made with the knowledge that their organization is doomed without professional leadership that is capable of ensuring that the work of the nonprofit always advances, and not something done in a dedicated leader’s spare time.

Thus, appropriate executive compensation is a critical tool for every Jewish (and other) nonprofit when recruiting and retaining the best talent. Without a continually competitive compensation package, those professionals who were drawn to the nonprofit sector in the first place are apt to wander.

“Many Jewish nonprofit professionals understand that when they cannot move up in their organization or there is no place else to go but out of that particular nonprofit,” says Ben Brown, founder of JewishJobs.com. “Many of these candidates have many skills and find that they can often get hired and move up in the for-profit world.”

Takeaway:
Invest smartly in employees. For all nonprofits, this could include flexible commuting, additional paid time off, or other benefits beyond salary. Career coach Lavie Margolin agrees. “The compensation package is a key component when looking to remain competitive.”

“There is a major difference of full medical coverage versus an employee contribution of 40%,” he contends, enumerating some of the ways nonprofits can satisfy prospective and current employees. “As many nonprofit professionals are on the road to advanced degrees, employer contributions to defray the cost of degrees could be a real difference maker.”

Challenge #2: Advertising and Marketing

“We don’t like to see our donations spent on advertising in charity … as if the money spent on advertising couldn’t bring in dramatically more sums of money to serve the needy,” Pallotta argues. Specifically, digital advertising is often the last line item on a nonprofit budget. Yet, there is an argument to be made that it should be the first.

Every major corporation today is dependent on its website and social media presence to reach new customers and convey its “value proposition” to the world. A professional, unique, and well-designed website is a critical indicator of reputation and trust to consumers. A strong website indicates a strong and vital business. Yet, so many nonprofit websites are outdated, hard to use, and poorly branded.

There are a number of reasons why this happens, with cost being a primary factor. Jewish nonprofit organizations seemingly have been especially slow to take advantage of the power of the internet. We believe that donors should be able to visit an organization’s web site for timely, compelling, and persuasive information. Too many Jewish organizations seem to view their web sites as passive, promotional vehicles. And without a webmaster in charge, organizations fail to update their information frequently and adequately.

Takeaway:
Creating and managing an effective website requires an investment of time and professional expertise, but it is time and money invested wisely. With the ever-evolving tools available on the Internet, building a professional, easy-to-update website is easier and more cost effective than ever before. Each nonprofit must establish a website that communicates its own individual philosophy, programs, and “business” to donors, constituents, and potential friends. This cannot – and must not be – an amateur’s learning experience!

Local colleges and universities can be great resources for web development work, as well as informal social networks. Spread the word that you are looking for a web developer and designer. Often, a relatively small investment is enough to develop a site that will truly open the doors of communication.

Challenge #3: Taking Risk on New Revenue Ideas

“Nonprofits are really reluctant to attempt any brave, daring, giant-scale new fundraising endeavors for fear that if the thing fails, their reputations will be dragged through the mud,” Pallotta contends, and this is one of the reasons the nonprofit sector is stuck all too often trying to solve new problems with the same ideas and approaches. “When you prohibit failure, you kill innovation. You kill innovation in fundraising, you can’t raise more revenue. You can’t raise more revenue, you can’t grow and if you can’t grow, you can’t possibly solve large social problems.”

Yet the Jewish community contains some of the sectors’ earliest adopters of new ideas. Mr. Margolin gives this example: “Some organizations in the Jewish nonprofit sector were quick to seize upon resources on social media to market themselves out of necessity. It was an evolutionary process … organizations are taking videos that show the impactful work they are performing or sharing videos from clients or participants who are so happy to be involved and this brings passion.”

Too often, nonprofits do not project out far enough to substantiate their innovative inclinations. If a new campaign or marketing effort is part of a larger five-year plan to develop new donors, than a low return on the first year’s mailings does not reflect a failing, it reflects steps in a process. However, Jewish nonprofits must create compelling and realistic Business Plans to strategize about these long-term objectives, and assuage the early doubts of investors that must be counseled to stick with the project beyond Step 1 and for the long-term.

Takeaway:
Create a business plan. A business plan offers organization and guidance in decision-making to leaders and is an increasingly important tool being sought after by for prospective major donors. In the undisciplined charitable climate that we find ourselves, every iota of business sense that is demonstrated together and in concert with the embrace of caring and compassion enables the nonprofit to climb one more rung on the credibility scale and ultimately on the priority scale of prospective supporters.

We, at EHL Consulting, have both witnessed and counseled the more expansive use of business plans emerge and establish itself as a component of the decision-making process in the minds of prospective donors, and in the realm of good organizational leadership and governance. While we recognize that it is an adjustment for many nonprofit executives and managers it is one that is being made by many and must be joined by all.

Challenge #4: Time

Today’s increasingly complex and competitive environment requires nonprofit agencies to continually advance their efficiency. Prospective top level volunteer leaders and major gift donors expect that the community-based organizations that they lead and support are managed with care and commitment to excellence that will enable every client, student, or congregant to be served appropriately and completely.

Unfortunately, limited staff sizes see many nonprofit workers (especially fundraising staff!) often “wearing many hats” and being stretched too thin to accomplish immediate tasks, without the time to brainstorm and develop long-range strategies. For example, when was the last time that you stopped to think about these key questions:

  • Why are we really raising money?
  • What impact will this fundraising campaign really have on our agency and its ability to succeed?
  • What are our strategies for success this year and how will it affect our budget and ability to achieve our mission this year and for the next five years?

Takeaway:
All too often we see agencies cutting corners, sacrificing a measure of their success by “making do.” And while we understand the beckoning of the bottom line and the budgetary limitations facing every nonprofit, we do underscore the utility and the value of setting aside time to think about “big picture” agenda items that will truly inspire major donors to make an investment in your future, right now. Create a mini-staff retreat, or reorganize your weekly staff meetings, to take the time to address and answer the critical questions that you may be “too busy” to prioritize, but that you cannot afford to overlook. Only by knowing where you want to go will you be able to figure out how to get there.

Challenge #5: Profit to Attract Risk Capital

We often hear people remark that nonprofit organizations should operate like businesses, but charitable organizations don’t make widgets or cars. They enable individuals and communities to succeed at achieving their mission and goals by doing what they do: education, culture, counseling, pastoral services, and addressing quality of life issues.

Nonprofit organizations that operate with the direct or indirect financial support of the public must take that support and public trust seriously by operating with up-to-date business practices using acceptable business instruments and tools. One of these tools includes attracting the types of donors who are willing take a risk on helping your organization achieve its most visionary and ambitious goals.

Takeaway:
We contend that nonprofits are not “businesses” but rather service institutions that depend on operating with critical business practices, and those practices sometimes include the taking risks. We believe that pursuing these practices will help nonprofit leaders understand the nature, scope and priorities of their constituencies sharpen their capability to market themselves and their services/products, and position themselves to obtain the dollars that will make it possible for them to grow. Whether they are businesses or function with contemporary and effective business practices, it makes good business sense!

Conclusion

“We should be investing more money, not less, in fundraising because fundraising is the one thing that has the potential to multiply the amount of money available for the cause that we care about so deeply.” – Dan Pallotta

The old fundraising adage goes, “If you don’t ask, you don’t get.” We must ask ourselves, as a community, several critical questions. How are we holding the nonprofit sector back? What changes can we make to help the nonprofit sector succeed? What we will get is a new way of thinking, a new way of working, and hopefully … a new way to save the world.

Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of The EHL Consulting Group, a fundraising consulting firm located in suburban Philadelphia. They are frequent contributors to eJewishPhilanthropy.com. The EHL Consulting Group is one of only 38 member firms of The Giving Institute. EHL Consulting works with dozens of nonprofits on fundraising, strategic planning, and nonprofit business practices and strategies. Learn more at ehlconsulting.com

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