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A New Executive Walks into a Nonprofit…

Ruth McCambridge
March 9, 2017
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“Peace to all who enter here,” by Shawn Campbell

March 8, 2017; Portland Tribune

We have all heard multiple stories where a new nonprofit executive walks into an organization portrayed as financially healthy only to find it most definitively was not! Yet, when I hear those stories, especially with organizations that periodically live hand-to-mouth, I always wonder how ready the new leader was to manage in that particular situation, especially if they were chosen from outside. For small nonprofits, the management is often vested in the understanding of how to work relationships and variables even in the most spare of situations. These kinds of leaders do not always recognize how vulnerable the use of that skill set can leave their beloved organization when they choose to leave. We do not know whether that applies to the following situation, but it sure reminds us of the pattern.

In Portland, Oregon, when Mel Rader, the longtime head of Upstream Public Health, left in December, all expected to transition fairly smoothly to the new executive, Samantha Shepherd.

“I am confident that I am leaving the organization in good hands,” Rader said in the press release. “Ms. Shepherd has the experience and skills to lead the organization to the next phase of positive impact on Oregon’s health.”

But now, two months later, the organization has been temporarily shut until it gets its financial house in order.

“It was absolutely a shock to all of us,” board chairwoman Ellen Falbo said. “As you’re asking yourself what happened, we’re asking ourselves the same question—and all of our stakeholders are asking us the same questions.”

An open letter was sent late last month that said, “We have taken a hard look at our finances and our options, and concluded that Upstream can no longer remain an independent organization.”

But, apparently, the organization’s supporters felt differently and have declared themselves as willing to help. Three new board members have been added to help plan the future, and the board has voted to keep the organization alive.

“They’ve done a lot of great work in research and advocacy,” said Craig Mosbaek, a former board member, He said that the loss of UPH would have been “a big loss for the fight to improve the health of Oregonians. I’m excited to hear that there are possible ways that Upstream can continue.”

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The way this story goes, Shepherd began getting worried upon reviewing the finances and fundraising plan. She contacted Falbo to express her trepidation.

Unlike some nonprofits, Upstream had no corporate backing or member base to generate revenue. It lived a hand-to-mouth existence of task-specific grants and contracts, with slim reserves.

Shepherd worked up her own cash-flow forecast and concluded that the nonprofit had contracts and grants covering less than a third of the funds it needed for the coming year, and some were not slated to begin before May.

“I reached out to Mel and tried to see if there was anything we were missing,” Falbo said. “In one (cash-flow) model, a particular grant was expected to be received in March or April, and when we read what was committed to, that money was going to come in in May.”

“So, I wish Mel had caught it sooner,” the chair said, adding that there had been some grant turndowns in the meantime. “I don’t think there was any sort of bad intent.”

For his part, Rader wrote in an email, “In regards to the issues you raise around budgeting, etc., like many nonprofits, the budget was tight throughout 2016, but I saw a clear path for managing the situation at the time I left in December.” This may be true, but staff was finally laid off in January.

If this reminds you of an organization you know intimately, perhaps the board should consider the fit of skill set to organizational culture before they tap that new leader. If the old leader is relatively unflappable, well connected, passionate, and used to begging for the glue and string that keep things running over the odd rough spot, you may want to be sure the new leader has similar capacities unless you have a healthy reserve to float you past the change of climate. And even if you do want to spark a change in the culture by hiring a more by-the-book manager, consider that you may end up in a situation like this one—which may not be so bad, really, if stakeholders mean what they say and can get organized.

Is this business model smooth and sustainable over the long term without that old director or another insider who knows all the hidden corners? Perhaps not. Could it be transitioned to be smoother and more sustainable? Without a doubt, so long as stakeholders value it.—Ruth McCambridge

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ABOUT THE AUTHOR
Ruth McCambridge

Ruth is Editor Emerita of the Nonprofit Quarterly. Her background includes forty-five years of experience in nonprofits, primarily in organizations that mix grassroots community work with policy change. Beginning in the mid-1980s, Ruth spent a decade at the Boston Foundation, developing and implementing capacity building programs and advocating for grantmaking attention to constituent involvement.

More about: Leadership Transition/Succession PlanningManagement and LeadershipNonprofit deathsNonprofit News

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