Straw to Gold: Three Years On

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Editors’ Note: For three years now, the Nonprofit Quarterly has charted the progress and response of five nonprofits as they have creatively confronted shifts in the environment. A little over a year since our last update, each of these organizations has something to teach the rest of us. For the previous articles in this series see the Winter 2002 and Winter 2003 issues of NPQ.

In applying the lessons of his book Good to Great to the nonprofit sector, author Jim Collins noted the critical need for organizations to cultivate shared commitment and focus on core values and what those organizations do best, while remaining open to necessary changes in the face of shifting environments.

We would like to involve you in some commentary about the course these organizations have chosen to take. Write to us at the editorial address or via e-mail and share your observations with us. You can also tell us about your own experiences of navigating your work through the unpredictable waters of the current sociopolitical storm.

When we last heard from Power of Attorney, a national intermediary established to provide pro bono legal services to nonprofit organizations, it was reevaluating its programs in light of the impending loss of its sole source of funding—a five-year, five-million-dollar grant from Atlantic Philanthropies. POA’s subsequent challenge rested primarily on defending its value proposition while working to maintain funding as a relatively new organization in a difficult fiscal environment.

Allen Bromberger, head of POA, recently reported that he had effectively shut the organization down, with the exception of a few small initiatives, and gone to work at a law firm where he specializes in legal work for nonprofits. “POA has no funding and no staff,” he explained. “So I am doing the work as a volunteer. The scale is significantly reduced.” Despite the lack of money and personnel, POA continues to operate in those areas Bromberger deems as being worthwhile. “It’s actually pretty refreshing,” he said, while indicating the relative freedom he now has from answering to the demands and requirements of funders. Of course, the down side of these developments is that the organization is severely limited in its reach and impact. Bromberger notes, however, that the 50 local pro bono centers POA supported during its five years of funding are still going strong. “The irony is that, while we are going out of business, our local groups are doing great,” he said. “So at least we’ve left a legacy of which we can be proud.” A victim of dependency on a single funding source, it remains to be seen what the future will hold for POA and its programming.

The Southern Regional Council is an 85-year-old organization dedicated to racial justice in the South. As such, SRC was involved in the South’s most acute struggles for voting rights. It has, in other words, walked through fire, achieved great things, and survived. But sometimes organizations need to muster a very different kind of strength to flourish and remain relevant over time.

As is evident in each of these stories, the viability of any particular organization is dependent on its ability to position itself well in its niche. This positioning requires leadership with foresight and a cohesive sense of purpose and goals. So when we got what we thought was a stellar interview from the Southern Regional Council’s new executive director, Chuck Burris, we were encouraged for SRC. Burris seemed to have a strong strategy that brought together a more focused mission intention and a financing design.

Unfortunately, not two weeks later, we learned that he and the board had come to a parting of the ways and he had left after only 16 months at the helm.

SRC has, since we first interviewed the organization in the winter of 2002, had three regular executive directors and one interim. When executive leadership turns over repeatedly it almost always gives its funding and other partners concern. It implies, rightly or wrongly, that the governance system is not able to (1) choose executives wisely, (2) work well with executives, or (3) both of the above. We cannot know what the story is here, but we wish this important organization the best in devising a path forward.

Meanwhile, in America’s heartland, one organization has been asking itself, “What’s in a name?” Following a shift in funding, especially foundation resources, the Family Conservancy, formerly Heart of America Family Services, began assessing its programs and core service areas. Part of its response was to engage board members more frequently in communication about the status and direction of the organization, as well as to reach out to community groups to ensure the relevancy of its services.

For president Betsy Vander Velde, the ensuing dialogue was less about coping with losses and more about how to make a bigger impact. “Back in the old days we interpreted our mission very broadly, we were all things to all people. Now in the era of declining resources, we have realized . . . that we have to allocate our time and our talent and our resources to where we get the greatest social return on investment. We’ve been engaged in a thorough revisiting of our strategic plan and identified clearly our core competencies, which are parenting and early education solutions, helping families in crisis, and helping families overcome poverty.”

The organization is now moving ahead with its new name and new look—the result of a nine-month process involving external consultants and the board of directors. According to Vander Velde, the name “says that we’re about protecting and promoting strong families. It says we invest in families because that’s where children learn to succeed.” The Family Conservancy is also adopting a new approach that tears down the walls between its various service divisions, for example integrating mental health services into its work with child care centers, and putting more emphasis on research and evidence-based programming. As funding has run out for certain programs deemed less aligned with the organization’s core competencies, leadership has made no effort to renew those sources and instead let other organizations step in to deliver those services.

Vander Velde explained that the organization is also attempting to gain more flexibility by generating unrestricted revenues through individual philanthropy. “We’re pursuing a very professional philanthropic course that is much larger than solicitation of money. It’s very much about finding out who in the community resonates with our mission, and talking to them and telling our story, getting them on board, increasing our volunteer base so that we really can increase our individual base of support.” Despite the numerous apparent changes, Vander Velde says that the organization remains true to its culture and values, but with a much clearer strategic focus.

On the west coast, Shanti, Inc. also underwent a leadership transition when its previous executive director, having been with the organization a little over a year and a half, left for personal reasons. Shanti provides resources to people with life-threatening diseases, including HIV/AIDS and breast cancer. The new executive director, Kevin Burns, moved up from his deputy director position with 10 years’ experience in the organization. This change occurred amidst restructuring efforts stemming from a significant budget shortfall, with cuts in government funding and reductions in individual donations. Like SRC and The Family Conservancy, Shanti turned to the community it served as well as to questions of what the essence of the organization is and should be. The result was a concerted effort to avoid cutting services, in favor of trimming infrastructure. This, of course, was a strategy with its own set of risks.

“Our funding was being cut. It was primarily being cut from government sources. San Francisco took its huge hit in the federal Ryan White CARE funding, which was supporting a great deal of our HIV/AIDS programming. Then the City also took some significant cuts that threatened other HIV/AIDS and breast cancer services. So the decision was made to minimize the impact on direct service programs and program staff by cutting into the other areas of staffing. And so what we were left with was continuing cuts to the support from the government and the government funding, which also paid for some of our overhead, some of our indirect cost, which affect staff not directly involved with the programs.

“Hindsight’s always 20/20. The goal was to not cut services at all. So what we did was cut pretty deeply into the infrastructure. I don’t know if, knowing what I know today, if I would have made that same decision. While I’m still glad that we were able to not cut our services at all, it meant cutting into our development, into our finance, into other areas of the organization which are critical in supporting the programming.

“Clearly, we needed to focus our attention on our individual donors and corporate donors. But a downturn in the economy impacted our ability to fundraise from those areas, and with the cuts into the development staff at the same time, we had fewer people to try to capture the dwindling available dollars.

“We had kept a grant writer on staff and that basically became our primary development person. And with the cuts in other areas of the organization, my role as a deputy director was not re-filled when I became executive director. So the director’s position becomes kind of a, I don’t want to say jack-of-all-trades, but basically trying to continue in my previous role while taking on additional roles, such as fundraising, human resources, etc. I was also in more of a leadership role in the finance area when some of the accounting staff left. I do have to say that the administrative staff was remarkable. In spite of the crisis, and knowing there was likely to be cuts, people pretty much stayed until we had to make the cuts. And, I’m fortunate to have a board that has also been very supportive.

“Eventually, we had become as thin as we could get. I was very open with people and said we’ve cut into the infrastructure as much as we can, now we’re going to have to start looking at services. But let’s do this in a new way. Let’s look at things differently. So I brought all the program managers and directors together and said we had to stop looking at these programs as though they were stand-alone structures in the organization. We’re all in this together, they’re all under the same Shanti organization and let’s start identifying areas where there may be some overlap. Let’s look at the skills of the people we have here, and instead of just keeping them involved in what their job description may say, or what they’ve typically been doing, asking, ‘What other skills and expertise do they bring that can benefit the organization as a whole?’”

“So we started looking at Shanti more as one entire system instead of a set of siloed activities defined by contracts. I think one could argue that in the long term maybe that aspect of the situation turned into a benefit, because instead of being contract-driven, we have been able to become more focused on the overall mission and values of the organization. In this case, everybody got together and we began to get creative in terms of how we did our programming. We identified a number of overlaps and were able to combine some processes. The end result was that we were able to make some cuts in staff but without having to lay people off. We combined some positions because there were some individuals who we were able to take on roles that were slightly outside the scope of what they had been doing, and some positions were cut through attrition. And, not surprisingly, our volunteers stayed with us, focusing in on the mission and not being blindsided by the organizational changes, which were not easy for all of them to understand. In the end our programs are more efficient and cost-effective. And while I fully expect that at some point in time we will need to refill some of the positions, for now we’ve created a program system that is not ideal but is working well enough so that we can focus on rebuilding our fiscal and administrative infrastructure.

“We’re not out of the woods completely, and certainly cash isn’t free-flowing. I scrutinize every penny that is spent, but I’m very happy to say we actually still did not have to cut any services completely. A year ago we were reacting to these funding cuts wondering if the organization would survive. Today, I’m very pleased that we are able to be proactive by embarking on a strategic planning project. In addition, we’ve hired a development consultant to assist with developing a long-term fundraising plan, we’ve been able to create an endowment fund, and are doing some significant board recruitment and development.”

In California, La Raza Centro Legal (LRCL) has undergone a rather remarkable process of internal philanthropy and unwavering commitment to its mission, which seems to be paying off in a variety of ways. LRCL offers direct services to and does advocacy on behalf of low-income workers and immigrants in the San Francisco Bay area. Significant cuts from the Mayor of San Francisco’s office were turned into a choice presented to La Raza staff—layoffs or salary reductions. Staff chose the latter. This decision was coupled with an organizational effort to be fully transparent about the financial situation, including client groups, and improving communication with funders.

Not the least of the reasons why this all works is the organization’s excellent approach to governance. Consider the following statement, which all board members are required to sign:

“By agreeing to serve on the Board of Directors, I am committing to:

• Respect, uphold, and model the organization’s By-laws, process, values, and commitments.

• Recognize and uphold the organization’s commitment to community empowerment, democratic decision-making, and a focus on organizational principles over funding pressures.

• Make an annual personal financial gift to the organization at a personally significant level. If my gift is a pledge, I will complete my pledge payments before the end of the fiscal year. I am showing my commitment to the organization through my contribution.

Participate in fundraising activities annually. I will make specific fundraising commitments at the start of each fiscal year and will follow through on them throughout the year.”

La Raza Centro Legal has carefully considered how to negotiate the sometimes mission-treacherous territory between funder and constituent interests. In the case of LRCL, this forethought was essential because it is one of those powerful organizations that combines advocacy with services. Sometimes, in fact, their advocacy targets include the same government entities that fund their services.

This overlap makes that second (bullet above) statement in the commitment form that each LRCL board member has to sign a critical common precept for governance. Anamaria Loya admits that LRCL would rather not be so dependent upon government funding, but “we’ve learned that no foundation is going to fund direct services consistently at the level that it really costs to provide them. The government, at least in this area of work, will tend to fund for much longer periods of time consistently unless there is some ‘shake-up.’ It’s hard to turn down the government money unless we have to, and there have been some occasions where we have had to refuse government funding. For example, we don’t accept funding that requires that we not serve undocumented immigrants.”

This is, in fact, almost never an inactive question for the organization. “We advocate for day laborer first amendment rights,” she said, “and challenge police activity even though the city is one of our main funders. This stance is core to who we are. Our mission is not just to provide services and empower the community, but actually to have those most affected by injustice decide on and drive our agenda. So with the board, when they are recruited, when they are signing their board member commitment agreements, and when they are talking about fundraising, we talk about the mission and what it means in terms of how we do our work.

Being a politically active organization has not been without some costs in terms of funding. When we last visited with LRCL, the 18-member staff had taken a voluntary pay cut to weather a period during which a chunk of city funding had been withdrawn because of that administration’s political differences with LRCL’s mission. “For two months staff members were on half time salaries and for six months they were on three-quarter time salaries, but most of the staff stayed through. We basically survived that time by getting really lean in every way we could. Now, our funding is restored and we have a healthier relationship with the city’s various departments.”

Still, Loya says they are continuing to be conservative in their spending and are being aggressive with other fundraising strategies, pursuing foundation funding and individual gifts, especially those that might give them an unrestricted balance they might carry as a cushion. But, she says the economy “seems very tight and people are more nervous about giving at an individual level. It’s challenging.”

Individual gifts at LRCL, in fact, are matched by client donations. Most of these are received from low-wage workers who, with the help of LRCL, recover unpaid wages. Between the commitment of staff and that of constituents who also volunteer, this agency has a richness that should be the envy of others with a great deal more cash.

No organization is exactly like another, yet we can learn enormously from the experiences of these five who have so graciously allowed us to follow their progress over the past three years.

We are sure you can see that a few of these organizations may not be completely out of the woods, but faced with daunting economic, and in some cases political, circumstances these nonprofit organizations have often displayed remarkable commitment and resilience as they have navigated with a clear goal in mind the very turbulent waters of our economic and political environments.