May 22, 2015; Olympian

As Baby Boomers begin to retire from their long-term CEO roles with nonprofits, the best of them will leave behind their thoughts about what makes an extraordinary nonprofit executive. NPQ intends to reprint the best of these for widest possible distribution. Director Charles Shelan announced his retirement from Community Youth Services in Olympia, Washington, effective July 31st. He has several insights on what it takes to run a successful nonprofit.

  • Community Trust is Essential: In order to function successfully, nonprofits must have the trust and support of the communities in which they serve. A nonprofit board, as well as the staff, should be well trained and motivated. “Board members must not have any conflict of interest and should not enter into business relationships with the nonprofit.” Volunteers are also crucial to nonprofits; not only does recruiting volunteers help the organization educate the community, but it also gives residents purpose and buy-in to the charity.
  • Keep Overhead at the Right Size: There is no question that nonprofits have a significant amount of labor needs, and that this is where a lot of expenses are focused. Technology can help to improve efficiency, but should not substitute for personal relationships. Debts should be kept to a minimum so that funds can be used for direct services. Any large purchases should be made through capital campaigns or bonds. Administration costs should stay between 12 and 20 percent.
  • Focus on Human Capital: Nonprofits need to decrease staff turnover so as not to lose funding to recruiting, hiring, and training new staff. “Ways that nonprofits can improve retention include: paying a living wage, providing adequate benefits including retirement, providing ongoing training and evaluation, holding staff to high standards, and supporting and encouraging staff.” With the funding and resource climate of the nonprofit sector, organizations need to work together and not in silos. Strategic partnerships need to be developed.

While Shelan’s points may seem obvious, they are often breached by nonprofits. For instance, his point about board members not entering into business relationships with the nonprofit is often negotiated away in bits and pieces, taking with it reputational resilience. A good example of this may be found in a recent NPQ newswire about DuPage College in Illinois. Shelan’s points about human capital could be the basis for a book. Without fairness to staff there can be no engagement, and without engagement the organization will function at a self-limited pace as people guard their energies for other scenarios that value them to a greater degree.

We are grateful for Shelan’s guidance both to those who are taking up new mantles and those that want to do better in the positions they already occupy.—Erin Lamb