When Bad Things Happen to Good Agencies: An Opening Series of Observations

By Robert Hyfler, PhD

The sociologist C. Wright Mills once observed that a single marital divorce can often be attributed to factors unique to that couple while a significant increase in the divorce rate indicates that larger societal issues are at play. So too, the spate of financial crises, bankruptcies and overt scandals in the nonprofit world begs the question, “what’s going on and what can be done about it?”

I would posit that a collection of factors have led us to this point:

• The increase in the number of executive skills and roles required at the top, not easily managed by a single individual – visionary, fundraiser, financial manager;
• The bad collective decision that being “fundraiser in chief” tops all the other roles and skill requirements of the CEO;
• The ego and hubris of highly compensated executives who are reluctant to admit that they are seldom experts in all things nonprofit and hence do not balance their unique skills with those of others. CEO’s can be too late in seeking the advice, counsel and direction of others within their organization and on their board.
• Nonprofit boards that overly defer decision making and oversight to their CEO’s;
• A 21st century trend among the best and brightest – philanthropists, laity and professionals – to be overly focused on specific outcomes and projects and not on organizational and structural issues and the systemic health of agency networks;
• To borrow the language of Sir Isaiah Berlin, the nonprofit world has too many “hedgehogs,” focused on one supreme philanthropic goal and one overarching strategy to get there. We lack “foxes” who understand the need to balance multiple ends and multiple approaches and can hence change course when events and opportunities present themselves.
• The privatization of major gifts philanthropy which has diminished the talent available for board involvement, structural ownership, partnership and direction and can take an individual agency, “on the whim of a large gift,” into new, at times inadvisable, waters;
• A tendency (by no means universal) among our wealthiest 1% to disrespect the talents and culture of the nonprofit world and recreate nonprofit structures in their own image;
• The at times productive and at times uneasy partnership between the government sector and the nonprofit world where competing value systems, ways of doing business and definitions of financial accountability conflict. Couple that with the allure of large government contracts – even when they undermine the culture, mission and long term viability of the agency.

The corrective to the above ills begins with the following:

• The introduction of a serious system wide discussion on the above points, individually and in total;
• An increased examination and consideration of collective executive leadership where the individual at the top shares powers and responsibilities with others possessing complimentary skills and where multiple checks and accountability mechanisms are in place;
• An awareness among boards of directors that neither the CEO nor the chairman of the board are omnipotent in all things organizational. On too many boards the CEO is seen in Technicolor while subordinate leadership are perceived in black and white;
• The recognition that fundraising may be a vital, essential executive function but is nevertheless a by-product of organizational mission, programmatic uniqueness, service excellence, integrity and vision;
• A culture of humility and servant leadership among our top executives. We must eschew any sense of personal entitlement and remind ourselves that we entered this “business” to change the world for the better. Attractive yet reasonable compensation packages are a pleasant additive that can and should be expected with success.
• A renewed focus on the health and interdependence of our nonprofit system and the structural supports necessary for effective service delivery and programmatic outcomes – executive training programs that balance the why, the what and the how;
• A sustained re-empowerment of nonprofit boards with a co-commitment to board accountability. The reset of roles should also include an examination of the strengths and limitations of consultancies that can at times be as much a part of the problem as part of the solution.
• A recognition by even the wealthiest and most powerful philanthropists that their nonprofit activities serve a “public good” and hence must be held accountable to communal and public input, collaboration and oversight. Two, ten or even twenty philanthropists coming together in a room does not in itself constitute a “public” endeavor;
• A serious re-examination of public-nonprofit partnerships with due and equal respect for each of the sectors, their purposes and cultures. (As a final aside, the voluntary sector has public policy interests but political advocacy is not our founding mission.)

Bob Hyfler, currently an organizational consultant, was recruited to the voluntary sector in 1981. He can be reached at [email protected]