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Promoting Spirited Nonprofit Management  Spring 2017  $19.95 How to Think Differently About . . .Kendall-Taylor and Bales on Casting off Dead-End Frameworks of CommunicationThomas-Breitfeld on Facing the Nonprofit Racial Leadership Gap Head-OnPolanco and Jain on Taking Control of Your Capital

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Volume 24, Issue 1 Spring 2017 Features PAGE 10 S P E C I A L S E C T I O N PAGE 22 5 Welcome PAGE 28 28 How to Think Differently about Leadership Transition 6 The Nonprofit Whisperer In this inaugural edition of “The Nonprofit 30 Reflections on Executive Leadership Whisperer,” an unprincipled board and Transition Data over Fifteen Years member tries to serve two masters, an arts This take-no-prisoners article examines organization gets tangled up in its undefined more than fifteen years of stagnant data on expenditures, and a CEO leaves on good nonprofit executive transitions and the lack of terms, only to be scapegoated weeks later. progress on such things as the development of shared leadership, young leadership, and 10 How to Think Differently about leadership diversity. Communication: Your Nonprofit’s Role in Reframing the Post-Election by Jeanne Bell, Paola Cubías, and Discourse Byron Johnson Is the way that we frame important social issues not only inadequate but also perhaps 34 Blending Succession Planning and even wildly counterproductive? This article Executive Transition: A Successful Case from the FrameWorks Institute is worthy This case reflecting a new practice model of wide distribution, discussion, and self- discusses in a vibrant and resonant way how reflection among nonprofits and philanthropy. one community-based nonprofit blended business, strategic, and succession planning to by Nat Kendall-Taylor and Susan Nall Bales support an executive transition. 22 How to Think Differently about by Tom Adams Diversity in Nonprofit Leadership: Get Comfortable with Discomfort 40 Five Insights from Directors “Despite the evidence that systems and Sharing Power structures are leading to the isolation of Can sharing executive leadership really work people of color in nonprofit organizations, in nonprofits? What issues does it answer? there still seems to be a hesitance to talk And how do you approach the possibility? explicitly about racism in the sector,” writes This article takes up these questions Sean Thomas-Breitfeld of the Building through interviews with leaders of five Movement Project. Here he discusses the progressive community organizations with “nonprofit racial leadership gap” explored shared leadership models, and the resulting via a 2016 national survey on nonprofits, observations and advice speak directly to leadership, and race. organizational relevance and sustainability. by Sean Thomas-Breitfeld by Jeanne Bell, Paola Cubías, and Byron Johnson COVER DESIGN BY CANFIELD DESIGN COVER ART: “TWILIGHT 6” BY TERESA COX ©2012/WWW.TERESACOX.COM

44 How to Think Differently about PAGE 44 59 Ready to Launch? How the Your Money: Capital Explored 1023-EZ Has Changed Your Understanding your nonprofit’s capital Nonprofit Start-Up Options structure is a critical part of skillfully It used to be that for a small nonprofit, managing a sustainable nonprofit—but in the deciding between forming an independent nonprofit sector, the notion of capital is often 501(c)(3) or using a fiscal sponsor was a fairly misunderstood to the extent that it becomes straightforward decision. Since the advent of self-limiting. In this article, adapted from one the new Form 1023-EZ, however, the equation of NPQ’s most well-attended webinars ever, has changed. Financial Management Association’s Hilda Polanco and Dipty Jain describe the issues by Tivoni Devor and Laura N. Solomon, Esq. surrounding the various sources and uses of nonprofit capital. 63 Growth Hacking for NGOs and Nonprofits: How a Few Staffers by Hilda Polanco and Dipty Jain Can Mobilize Millions In this article adapted from a report Departments copublished by Mobilisation Lab, Change.org, and Capulet, the author discusses the lost art 55 Want to Improve Governance? of “amplifying an organization or movement Context Matters with volunteers,” and lays out what growth Drawing on her personal experiences of hacking looks like in twenty-first-century working in Southeast Asia, organizational volunteering. development consultant and facilitator Louise Coventry outlines seven dimensions of context by Julie Szabo that need to be considered when designing governance models and practices. by Louise Coventry www.npqmag.org Nonprofit Information Networking Association Ruth McCambridge, Executive DirectorThe Nonprofit Quarterly is published by Nonprofit Information Networking Association, 112Water St., Ste. 400, Boston, MA 02109; 617-227-4624. Nonprofit Information Networking Association Board of Directors Ivye Allen, Foundation for the Mid South Copyr­ight © 2017. No part of this publication maybereprinted without permission. Charles Bell, Consumers Union ISSN 1934-6050 Jeanne Bell, CompassPoint Nonprofit Services Jim East, George Kaiser Family Foundation Chao Guo, University of Pennsylvania Anasuya Sengupta, Activist/Strategist/Facilitator Richard Shaw, Youth Villages

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WelcomeExecutive Publisher Dear readers, “Nonprofits should act more like business.” Joel Toner “Give, get or get off.” “Boards make policy and staff members implement it.” The fieldEditor in Chief of nonprofit management and governance is rife with baseless assertions about the way things ought to be.Ruth McCambridge These are sometimes cleverly cloaked as best practices even though they don’t often work, and many nonprofitsSenior Managing Editor have spent decades chasing after what is at the end of these rainbows only to find that there is no end to themCassandra Heliczer because (1) there never is, and (2) even from a distance, the arc has long since disappeared into atmospheric changes. In this edition, we takeContributing Editors up a number of areas of management and governance that have been misframed in ways that misdirect, overpromise, and in general make our hard jobs harder—andFredrik O. Andersson, Shena Ashley, Jeanne Bell, then we suggest different ways to think about the topics being addressed. For instance, the difficulty that we often have understanding capital stems from aChao Guo, Jon Pratt lack of understanding of nonprofit financial structures more generally—thus, instead of talking about working capital and growth capital in relationship to operatingOnline Editor Community Builder revenue, we have ended up in an endless search for the right ratio of overhead to program costs. Within, Hilda Polanco and Dipty Jain make some simple distinctionsJason Schneiderman Erin Rubin between revenue and capital and then talk about the various kinds of capital needed to make a healthy nonprofit.Director of Digital Strategies Similarly, for a number of decades we have been focused on CEO turnover as an all-important inflection point in the lives of nonprofits—but perhaps that is a self- Aine Creedon reinforcing notion that creates a cycle of overdependence and periodic vulnerability in our organizations. Maybe we need to think differently about models of organiza-Graphic Design tional leadership. Maybe we need to consider, for instance, codirectorship and shared leadership as a norm rather than an odd exception. In a special section on leadership Kate Canfield transition, Tom Adams, Jeanne Bell, Paola Cubías, and Byron Johnson parse this out. Sean Thomas-Breitfeld writes on the “nonprofit racial leadership gap,” explored via Production a national survey on nonprofits, leadership, and race launched by Building Movement Nita Cote Project in 2016. Upon completion of the survey, which drew more than four thousand respondents, he asks, “Why haven’t we moved the dial on diversity?”Marketing and Development Manager Nat Kendall-Taylor and Susan Nall Bales describe a landscape fraught with old, dead-end frameworks of communication, look at the perilous consequences ofAmanda Nelson abiding by such framing, and offer alternative models of discourse that are more likely to “get us back into the commons and reasoning together.”Operations Manager So, this edition is designed around unlearning the norm by entertaining experi- ments in thinking differently about some crucial issues facing the sector. This requires Scarlet Kim that we change the way we think and talk, but it is remarkable how quickly you can make sense of the tangle in front of you by starting in a different place and with theCopy Editors Proofreaders right set of glasses.Christine Clark, James Carroll,Dorian Hastings Dorian Hastings Editorial Advisory Board Elizabeth Castillo, University of San Diego Eileen Cunniffe, Arts & Business Council of Greater Philadelphia Lynn Eakin, Ontario Nonprofit Network Anne Eigeman, Anne Eigeman Consulting Robert Frady Chao Guo, University of PennsylvaniaRahsaan Harris, Emerging Practitioners in Philanthropy Paul Hogan, John R. Oishei Foundation Mia Joiner-Moore, NeighborWorks America Hildie Lipson, Maine Center for Public Interest Lindsay Louie, Hewlett Foundation Robert Meiksins, Forward Steps Consulting LLC Jon Pratt, Minnesota Council of NonprofitsJamie Smith, Young Nonprofit Professionals Network Michael Wyland, Sumption & Wyland Advertising Sales 617-227-4624, [email protected]: Order by telephone (617-227-4624, ext. 1),fax (617-227-5270), e-mail ([email protected]), or online (www.nonprofitquarterly.org). A one-year subscription (4 issues) is $59. A single issue is $19.95.SPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​5

ethics The Nonprofit Whisperer Applying for a paid position in an organization without first resigning from its board is an unequivocal no-no; if you do not define your allowable expenditures, you could find yourself in a spot of trouble; and if you find yourself scapegoated after leaving an organization, take the high ground and use it as an opportunity to reflect on any leadership blind spots that may have helped to create the hostile post-departure environment. Dear nonprofit whisperer, Dear Nonprofit Whisperer, the tuition fees, room, and board. I have a question regarding I am on the board of a 501(c)(3) orga- Attending the dance week seems to conflict of interest for the nization whose mission is to “research, board of directors of a charter teach, perform, and promote” certain support the mission of the organiza- school in New Hampshire. It recently types of historical or traditional dance. tion. However, many individuals attend came to my knowledge that a member of As one of its projects, the organization such weeks for pleasure. There are social the board of directors has applied for the has a performing troupe. The orga- dances and tours of historical sites; boat open bookkeeper position at the school. nization usually gets paid for troupe rides; and other excursions in connec- Would taking the position require the performances—in fact, this is the orga- tion with the events. Would sending the board member to resign from the board, nization’s main source of income. troupe to such an event be within the or could the board member ethically con- bounds of permitted expenditures for a tinue to serve? Although the organization’s annual nonprofit, or would it violate prohibi- Confused income is only around $12,000, over tions against supporting individuals the years it has built up a reserve of or providing excessive compensation to Dear Confused, some $30,000. Currently, the board is board members? (All the board members This is an easy one. The board member considering using a good portion of are also troupe members, but there are should resign before applying for any this reserve to send the troupe to one of troupe members who are not on the paid position with the organization, but several relevant dance weeks that take board.) And is it permissible to pay especially one that accounts for money. place each summer. Troupe leaders— some types of expenses but not others? The conflict comes from the fact that who teach, research, choreograph, the board member is there, with others direct, etc.—would benefit from min- Conscientious in the governance role, to provide general gling with other directors, teachers, and oversight to the organization on multi- researchers. The troupe dancers would Dear Conscientious, ple levels (mission, high-level strategy, receive training by attending workshops Sending the troupe to dance weeks—a policies, fiduciary). The IRS, in provid- led by well-known teachers of historical normal activity for many dance troupes— ing charitable status, asks that nonprof- dance, and the troupe would perform for exchange and learning, as you note, its have a voluntary board of directors, during the week, as would other groups, is not necessarily an issue. How the mostly to represent the broader commu- sharing choreographies, styles, and the organization defines allowable expen- nity’s interest and ensure accountability like. The organization would pay all or ditures, however, is critical to ensuring to mission, community, and constituents most of the member’s expenses. Some of that it remains on mission. The organi- on the part of paid staff. You can’t serve the dance events under consideration zation should create protocols for such two masters. take place in Europe, so transportation trips as to what are allowed expenditures could be a sizable expense in addition to that relate to the organization’s mission. Social evenings or side excursions should 6 ​T H E   N O N P R O F I T   Q U A R T E R LY WWW.NPQMAG.ORG • SPRING 2017

be on the participants’ dime. The more feeling that the opportunity was not ethicsyour organization can create bright lines only a positive career move for the CEOregarding what are considered allowable but also that their CEO’s having been EXPIRES 4/7/17expenditures, the better. selected by the prestigious Organiza- tion B was a feather in Organization A’s SAVE $100 A glaring red flag is that, as you cap. The outgoing CEO was honored at amention, all the board members are also going-away event and given an award. T H E   N O N P R O F I T   Q U A R T E R LY  ​7troupe members. This complicates your Organization A identified an interimquestions and begins to enter an area CEO and began the search for a new one.of poor optics for the organization. It Everyone parted on good terms.is not illegal for board members to bereimbursed for meetings or travel on After several months on the newbehalf of the organization, but it sounds job with Organization B, the formeras though the troupe is acting in mixed CEO learned through colleagues thatroles of oversight (board) and delivery some things were not going well forof services (volunteer staff on learning Organization A. The interim CEOtrips). If job descriptions for the board had floundered and the new CEO wasdo not exist, the organization should struggling. The former CEO was beingwork on those—delineating the role blamed for current issues (dysfunctionof governance as opposed to activi- among staff, committee dysfunction,ties of the organization that fulfill its and misunderstandings). Hard feel-mission, whether done by volunteers ings and distrust had taken root amongor paid staff; the board should develop some members. While saddened to heara conflict of interest policy (there are this, the former CEO accepted that thisboilerplates online); and, finally, the type of thing happens and that it isorganization should consider adding not uncommon for former staff to getnon-troupe members to the board, and scapegoated during such transitions.eventually having these be a majority. The former CEO opted not to take action.The optics of board members acting intheir self-interest will decrease with this A few weeks later, someone (whodiversification of board membership. was yet to be identified) created a Face- book page to “expose” Organization A’sDear Nonprofit Whisperer, issues. Part of the narrative includedI am seeking your thoughts regard- several e-mails expressing a boarding an organization’s responsibility member’s dislike of the former CEOto its former CEO. The circumstance I and why s/he blamed the former CEOdescribe below is rather awkward, and for current issues. The former CEO wasI’m not exactly sure if or what the orga- contacted by a member of Organizationnization or the former CEO should, or A and directed to the Facebook page (“Icould, do about the matter. felt you should be aware of what is being said about you”), and subsequently A nonprofit CEO with ten years of discovered through colleagues that thetenure with Organization A accepted board was quite upset about their inter-a new position with Organization B. nal strife being aired, and had contactedThe CEO had outstanding performance Facebook to ask that the page be takenreviews during those ten years, and down. After being up for over threewas regarded as a solid leader and rep- months and garnering thousands ofresentative of the organization. Upon views, the page was finally removed. Thethe CEO’s informing the board of the job board has not contacted the former CEOoffer, Organization A expressed delight, regarding any of this matter—and, toSPRING 2017 • WWW.NPQMAG.ORG

ethics date, the former CEO has not contacted the leader’s departure. If, during such a but some things have not changed very anyone about the matter, either. leader’s time, strong norms and practice much at all—and one of the things that principles regarding “how we behave” has not changed is the expectation that My questions are: (1) What is the and “how we communicate” were not staff and boards act responsibly when board of Organization A’s responsibil- inculcated throughout the organization speaking about their organization on the ity to the former CEO (for example, does at board and staff levels (and, for some public stage. it owe the former CEO some explanation groups, at the volunteer and constituent or apology)? (2) Given that the social levels), then people can begin behaving This situation is an issue for the media posts could cast a shadow on the badly in the wake of that strong leader’s boards of both these organizations, and former CEO’s reputation and thus jeop- departure. they should decide together on a course ardize current or future employment, of action that protects all involved. That what recourse does the former CEO have We are all always contributing both course of action should include cautions to defend or protect his/her reputation? positively and negatively to the dynamics to staff about respecting the boundaries (3) Are there other concerns or implica- of any living system (a family, an organi- of the organizations, even—and perhaps tions vis-à-vis this entire scenario that zation, a nation). The former CEO acted especially—in this new social media the former CEO should consider? correctly by not getting involved in the environment. In other words, this can aftermath that ensued post-departure, be used as a learning moment about the Sorry I Had to See This but this may be a time for him/her to protocols of discussing former staff in a reflect and check in on any leadership negative light in public—an exercise that Dear Sorry I Had to See This, blind spots that might now be illumi- should be engaged in only under the most First, the former CEO’s instinct was, nated through hindsight. Understanding egregious of circumstances. In a crisis— unfortunately, spot-on. No matter how his/her contribution (however minor) to which this does not seem to be—it is best remarkable a leader might be (and the situation might develop this already to decide upon speaking points and des- sometimes because of it), the depart- good leader even further (we are all ignate representatives. ing leader may be blamed for disruption always learning, right?). The former that occurs during a transition. William CEO should probably continue to take A key responsibility of board members Bridges, author of The Way of Transi- the high ground (libel is hard to prove is to act as positive ambassadors to the tion: Embracing Life’s Most Difficult and will only continue the devolution of a community on behalf of the nonprofit. Moments, says, “We resist transition not person’s legacy) and simply go on being a When there are questions or concerns, because we can’t accept the change, but high performer in his/her new position— these should be brought to committees because we can’t accept letting go of that the proof being in the pudding. or the board meeting and fully worked piece of ourselves that we have to give out there. A mature board member who up when and because the situation has Organization A has a lot of work disagrees with what is happening can act changed.”1 The organization is still in to do. The board of directors needs to as loyal opposition: raising critical ques- reaction to the loss of a strong leader; create a communications policy imme- tions or concerns, voting no as needed, some people simply do not do change diately. Most mature organizations have and resigning if necessary. Playing well, and can act out during these times. the CEO (and/or the board president) out this drama on the public stage of act as the spokesperson, and all written social media is simply the poorest type For the former CEO’s part, there may communications are vetted through a of behavior and, as mentioned above, be some things to reflect on. A strong, transparent process. In this situation, should be nipped in the bud immediately. vibrant leader may embody a set of organization-wide speaking points values that not everyone on the board should be developed and all board and Note or staff shares. A highly regarded leader staff should adhere to those speaking 1. William Bridges, The Way of Transition: might not be questioned about strategy or points, with consequences for those Embracing Life’s Most Difficult Moments other key issues during his or her tenure. who do not. Finally, there needs to be (Boston: Da Capo Press, 2000). If the leader is blind to even a small an immediate social media policy for values mismatch or the need to open up staff and board members alike. In this To comment on this article, write to us at feedback on strategy or programs, and new social media environment, many [email protected]. Order reprints from has held sway through the power of his things have changed regarding how non- http://store.nonprofitquarterly.org, using or her excellence, then under-the-table profits communicate with stakeholders, code 240101. issues will surely get aired in the wake of 8 ​T H E   N O N P R O F I T   Q U A R T E R LY WWW.NPQMAG.ORG • SPRING 2017

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Nonprofit Communication How to Think Differently about Communication: Your Nonprofit’s Role in Reframing the Post-Election Discourse by Nat Kendall-Taylor and Susan Nall BalesOur habitual go-to approaches to framing social issues work against finding solutions to the problems. The good news is, write the authors, “we don’t have just one mental model for how an issue works.”This multiple models approach holds the key to interrupting unbalanced, unproductive, and altogether false frames and replacing them with better explanations about how the world actually works.’Tis the season of reflection. In the wake we pay attention to as we try to figure out what of the 2016 elections, conventional the election means for the landscape of ideas wisdom has been turned on its head. in which we operate, the work that we do, and Defeatism and guilt are spreading, and the goals that we strive to achieve? How are we it’s hard to look forward from within the fog of the to think of our roles in bringing communities warlike discourse we’ve slogged through. This is together to improve outcomes for all people, the time when we resolve nevertheless to fight protect habitats, and make the world a more harder, give more, and be more resolute in staying peaceful place? How can we continue to lead the course. These are our individual reactions. organizations with long histories that transcend But what do we do in our public roles? presidents and parties to successfully provide services? The current context is fraught with both What should we do as members of the non- peril and puzzle. profit sector to assess the impact of this election on the sector’s future well-being? What should Electoral politics, as explained by the main- stream press in 2016, is an exercise in binary think-Nat Kendall-Taylor is chief executive officer at the ing. Rather than considering the important issuesFrameWorks Institute. Susan Nall Bales is founder of facing our nation and how a range of approachesand senior advisor to the FrameWorks Institute. might address them, the electoral discourse has10 ​T H E   N O N P R O F I T   Q U A R T E R LY  “UP OR DOWN” BY CHEYANNE ELVIN/CHEYANNEELVIN.WIX.COM/ELVINORIGINAL



Binary thinking and narrowed into polarities. As suggested by linguist doesn’t have to be this way. We have more waysthe campaigns that Deborah Tannen, America’s “argument culture” of looking at the world’s and our country’s futureactivate and ingrain it tends to conceptualize everything as a “metaphor- than were exercised in this election. But gettingwork against our central ical battle.”1 There are very real consequences of beyond binary thinking requires us to dig deepmission: to engage this framing. Tannen explains: “[I]t makes it more into our mental repertoires and become aware ofAmericans in difficult to solve the problems facing our society, how our options have been narrowed and whatunderstanding, and it is corrosive to the human spirit. By creating has been lost in the process.discussing, and an atmosphere of animosity, it makes individualsaddressing the more likely to turn on each other, so that everyone Cultural Modelsproblems facing feels more vulnerable and more isolated. And thatsociety with respect is why the argument culture is destructive to the Anthropologists call the intuitive explanationsand reason. common good.”2 and taken-for-granted assumptions that we bring to bear on our political (and other) judgments “cul- Steeped in this culture, we are at risk of using tural models.” The term refers to the way we hold the same dead-end framework to explain the elec- culture in our minds and use it to bring meaning toral aftermath. The media’s “horse-race” frame to our experiences, which includes the informa- (who’s ahead, who’s behind) during the 2016 tion we are presented with in our everyday lives. election impeded consideration of the policies Cultural models are an important part of the way that the presidential candidates espoused; and its we make sense of our world and how we act in it. “balance” frame, as represented by information Scholars have shown that these mental constructs from “both sides” of the debate, oversimplified the are culturally specific; that is, as Americans we complex issues we face. Now the “two Americas” are steeped in stories and common experiences frame threatens to further polarize Americans and that predispose us to certain ways of looking at to distract thought leaders from the critical work the world. If you ask people why some get ahead that we must do to bring our country together. in life and others don’t, different cultures will share different models of how success “works”: In the “two Americas” frame, people are either who is responsible, what happens first, and with blue or red, liberal or conservative. The prescrip- what consequences. These cultural models focus tion for change is persuasion, not explanation. our attention on what is relevant and important This binary approach obscures the important about an issue, and in so doing, they shape how we work of elections in engaging the American think about social issues—including those that are public in thinking about the critical issues of more obscure and harder to consider and under- our time and evaluating how we wish to address stand. Although they may be endorsed by different them. When elections are waged at this level, people to different degrees, research has found we all lose—but the nonprofit sector loses big. that cultural models are largely consistent across Binary thinking and the campaigns that activate populations—like a common set of tools that our and ingrain it work against our central mission: cultures have given us over time to help us make to engage Americans in understanding, discuss- sense of our world and how it works. ing, and addressing the problems facing society with respect and reason. This mission is not about The critical point is that we don’t have just persuasion and manipulation—it is about expla- one mental model for how an issue works; we nation, inclusion, and engagement. have multiple ways of looking at and understand- ing social issues. We might attribute success, for The “two Americas” frame is not serving us example, to individual effort, luck, or privilege; or, well. Moreover, it simply isn’t reflective of the we might consider it the end result of the way a truth. American culture offers its citizens a limited community makes resources available to people set of ideas to understand sociopolitical issues, who live there, the goals we set for our commu- and we suffer as a result. Just at the time when nity, or the roles available to those within it. We we are most primed to reconsider and reengage might think of our economy as a limited and finite with our working models of how our country resource—a pie from which each additional piece works, we have been fed a paltry, binary diet. It12 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

taken means less for the rest; or, we might see it American thinking: self-makingness; separate What this pastas a pool of resources that can be added to and fates; and business knows best. election did to theexpanded over time. As psychological anthropolo- cultural landscapegist Bradd Shore has explained: What Got “Easier to Think” in 2016 in which nonprofits Self-Makingness. According to this model, operate is to pull certain In the realm of politics and policy debates, people make their own fates through their ideas about how the what the idea of multiple models suggests is strength of character and the wisdom of their world works forward and that different advocates are not just trying to choices. Successful individuals are, by definition, push others deeper into impose different understandings on people superior people who have maximized their inher- our subconscious. but rather that they are trying to appeal to ent talents. Tautologically, they are winners, not one or more of the models . . . to change losers. As journalist James Hohmann has shown, the salience of those models. That is, they Donald Trump and some of his cabinet nominees recognize that for most people, it’s possible have acknowledged their intellectual debt to Ayn for them to move between more than one Rand’s objectivism, in which there are “makers understanding of something, such as what’s and takers, and . . . the takers are parasitic mooch- more important—individualism, and focus- ers who get in the way of the morally-superior ing on the moral individual, or the notion innovators.”4 As Trump has explained, “If you look of a communitarian value of what’s good at black and African American youth . . . they’ve for the group. Both of those are perfectly never done more poorly. There’s no spirit.”5 In well modeled in American culture. . . . The Trump’s Rand-inspired view, it would follow that difference is not whether one model exists Black Americans are responsible for their com- or doesn’t exist but which model is salient, munity’s higher rates of poverty and incarceration, or foregrounded, and which is back- and lower levels of education, homeownership, grounded. . . . The competition for the hearts and other markers of “success” in this country. and minds of people, in policy work, is the competition for restructuring salience and While the self-makingness model is most what’s in the foreground. . . . The model vividly on display in Trump’s talk, it is not without that’s in the foreground is going to be the representation in liberal rhetoric. As journalist default reading people have. And the other Carlos Lozada has suggested, Barack Obama is will remain, not hidden but latent, in the a major purveyor of the notion that one’s biog- background, fuzzy.3 raphy of success is a morality tale that has the power to incite others to overcome obstacles and In other words, when we say that the world achieve greatness.6 Hillary Clinton also adhereshas changed, or that we are in a whole new “ball to the self-makingness trope. Her unique andgame,” we are really saying that the conceptual innate abilities and experiences seemingly cre-environment in which we operate has shifted— dentialed her as the person destined to crack thethat there has been movement in the relative avail- ultimate glass ceiling as the first female presi-ability and relevance of certain models of how the dent of the United States. Lost in her narrativeworld works. What this past election did to the were the many scholarships, mentors, and othercultural landscape in which nonprofits operate is opportunities that made her biography both pos-to pull certain ideas about how the world works sible and potentially replicable. For example,forward and push others deeper into our subcon- her middle-class upbringing no doubt featuredscious, where we find them harder and harder to multiple intercessors who helped propel her“think” and therefore harder and harder to access achievement. But many girls and women do notand articulate. (We say that this foregrounding have access to mentors and sponsors. Researchand backgrounding process makes some ideas shows that only half of American adolescents can“easy/easier to think” and others “hard/harder to identify three or more nonfamilial adults theythink.”) The 2016 election discourse pulled three could turn to for help with an important questionimportant cultural models to the foreground of about their life.7SPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​13

Pulling forward ways While these bootstrap models are not “bad” optimism. FrameWorks research shows that theto engage people in stories per se, they are unbalanced, reflecting determinism can be overcome when interruptedthinking about the a myopic emphasis on an individual’s ability to and replaced with a different frame: specifically,contexts in which overcome adversity and realize his or her talents. explaining that some kids have access to a hostcommunities support Pushed to the background in these models, as of rich STEM experiences that serve as “chargingor impede individual Shore would say, are issues of race, class, and stations” for their knowledge and engagement,achievement and privilege, as well as the environments, experi- while others have few means of charging up theirwell-being requires ences, resources, and programs that play impor- interest. By activating, and pulling forward, think-that nonprofit tant roles in shaping individuals’ outcomes. This ing about the ways in which communities havecommunicators election’s sharp focus on candidates’ unique bio- different levels of resources, STEM advocates cananticipate the graphical characteristics failed to help Americans put self-makingness in its proper place, roundingdominance of self- understand that success or failure is not, in fact, it out with a more contextually sensitive perspec-makingness and due solely to personal characteristics. tive. Pulling forward ways to engage people inprepare themselves thinking about the contexts in which communitieswith powerful As a result, assessments of worthiness and support or impede individual achievement andstrategies to cue effort are now forefront in people’s thinking: they well-being requires that nonprofit communicatorsalternative ways are increasingly top-of-mind, “easy to think,” and anticipate the dominance of self-makingness andof thinking. cognitively comfortable. Meanwhile, notions of prepare themselves with powerful strategies to context and advantage have been backgrounded, cue alternative ways of thinking. becoming less familiar and harder to engage. This means that nonprofits will have to work even Separate Fates. When applying the separate harder to connect the dots for the public. Housing fates cultural model, people reason that things advocates, for example, will need to remind people that happen to individuals only affect those indi- that, in the words of Winston Churchill, “We shape viduals and those immediately around them— our buildings; thereafter they shape us.” People larger communities, and our society as a whole, need help seeing that when housing is designed are unaffected. This model encourages us to see with such goals in mind as ensuring that people other people’s “troubles” as regrettable, eliciting can walk safely, access healthy foods, and avoid perhaps a charitable donation, but it masks our exposure to harmful contaminants, this creates interdependence.9 In other words, what happens an environment that facilitates positive health and to “those” people “over there” does not affect the growth and dramatically increases the probability health and well-being of “my” people “over here.” of healthy outcomes. Housing that makes physi- Xenophobia, racism, and sexism were hugely cal activity onerous, makes it difficult to access visible in election discourse and media cover- healthy foods, and exposes people to mold and age this past year, but underlying these issues other contaminants decreases inhabitants’ like- was the less visible assumption that we have lihood of healthy outcomes. These seemingly separate fates. This model, however, is equally obvious points have become “harder to think,” pernicious and perhaps more insidious, as it thanks to the ascendancy of self-makingness. empowers those same “otherizing” perspectives but in a less obvious way. That is, the separate STEM learning offers another example. Here, fates model feeds and encourages racism through self-makingness is evident in the widespread the seemingly more polite and descriptive belief public assumption that science, technology, that we live in separate worlds, deal with sepa- engineering, and mathematics are innate talents rate problems, and must come up with separate that, simply, some kids have and others lack. solutions. It flies in the face of the civil rights Viewed from this “either you’ve got it or you don’t” movement’s core positioning argument, by way vantage point, the availability and quality of STEM of Martin Luther King Jr.: “Injustice anywhere is programming is of minimal importance.8 But the a threat to justice everywhere.” existence of multiple ways of thinking and the ability of frames to orchestrate and activate these This separate fates frame is one reason behind ways of looking at the world provide a dose of the struggle many Americans have with the14 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

statement “Black lives matter.” This is because she asserted that, “You could put half of Trump’s For nonprofits thatthey don’t see Black lives as mattering to their supporters into what I call the basket of deplo- advocate for the overalllives or to society as they experience it. As rables. Right? The racist, sexist, homophobic, well-being ofFrameWorks noted in a recent report on juvenile xenophobic, Islamophobic—you name it. . . . Now populations and thejustice, for many Americans, “African Americans some of those folks, they are irredeemable, but centrality of currentlyare understood to live in worlds that are both geo- thankfully they are not America.”13 When utter- marginalized groups . . .graphically and culturally apart from mainstream ing these words, Clinton was clearly attempting to America’s future, theAmerica. This cultural model is strengthened to make a strong symbolic statement about what separate fates culturalwhen crossed with issues of juvenile crime, as America stands for—and what it doesn’t. Yet her model serves to unraveljuveniles are also understood to be a ‘tribe apart.’ willing marginalization of one segment of the social responsibilityWhen reasoning through this model, the issues population undermined her “stronger together” beyond one’s family oryoung people of color face in the criminal justice assertions and cued unproductive “us-versus- group.system may be regrettable, but have little bearing them” thinking.on the society as a whole.”10 This model was clearin Trump’s phrasing of “the Blacks” and “the His- For nonprofits that advocate for the overallpanics,”11 and in his “otherizing” descriptions well-being of populations and the centrality ofof life in Black America: “You’re living in your currently marginalized groups—whether Africanpoverty, your schools are no good, you have no Americans or rural Americans—to America’sjobs, 58 percent of your youth is unemployed— future, the separate fates cultural model serveswhat the hell do you have to lose?”12 to unravel social responsibility beyond one’s family or group. Moreover, it negates what public But, again, the dividing wall between “us” and health experts assert to be core tenets of popula-“them” was on display across the aisle, as well. tion health. At the most obvious level, how doClinton activated the separate fates model when you campaign for childhood immunizations whenMake a world of difference.• Earn your Northwestern University master’s in Global Health part time and entirely online.• Build skills essential for success in areas such as global health policy and systems, regulation, evaluation and measurement, business strategy, grant writing, and leadership.• Develop the expertise needed to drive change and make positive impacts in underserved communities worldwide.• Learn from industry experts and distinguished faculty from Northwestern University Feinberg School of Medicine’s Center for Global Health.Apply today — the summer quarter application deadline is April 15.sps.northwestern.edu/global • 312-503-2579SPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​15

As FrameWorks has anyone can opt out and become a “free rider”? and inept. Trump used this assumption to greatobserved in past Many nonprofits will be challenged as this advantage during the election, and much of theresearch, talking about public bought it. Having made money for himselfplaces, how they model becomes more dominant in the public and his company, many reasoned, he could do itinterconnect, and mind. Watch for it in discussions of income for the country, too—and he could do it betterinequitable distribution inequality, where even people of good will can than those without his business experience.of services across struggle to understand how inequality negatively Using this model, people are unable to see dif-different places helps affects society as a whole, or, conversely, why ferent purposes for business and government.people think about measures to address inequality benefit us all. Yet, Indeed, Trump’s advantage as an experiencedsolutions. scholars show that the effects of economic segre- CEO made up for his lack of experience in gov- gation reverberate across society and diminish the ernment and measured formidably against Clin- quality of life for everyone. A new FrameWorks ton’s decades-long track record in public service. report offers strategies to overcome the separate Moreover, Trump’s corporate experience was fates model and trigger more productive ones.14 understood as uniquely positioning him to solve This will be especially useful in the year ahead problems and to avoid the massive inefficiencies as a way to remind people of what they already and corruption that tend to be associated with know—but might be forgetting—as a result of government officials. As one Trump voter replied the election. As one of our new reports about when asked to comment on an anticipated socioeconomically mixed neighborhoods states, healthcare gap after the repeal of the Afford- “. . . we strongly recommend that communicators able Care Act, “a smart businessman like Trump consistently use the value of Interdependence. If would [not] let that happen.”16 Finally, business the field coalesces around this value and finds executives’ lack of government experience only resonant and authentic ways of using it in commu- reinforces the purity of their motives. As Mitt nications and outreach to groups across the politi- Romney explained when he endorsed Trump cal spectrum, this will, over time, help shift public nominee Betsy DeVos for secretary of education, thinking about socioeconomic mixing away from “As a highly successful businesswoman, DeVos default individualistic modes and toward a more doesn’t need the job now, nor will she be looking collective and systemic perspective.”15 for an education job later.”17 In this formula, the successful businessperson is the ultimate public As FrameWorks has observed in past research, servant, because his or her wealth inoculates talking about places, how they interconnect, and against self-interest and corruption. inequitable distribution of services across differ- ent places helps people think about solutions. This way of thinking is not new. A decade That’s why advocates make the so-called “zip ago, FrameWorks conducted a series of studies code argument” to call for better school financ- into how Americans think about government, ing, and why they use the “patchwork” metaphor and found that “distinctions between public and to explain deficiencies in rural infrastructure. private hold little meaning” for Americans. It is FrameWorks has found both these strategies to worth quoting from the study summary at length: be effective. The separate fates model is assail- able—but only if nonprofit communicators do There is widespread confusion over the not inadvertently reinforce it, keep their concep- difference between the public and private tual task in mind, and use frames that get to “we” sectors, and numerous manifestations of rather than to “us” and “them.” this confusion. First, the private sector is presumed to be more accountable and Business Knows Best. Looking at the world efficient. Since there is little understand- through the business knows best frame, corpora- ing of differences in goals and motivation tions and the government are assumed to work in between the sectors, the public sector has similar ways, but with one essential difference: been degraded to a role that is, by defini- corporations are understood to be inherently tion, less effective than the private sector. more efficient and effective than government, which is thought of as wasteful, inefficient,16 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

When operating in this mindset, govern- The obvious consequence of this ascendant Without more ment would be better if it were “run like cultural model will come in a knee-jerk solution explanation, Americans a business” because government would we are likely to see put forth in response to our have little in their adopt business’ standards of accountability social problems: “Privatize it.” While many Ameri- mental repertoire to and be more efficient and careful with tax cans may initially recoil at this recommendation, remind them that taxes, dollars. At the same time, people are suspi- they are at the same time steeped in a cultural public goods, and cious of the private sector’s inherent lack of discourse that assumes that private is inherently services are not transparency and its “bottom-line” motiva- better—more efficient, less expensive, and offer- immediate exchanges tion, and see government as more open and ing more freedom of choice—than public. As a but are distributed accountable for actions. What is missing is result, the public may not resist arguments to over time. a sense that government has a mission that privatization as the solution to social problems is entirely different from private business: as vociferously as they might if pro-government it is, by definition, supposed to be acting in cultural models were stronger. the public interest.18 This model has even more detrimental con- Similarly, in a series of studies on how Ameri- sequences. When people reason from a businesscans view education, FrameWorks found that knows best model, they see no reason to question“[b]roader societal goals for public education— why government shouldn’t be run like a busi-such as public health or citizen participation—are ness. The question of whether this equivalency israrely mentioned by the American public.”19 As appropriate doesn’t come to mind. Without moreShore would say, the backgrounding and fuzzi- explanation, Americans have little in their mentalness over the value of the public sector and public repertoire to remind them that taxes, public goods,service work have been a long time in the making. and services are not immediate exchanges but are distributed over time. Some goods and services are $4,781,957.00**That’s the potential unemployment cost savings of over 400 nonprofits last year. What’s yours?SPRING 2017 • WWW.NPQMAG.ORG Get your free unemployment cost analysis at ChooseUST.org/NPQ  T H E   N O N P R O F I T   Q U A R T E R LY  ​17

Nonprofit immediately available (such as education in public it easy to ignore the conditions that constrain orcommunicators schools), but others aren’t available until later promote success and well-being. As we exerciseshould not assume (such as healthcare insurance coverage provided our self-makingness muscles, our sociologicalthat people by Medicare, or long-term public transportation muscles begin to atrophy. It becomes more dif-understand that programs). Cutting taxes now leaves future ben- ficult to see how systems, structures, and placeshealthcare coverage eficiaries behind, both in the sense that costs will shape outcomes, or how inequities have beenand services, public be higher down the road and that meeting those built into systems over time. How can we telleducation, and higher costs may be altogether unaffordable. This stories that enable people to practice using theirsubsidized housing model also prevents people from thinking about sociological muscles so that they can rebalanceserve the public good. budgets and taxes as instruments to plan for the the way they understand the roles of individualsThey must clearly common good that reflect our shared priorities and systems in our social worlds?communicate the and responsibilities rather than our individualimportance of public choices and preferences. Only when we make Our Ecological Imaginations. As long as theservices and explain the differential goals of business and government separate fates model is dominant, the ways thatthat, unlike nonprofits, explicit and when we explain the incremental our surroundings shape us will remain beyondbusinesses are not steps toward long-term public welfare will people view. Our linked fate, dependent on other species,beholden to the public recall how taxes—as opposed to private savings places, and populations, will be obscured. Withoutgood but to their accounts—support the public good.20 an ecological way to see the world, the problemsbottom line. that afflict others are regrettable but are not For nonprofit communicators, many of whom immediately salient, because they are not ours. work with government agencies (and who are How do we communicate in ways that make inter- often indistinguishable from government in the connections clear and discourage NIMBY (not in public mind), the business knows best way of my backyard) thinking? thinking means their very identity may cue resis- tance to their work.21 Donors and community Our Civic Imaginations. As business knows leaders may harbor unexpressed assumptions best thinking gains cognitive and cultural real about nonprofit groups’ inherent inefficiency, estate, we will increasingly focus on competi- anachronistic missions, or outright corruption. tion—as opposed to collaboration—when chart- Nonprofit communicators should not assume ing our path to the future, and civic space will that people understand that healthcare coverage take a backseat to private property. Key civic prin- and services, public education, and subsidized ciples will get pushed out of mind: how society is housing serve the public good. They must clearly strengthened when benefits are shared and our communicate the importance of public services talents are diversified; why it is crucial that young and explain that, unlike nonprofits, businesses people develop critical-thinking skills about the are not beholden to the public good but to their future they want to create through public policies bottom line. Doing otherwise could be a costly and programs, and that they participate in public communications oversight. decision making. How can we make the benefits of our public systems clear and engage people in At the same time that the ideas above have supporting them? been pulled forward in people’s thinking, there is another set of models that were pushed to the Rebalancing the Equation background in 2016 and became “harder to think.” These fall into three main categories: our socio- Why are these predilections in the public’s logical imaginations; our ecological imagina- explanatory repertoire so perilous to nonprof- tions; and our civic imaginations. its? Whether you are talking about access to children’s oral health programs or services for What Got “Harder to Think” in 2016 older Americans, boys’ and girls’ clubs or afford- Our Sociological Imaginations. When thinking able housing—in each case one begins the con- in self-makingness mode, attention is drawn to versation with significant conceptual deficits. internal dynamics of character and effort, making The public is likely to come to the conversation without an understanding of the links between18 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

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Perceptions of the truth individual effort, environmental constraints, the Obama legacy on healthcare, one participantare frame dependent. community assets, and the role that public poli- recounted: “The president said that, you know,It falls to those of us who cies play in solving social problems. Before the I guess we all could have done a better job ofwant to work with our election, advocates faced many cognitive deficits messaging to the American people just exactlyneighbors, coworkers, when communicating with the public. It just got what the value of this is to our country.”26 Exactly.and all whose fate we worse. The dominant models in our damaging The value it embodies, the way it works, whatshare to figure out how election discourse let reasonable thinking off the impedes and propels it, with what consequencesto get ourselves back hook and replaced it with what Daniel Kahne- for the country. In sum, a story that elicits slowinto the commons and man calls “fast thinking”: “[W]hen faced with a thinking.reasoning together. difficult question, we often answer an easier one instead, usually without noticing the substitu- So, what are nonprofits to do going into 2017? tion.”22 That is, when asked to consider policies to For starters, if we want smarter citizens, we must address complex sociopolitical issues like child promote better explanations of how the world development, climate change, or inequality, we works. This is not about slogans or niche mar- are likely to fall back on our comfortable bag keting. It requires real community conversations of tricks. Self-makingness, separate fates, and about the nature of the problems that confront business knows best will all provide “answers” of us and our options in addressing them. Those sorts. These models tell us that access to quality conversations will likely begin in problem mode, pre-K is less important than the child’s individual so they require significant reframing if people efforts; that the consequences of climate change are to be able to enlist slow thinking and train it outside my geographic view are regrettable but on solutions. This has been the fallacy of com- don’t affect me; that opening new job opportu- munity convenings and deliberative democracy nities for displaced workers in American busi- efforts that ignore the cognitive sciences in favor nesses will amply address inequality. Done. To of a “truth will set them free” approach. Percep- paraphrase Kahneman, our fast thinking told us tions of the truth are frame dependent. It falls to a story, and we agreed to believe it.23 those of us who want to work with our neighbors, coworkers, and all whose fate we share to figure There is an alternative: slow thinking, or the out how to get ourselves back into the commons process we go through when our old models and reasoning together. Remind people of the break down and our fast thinking is inter- values they hold for their communities, of the rupted. “The spontaneous search for an intui- places they want their children and grandchil- tive solution sometimes fails. . . . In such cases, dren to enjoy, of the institutions that have served we often find ourselves switching to a slower, people well in the past, and of the responsibility more deliberate and effortful form of thinking,” we share in building well-being for all Americans. Kahneman writes.24 Nonprofit leaders know that In true American fashion, there will be hundreds self-makingness, separate fates, and business of imagined Americas that result from that think- knows best will not stand up under scrutiny ing as we experiment with various ways to bring as solutions to America’s complex problems. it about. But only slow thinking will anticipate Evoking our sociological, ecological, and civic the problem areas, put plans in place to overcome imaginations is difficult just now, as the faster them, and lead to reengineering new approaches models go uncontested in the current political to what besets us all. The “two Americas” myth is discourse. They need to be interrupted. And non- a serious distraction from that mission, and one profits must be both instrumental in that interrup- that all nonprofits should eschew. tion and ready to tell better explanatory stories that link values to solutions and use the power Notes of metaphor to explain how the world actually 1. Deborah Tannen, “The Argument Culture,” works.25 After all, it is in the context of silence Daedalus: Journal of the American Academy of Arts that the old cultural models are allowed to harden & Sciences 142, no. 2 (Spring 2013): 177–84. and dominate. Coming out of a meeting to discuss 2. Ibid., 179.20 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

3. Bradd Shore, private interview, FrameWorks Insti- Pounces,” New York Times, December 10,tute, 2012. 2016, www.nytimes.com/2016/09/11/us/politics4. James Hohmann, “The Daily 202: Ayn Rand-acolyte /hillary-clinton-basket-of-deplorables.html?_r=0.Donald Trump stacks his cabinet with fellow 14. Drew Volmert et al., Mixing It Up: Reframingobjectivists,” Washington Post, December 13, Neighborhood Socioeconomic Diversity (Washington,2016, www.washingtonpost.com/news/powerpost DC: FrameWorks Institute, 2016), 18./paloma/daily-202/2016/12/13/daily-202-ayn-rand 15. Ibid., 22.-acolyte-donald-trump-stacks-his-cabinet-with 16. Drew Altman, “The Health Care Plan Trump Voters-fellow-objectivists/584f5cdfe9b69b36fcfeaf3b Really Want,” New York Times, January 5, 2017, www/?utm_term=.8bbb08e6df69. .nytimes.com/2017/01/05/opinion/the-health5. Colbert I. King, “Trump is woefully ignorant -care-plan-trump-voters-really-want.html.about minority youth in America,” Washington 17. Mitt Romney, “Trump has made a smart choice for edu-Post, June 17, 2016, www.washingtonpost.com cation secretary,” Washington Post, January 6, 2017, www/opinions/trump-is-ignorant-about-minority-youths .washingtonpost.com/opinions/mitt-romney-trump-has-achievement/2016/06/17/89c36680-33fb-11e6-8758 -made-a-smart-choice-for-education-secretary-d58e76e11b12_story.html. /2017/01/06/627550e0-d421-11e6-9cb0-54ab630851e86. Carlos Lozada, “The self-referential presidency _story.html?utm_term=.89b28fff467a.of Barack Obama,” Washington Post, December 15, 18. Susan Nall Bales, How to Talk About Govern-2016, www.washingtonpost.com/news/book-party ment: A FrameWorks Message Memo (Washington,/wp/2016/12/15/the-self-referential-presidency DC: FrameWorks Institute, 2006), 6.-of-barack-obama/?utm_term=.1647f08dfa80. 19. Susan Nall Bales and Moira O’Neil, Putting it Back7. Peter L. Benson, All Kids Are Our Kids: What Together Again: Reframing Education Using a CoreCommunities Must Do to Raise Caring and Respon- Story Approach (Washington, DC: FrameWorks Insti-sible Children and Adolescents (San Francisco, CA: tute, 2014), 5.Jossey-Bass, 1997). 20. Lynn Davey and Susan Bales, How to Talk About8. Susan Nall Bales, Andrew Volmert, and Nathaniel Budgets and Taxes: A FrameWorks Message MemoKendall-Taylor, The Power of Explanation: Refram- (Washington, DC: FrameWorks Institute, 2010).ing STEM and Informal Learning (Washington, DC: 21. Michael Baran et al., “Handed to Them on a Plate”:FrameWorks Institute, 2015). Mapping the Gaps Between Expert and Public Under-9. For more on the separate fates model, see C. Wright standings of Human Services (Washington, DC:Mills, The Sociological Imagination, fortieth anni- FrameWorks Institute, 2013).versary edition (New York: Oxford University Press, 22. Daniel Kahneman, Thinking, Fast and Slow2000). (New York: Farrar, Straus and Giroux, 2011), 12.10. Susan Nall Bales et al., Talking Juvenile Justice 23. Ibid., 58.Reform (Washington, DC: FrameWorks Institute, 24. Ibid., 13.2015), 8. 25. Nathaniel Kendall-Taylor and Abigail Haydon,11. Lydia O’Connor and Daniel Marans, “Here “Space to Think: Using Metaphor to Expand PublicAre 13 Examples of Donald Trump Being Thinking about Criminal Justice Reform,” StudiesRacist,” Huffington Post, February 29, 2016, in Media and Communication 2, no. 2 (Decemberw w w. h u f f i n g t o n p o s t . c o m / e n t r y / d o n a l d - t r u m p 2014): 13–23.-racist-examples_us_56d47177e4b03260bf777e83. 26. Dana Milbank, “Suddenly, not a ‘Thanks,12. Richard Fausset, Alan Blinder, and John Eligon, Obama’ to be heard,” Washington Post,“Donald Trump’s Description of Black America Is January 5, 2017, www.pressreader.com/usaOffending Those Living in It,” New York Times, August /the-washington-post/20170105/281608125111297.24, 2016, www.nytimes.com/2016/08/25/us/politics/donald-trump-black-voters.html. To comment on this article, write to us at feedback13. Amy Chozick, “Hillary Clinton Calls Many @npqmag.org. Order reprints from http://s​ tore.nonprofitTrump Backers ‘Deplorables,’ and G.O.P. quarterly.org, using code 240102.SPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​21

Nonprofit Leadership & Diversity How to Think Differently aboutDiversity in Nonprofit Leadership: Get Comfortable with Discomfort by Sean Thomas-BreitfeldWe have long known that the sector must I t would be an understatement to say that the ready for additional uncomfortable conversations diversify its staff and past few months have been uncomfortable. over the next years and accept that conflict will leadership to better The national election was downright ugly, and be necessary for progress. reach, reflect, and it exposed just how naïve those pundits were who “dared ask whether the United States had The diverse leadership of the Women’s March advocate for its finally begun to heal its divisions over race” after was so notable because studies and surveys constituents, yet too President Obama was elected.1 The resistance repeatedly show that people of color are under-many of us continue to that has sprung up in response to the new admin- represented in CEO3 and board4 roles in the non-edge around the issues istration has also been fraught—apparent, most profit sector. In preparation to launch our own and avoid plunging notably, in the tensions over race and feminism national survey on nonprofits, leadership, and into the deeper work race last year, my codirector, Frances Kunreuther,required for fundamental and I conducted more than thirty interviews with other experts in the nonprofit sector about what transformation. that were sparked in the lead-up to the Women’s we’re calling the “nonprofit racial leadership gap.” But creative conflict is March on Washington, in January.2 The critiques The basic question we asked is, “Why haven’t weexactly what is needed and dissent may have hurt some feelings but the moved the dial on diversity?” The answers to that here. As the author march was an undeniable success, drawing his- question varied widely and are far from conclusive,writes, “Making progress toric crowds to the nation’s capital and highlight- but without fail the most interesting conversations on any tough issue at ing the leadership of the four cochairwomen—one were with people who had personal experiencesthe intersection of social Black, one Latina, one Muslim and Arab Ameri- to get off their chests. Similarly, among the more can, and one white. Nonprofit leaders should get than four thousand survey responses from non- profit staff across the country, some of the richestbiases, policies, and data came from the hundreds of individuals who answered an open-ended question about how their structures and our Sean Thomas-Breitfeld is codirector of the Building race/ethnicity had negatively impacted their career nation’s legacy of Movement Project (BMP). Prior to joining BMP, Sean advancement.5 Knowing that discrimination stillracism requires some spent a decade working in various roles at the Center exists is one thing, but listening to and readingdiscomfort; it’s how for Community Change, and as a policy analyst at the personal stories reveals that racial dynamics are we know things National Council of La Raza. Sean is an adjunct assis- are changing.” tant professor at NYU’s Wagner School of Public Service, where he teaches a class on race, identity, and inclusion in organizations.22 ​T H E   N O N P R O F I T   Q U A R T E R LY  “SEARCHING FOR WHAT WE DON’T HAVE” BY SHANMUKHA INKAS/WWW.SAATCHIART.COM/INKAS; INKASART.BLOGSPOT.IN



The stories of racism as tense in our organizations as they are in our light on what “minority” staff (people of color,that our interviewees national politics. women, and transgender staff) had characterizedand survey respondents as a “White Men’s Club” environment inside of thedescribed having The stories of racism that our interviewees and organization.8 All across the sector, working dayconfronted in nonprofit survey respondents described having confronted to day in racially hostile, isolating, and obliviousworkplaces are not in nonprofit workplaces are not isolated incidents. environments is taking a toll on nonprofit staff ofisolated incidents. In fact, they reflect clear trends documented by color and causing staff turnover and recruitmentIn fact, they reflect other surveys, focus groups, and high-profile cases problems. This is a crisis for the sector, especiallyclear trends. over the last few years. In a 2010 survey by Com- knowing that it needs to be diversifying its staff mongood Careers of employees of nonprofits, and leadership to better reach, reflect, and advo- more than a quarter of the respondents of color cate for constituents who often are people of color. reported having left a job “due to lack of diversity and inclusiveness.”6 Similarly, a 2014 report from But despite the evidence that systems and A Philanthropic Partnership for Black Communi- structures are leading to the isolation of people ties (ABFE), based on focus groups and interviews of color in nonprofit organizations, there still with Black professionals in philanthropy, found seems to be a hesitance to talk explicitly about that when asked why Black practitioners leave racism in the sector. I bring up racism specifically, the field of grantmaking, roughly one-fifth gave because talking about race in the abstract has “being pushed out” of philanthropy as the reason proved insufficient. Appreciating racial, ethnic, for leaving, and two in five indicated that isola- and cultural differences is great, but too often tion was a cause for leaving foundation jobs.7 In that is the extent of multicultural work done in 2015, an internal memo on diversity issues in one the nonprofit sector. of the country’s biggest and most powerful LGBTQ organizations was leaked to the press, shedding A 2012 study looking at how rationales for organizational change shape multiculturalMASTER OF ARTS INPublic Policy and Administration• Build a broad, highly relevant skill set for a career in nearly any type of organization: government, nonprofits, business, and private enterprise.• Learn analytic methods, statistics, and qualitative and quantitative research.• Understand, manage, and lead organizational change.• Strengthen critical thinking, leadership, and communication skills.• Earn your Northwestern University master’s degree on campus or entirely online.• Choose the new Global Health specialization or one of three other specializations.Apply today!sps.northwestern.edu/ppa • 312-503-257924 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

development in nonprofits found that when orga- unfair or negative assumption; but regardless of If nonprofits arenizations undertake multicultural initiatives to be the interviewer’s positive—though apparently finally going to tackleresponsive to their client base (the top rationale clumsy—intention to affirm the relevance of how racial oppressiongiven), the interventions they tend to choose focus lived experience in the context of the job, being shows up inside ofon cultural competency, awareness, and sensi- stereotyped still doesn’t feel good. The tendency organizations, theytivity.9 This responsiveness rationale probably of nonprofits to tokenize people of color may get must be willing to bereflects “cultural competency” finally catching on new staff in the door, but it doesn’t lead to staff explicit about tacklingafter two decades of practitioners, consultants, retention. And when this kind of racially charged the dominant whiteand academics trying to make it a best practice in environment becomes too uncomfortable, people culture that compelsthe sector. By contrast, one of the rarer reasons would rather not rock the boat, and they wind up people of color tothat organizations took on multicultural programs jumping ship and leaving their job or the sector “cover” or downplaywas to “dismantle white/dominant culture.”10 But entirely. their authenticthis was the only rationale (out of eleven) that led identities at work.to organizations developing career ladder pro- As a nation, our racial waters seem to be gettinggrams and mentoring programs to create oppor- rougher. Polls show that people are alarmed thattunities for staff of color. Doing this much deeper race relations are worse than in years before.14multicultural work requires a commitment to But history and recent movements show that“fundamental organizational transformation”11— the discord is probably necessary. Creating reala commitment that seems too rare in the sector. opportunities to address America’s continuing racial inequality and oppression is going to require If nonprofits are finally going to tackle how conflict. Half a century ago, Martin Luther Kingracial oppression shows up inside of organiza- Jr. explained the concept of “creative tension”tions, they must be willing to be explicit about to defend against criticisms of the protests andtackling the dominant white culture that compels demonstrations of the day.15 It is worth remember-people of color to “cover” or downplay their ing that King’s critics were friends and supportersauthentic identities at work. A decade ago, Kenji of civil rights; they just wanted activists to waitYoshino’s book on “covering” explained how rather than push so aggressively for change. Andcoerced conformity and assimilation constituted if the nonprofit sector is going to grow and evolvethe new assault on our civil rights, especially in to fully embrace the leadership of diverse staff,an era when overt racism had been forced to change agents inside of organizations will need tosimmer below the surface.12 Yoshino’s own per- follow their lead, despite appeals from colleaguessonal reflections—as a gay Asian-American man to be patient and polite.who identified with certain aspects of dominantculture—also showed how complicated and Under President Obama, activists constantlynuanced the experience of racial oppression has had to grapple with the urgency to push for changebecome in multicultural America. while facing appeals from supposed/professed “allies” to be quiet. From the grassroots activists One of the profiles in the Commongood who heckled the president at media events to theCareers report parallels Yoshino’s notion of nonprofit leaders who got arrested in front of the“reverse-covering”—that is, demands on people White House, both the LGBTQ and the immigrantto act in stereotyped ways. The report profiles an rights movements used the same tactics the presi-African-American woman who recounted being dent had learned from his own years as a com-asked questions about her background—such as munity organizer.16 With the emergence of thegrowing up in the inner city and being a single Black Lives Matter movement during Presidentmother—that didn’t seem relevant to the job she Obama’s second term, there was renewed debatewas applying for.13 Those questions only made about activists’ disruptive tactics targeting allies.sense once the interviewer told her that she would Also, with their hoodies, T-shirts, and encour-“be able to relate to students in the program.” agement to supporters to be “unapologeticallyTo be sure, being able to relate to program par- Black,” the young activists refuse to “cover” andticipants should be seen as an asset, not as an play into respectability politics. This revived spiritSPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​25

When our own of activism is now in full swing in response to the of tokenism, they are only bringing the discom-organizations fall current administration in Washington, so we can fort and tension that exists within organizationsshort of our professed all expect the political debates to continue to get to the surface. The ability of decision makersvalues of diversity and more heated and contentious. to hear that their organizations are not livinginclusion, we should up to their ideals is a crucial leadership capac-expect staff to fight Just as nonprofits should embrace a more ity, and internal assessments of organizationalfor progress internally confrontational and overt style of advocacy and climate are a powerful tool for starting the kindwith the same zeal that activism in their public fights over our nation’s of honest discussions that are needed to makewe call attention to policy and politics, they must also prepare for change. My organization developed a questioninjustice and inequity a similar style of conflict and “creative tension” on the racial match or mismatch between orga-in the wider world. inside of the workplace. Any organization that is nizational leaders and clients/constituents for mission driven is going to have highly principled initial assessments we recently did with a cohort staff working to achieve social change in the of organizations in Albuquerque.17 When directors world. So, when our own organizations fall short saw the data on how their staff perceived their of our professed values of diversity and inclu- leadership—particularly boards—to be mostly sion, we should expect staff to fight for progress different from their constituents, it was met with internally with the same zeal that we call atten- some discomfort but also sparked necessary con- tion to injustice and inequity in the wider world. versations. Now those organizations are learning But, too often, leaders seem to regard critiques together about strategies to diversify their boards related to the lack of internal staff diversity as and prepare both clients and board members to signs of disloyalty. communicate directly with each other. When staff take the personal risk to speak up Facing the reality of race and racism inside about barriers to advancement, implicit biases nonprofit organizations is a necessary first step to playing out in hiring decisions, and experiencesTogether, we’ll write the next chapter. F or more than 70 years, Pacific Oaks has prepared students to serve diverse communities throughout California. Education Human Development Marriage and Family Therapy Teacher Credentialing pacificoaks.edu 877.314.2380 WWW.NPQMAG.ORG • SPRING 201726 ​T H E   N O N P R O F I T   Q U A R T E R LY

making progress and making change. If we truly 7. LM Strategies, The Exit Interview: Perceptions onare going to diversify the leadership of organiza- why Black professionals leave grantmaking institu-tions, people in positions of power will not be able tions (New York: ABFE, A Philanthropic Partnershipto avoid feeling uncomfortable. Making progress for Black Communities, 2014), 9.on any tough issue at the intersection of social 8. Chris Geidner, “Internal Report: Major Diversity,biases, policies, and structures and our nation’s Organizational Problems At Human Rights Cam-legacy of racism requires some discomfort; it’s paign,” BuzzFeed News, June 3, 2015, www.buzzfeedhow we know things are changing. .com/chrisgeidner/internal-report-major-diversity -organizational-problems-at-h.Notes 9. Cheryl A. Hyde, “Organizational Change Rationales:1. Kevin Sack and Megan Thee-Brenan, “Poll Finds Exploring Reasons for Multicultural Development inMost in U.S. Hold Dim View of Race Relations,” Human Service Agencies,” Administration in SocialNew York Times, July 23, 2015, www.nytimes Work 36, no. 5 (October 2012): 436–56..com/2015/07/24/us/poll-shows-most-americans 10. Ibid., 442.-think-race-relations-are-bad.html. 11. Ibid., 452.2. Farah Stockman, “Women’s March on Washington 12. Kenji Yoshino, Covering: The Hidden Assault onOpens Contentious Dialogues About Race,” New York Our Civil Rights (New York: Random House, 2006).Times, January 9, 2017, www.nytimes.com/2017/01/09 13. Schwartz et al., The Voice of Nonprofit Talent, 9./us/womens-march-on-washington-opens 14. See Sack and Thee-Brenan, “Poll Finds Most in-contentious-dialogues-about-race.html. U.S. Hold Dim View of Race Relations”; William3. For instance, the “Daring to Lead” surveys found Douglas and Donovan Harrell, “Poll finds bleakthat in both 2006 and 2011 (the most recent years of outlook for race relations,” San Francisco Chronicle,survey data), 82 percent of EDs in their sample were March 6, 2017, www.sfchronicle.com/nation/articlewhite. See Jeanne Bell, Richard Moyers, and Timothy /Poll-finds-bleak-outlook-for-race-relations-10978877Wolfred, Daring to Lead 2006: A National Study of .php; and Shiva Maniam, “Many voters, especiallyNonprofit Executive Leadership (San Francisco: Com- blacks, expect race relations to worsen follow-passPoint Nonprofit Services and the Meyer Founda- ing Trump’s election,” Fact Tank: News in thetion, 2006), 28; and Marla Cornelius, Rick Moyers, and Numbers blog, Pew Research Center, November 21,Jeanne Bell, Daring to Lead 2011: A National Study of 2016, www.pewresearch.org/fact-tank/2016/11/21Nonprofit Executive Leadership (San Francisco: Com- /race-relations-following-trumps-election/.passPoint Nonprofit Services and the Meyer Founda- 15. Martin Luther King Jr., “Letter From a Birm­inghamtion, 2011). Detailed “Demographics & Salary” charts Jail,” April 16, 1963, The Martin Luther King, Jr.,for the 2011 study are available at daringtolead.org Research and Education Institute./demographics/demographics-salary/). 16. Peter Wallsten, “President Obama bristles when4. Francie Ostrower, Nonprofit Governance in he is the target of activist tactics he once used,” Junethe United States: Findings on Performance and 10, 2012, Washington Post, www.washingtonpostAccountability from the First National Representa- .com/politics/president-obama-bristles-when-he-istive Study (Washington, DC: Urban Institute, 2007), -the-target-of-activist-tactics-he-once-used/2012/06/0918. /gJQA0i7JRV_story.html.5. Noelia Mann, “The #BMPRaceSurvey Closes 17. Alicia Lueras Maldonado and Leah Steimel,with Over 4,000 Responses,” Building Movement “The ‘Common Good’ in Action,” Build-Project blog, July 2016, www.buildingmovement ing Movement Project blog, March 2017,.org/blog/entry/the_bmpracesurvey_closes_with 2017, www.buildingmovement.org/blog/entry_over_4000_responses. /the_common_good_in_action.6. Robert Schwartz et al., The Voice of NonprofitTalent: Perceptions of Diversity in the Workplace To comment on this article, write to us at feedback(Boston/San Francisco: Commongood Careers and @npqmag.org. Order reprints from http://s​ tore.nonprofitLevel Playing Field Institute, 2011), 11. quarterly.org, using code 240103.SPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​27

Nonprofit Leadership TransitionHow to Think Differently about Leadership Transition28 ​T H E   N O N P R O F I T   Q U A R T E R LY  “PAN-IKONIKO-3” BY CHRISTOS SIMATOS/WWW.CHRISTOS-SIMATOS.COM

Callout tkEditors’ note: We are coming up on two decades  T H E   N O N P R O F I T   Q U A R T E R LY  ​29of sounding an alarm about who will take on thefuture leadership of nonprofits, but that alarm hasnot sparked much positive advancement, accord-ing to the data. This trio of hard-hitting articlesis designed to alert nonprofit leaders to a changeagenda—one that aligns the way we develop andchoose organizational leaders with meeting ourvery real sustainability needs as well as our socialintentions.SPRING 2017 • WWW.NPQMAG.ORG

30 ​T H E   N O N P R O F I T   Q U A R T E R LY  Reflections on Executive Leadership and Transition Data over Fifteen Years by Jeanne Bell, Paola Cubías, and Byron Johnson If we keep doing the same kinds of succession planning, warn the authors, then “years after this current wave of retirements, we may look up and see that nothing has really changed; that we are still a predominantly white ‘charitable’ sector doing the bare minimum to disrupt the social and political status quo.” “PAN-IKONIKO-3” (DETAIL) BY CHRISTOS SIMATOS/WWW.CHRISTOS-SIMATOS.COM

Over the course of fifteen years, how we can confront and finally overcome these Hire by hire (and board CompassPoint Nonprofit Services con- systemic “elephants in the room.” While there are recruit by board ducted four national studies of non- many levers for change, this article looks at the recruit), we are profit executive leadership. The first disconnect between what’s happening in most keeping the sectorthree reports were called Daring to Lead, and organizations and what the leadership discourse predominantly white—were produced in 2001, 2006, and 2011.1 And then has been for at least ten years now with respect demographically,in 2014–15, as part of a multifaceted project to to the potential for leadership itself to change— politically, and culturally.explore our role in the executive transition man- that is, for fundamentally reconsidering who leadsagement (ETM) field, we did another national community organizations and how they lead them.gathering of data, specifically about executivesand their most recent experiences of executive Who Leads?transition.2 Each time, we have noted how littlethings are changing with respect to leadership The Datademographics and dynamics—at least in thebroad swath of community-based organizations Race and Ethnicity of Executivesthat have been our primary research audience.Over those same fifteen years, the field of non- Daring to Lead 2001 Executive Transition 2014profit leadership development (of which we arealso a part) has grown extensively as evidenced 75% white 79% whiteby the breadth of leadership programs nation-ally, the emerging prevalence of methodologies 25% people of color 21% people of colorsuch as leadership coaching, and the growinginvestment by foundations. Taken together, the Graduate Education of Executivesstagnant data and evolving leadership discourseraise concern about whether as a sector (and as Daring to Lead 2001 Executive Transition 2014the leadership practitioners serving it) we aremoving quickly and intentionally enough toward 42% without Masters 40% without Mastersalignment of our leadership aspirations for the and/or PhD and/or PhDsector with our leadership reality. 58% with Masters and/or PhD 60% with Masters and/or PhD In The Evolution of Executive Transitionand Allied Practices, Tom Adams lays out how The Contradiction in Current Discoursethe field of ETM has evolved over twenty yearsof practice and where he and other experts see It has become exceedingly common for leaders,it going next.3 Adams argues that even as ETM funders, and practitioners to posit that the peoplepractitioners have strengthened and integrated impacted directly by an issue should have leader-their approach to organizational consulting— ship in defining and solving it. Given the central-by adding succession and financial sustainabil- ity of racism and white supremacy in all sociality planning, for instance—they nevertheless issues, how then can we be satisfied with stagnantencounter some seemingly intractable systemic representation of people of color in nonprofitforces: “These challenges—the elephants in the leadership over fifteen years? Hire by hire (androom—include the lack of diversity among non- board recruit by board recruit), we are keepingprofit executives and boards; the bias toward the sector predominantly white—demographi-unrealistic leadership expectations; underper- cally, politically, and culturally. If we had reallyforming or challenged boards; and the ongoing done the work to understand the catastrophicstruggle to finance an overburdened sector.”4 consequences of this from both an equity and organizational impact perspective, we wouldn’t As we improve the way we work with or within allow it to continue. But we haven’t. We haven’tindividual organizations, we also need to consider confronted this elephant in the room: if few people of color want to lead your staff or serve on your board despite the fact that you work in Jeanne Bell is CEO of CompassPoint Nonprofit Services. Paola Cubías is an associate project director at Com- passPoint Nonprofit Services. Byron Johnson is a senior project director at CompassPoint Nonprofit Services.SPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​31

We don’t know how and with communities of color, it is entirely likely We often hear the argument that small organiza-many fully capable that people of color don’t see your organization tions—thus, the bulk of nonprofits—can’t developleaders are overlooked as a place through which to make social change. executives because there aren’t enough layers andby outgoing executives places to move up through. This is arcane, hierar-and boards who are Another contradiction exists in our attitude chical thinking that does a disservice to the sectorlooking for the next toward graduate education. Given the growing in so many ways, not least of which is the problem“heroic leader”— acknowledgment that professionalization of our of not retaining millennials. In reality, a small orga-in the last one’s mold, sector has had significant negative consequences, nization offers more opportunity to loosen the griponly better. our practice of favoring candidates with graduate of traditional job descriptions and allow people to degrees in our selection of executives would seem grow together and with equal access to the stra- to be counterproductive. It suggests that many tegic and financial realities of the organization. sector actors are simply not motivated to disman- tle oppressive structures and systems (what many How we lead in too many organizations—as sum up as the “nonprofit industrial complex”). though we are little 1950s companies—is actually This is not to say categorically that graduate edu- thwarting internal leadership development. More- cation is problematic (although some of it may over, not developing our own leaders is a contra- very well be anathema to building equitable orga- diction in that so much of our work as nonprofits nizations and movements for change) but rather is in developing leadership in external milieus, gives reason to ask ourselves if favoring graduate such as communities and movements. For things education in our selection of executives—and to change, we have to take the espoused value thus encouraging the next generation of leaders of internal leadership development and opera- to partake in it—really is accelerating the sector’s tionalize it, including holding current executives relevance and impact. And more obviously, given accountable for the bench they nurture through- its exorbitant cost and consumption of nights and out their tenure and the organizational structures weekends, we should be asking ourselves who is and cultures they develop to engage everyone in being screened out of the sector’s executive roles leadership. given this preference? Why Aren’t Organizations Better Where Do Executives Come From? Prepared for Transition? The Data The Data Executives Developed Internally Incoming Executives’ Experience of Transition Daring to Lead 2001 Executive Transition 2014 27% describe their transition 73% describe their transition into the organization as into the organization as 64% external hires 68% external hires “smooth”or“fairly smooth” “somewhat challenging”or 36% developed from within 32% developed from within “very challenging” The Contradiction in Current Discourse Inheriting Significant Financial Challenges The leadership discourse is and has been for years 60% describe the 30% describe the 10% describe the overflowing with talk about preparing for baby financial state of financial state of financial state of boomer retirement, about next-generation leader- the organization as the organization the organization as ship, about shared leadership, and so on. So, how “weak”or“in crisis” as “moderately “strong”when they can it be that only one in three organizations is when they arrived healthy”when they capable of developing its own future executive? arrived Or that only one in three at least recognizes the arrived leadership already on its bench? We don’t know. We don’t know how many fully capable leaders Inheriting Significant Program-Relevance Challenges are overlooked by outgoing executives and boards who are looking for the next “heroic leader”—in 33% describe the 53% describe the 14% describe the the last one’s mold, only better. programming as programming as“in programming as “weak”when they need of innovation” “strong”when they when they arrived arrived arrived32 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

The Contradiction in Current Discourse These four studies were similarly conducted but It should be of great independent (not longitudinal); however, the concern to the sectorThe field of executive transition management has data—taken in concert with a divergent leader- that who leads and howbeen in the mainstream for twenty years now, ship discourse and the urgency of the political is not changing fastwith countless articles, books, and guides as well moment—more than gave us pause. It should enough to catalyze theas hundreds of trained practitioners across the be of great concern to the sector that who leads relevance of manycountry. There is more than ample evidence that and how is not changing fast enough to catalyze nonprofit organizations.following its core tenets, even if outside consult- the relevance of many nonprofit organizations.ing help is not available or affordable, increases And further, that without sectorwide attentionthe likelihood of a smooth executive transition. paid to the transition of leadership (as regardsRetention of new executives and board and both the process of leadership and the leadersexecutive satisfaction are improved when these themselves), years after this current wave ofpractices are followed.5 executive retirements we may look up and see that nothing has really changed: that we are still But, at a more fundamental level, these data a predominantly white, “charitable” sector doingdemonstrate how far organizations get off course the bare minimum to disrupt the social and politi-and how they then look to a new executive— cal status quo.typically from outside the organization—to tryto “right the ship.” This pattern, we suspect, only The authors thank the David and Lucile Packardserves to reinforce current leadership demo- Foundation and the Annie E. Casey Foundationgraphics and dynamics. If an organization actu- for their generous support of this project.ally needs a “hero” to save it, how likely is it tomake major pivots in its thinking about who leads Notesand how? And compounding this, how many 1. The Daring to Lead reports were funded by thepotential leaders—especially first-time execu- Agnes and Eugene Meyer Foundation; Rick Moyerstives of color, for whom the stakes are extremely of the foundation served as a coauthor, along withhigh—will stay clear of the opportunity to lead Tim Wolfred and Marla Cornelius. Find the reports atgiven the inevitably protracted challenge of a daringtolead.org/.“turnaround,” if not the potential outright failure 2. These data were collected from 885 executiveof one? directors nationally, in partnership with the online magazine Blue Avocado and then editor-in-chief Jan And finally, one has to wonder if so many orga- Masaoka.nizations would in fact get this far off course if 3. Tom Adams, The Evolution of Execu-they were practicing and sharing leadership dif- tive Transition and Allied Practices: A Callferently. The oft-touted “organizational agility”— for Service Integration (Oakland, CA: Com-the capacity to make constant sense of what’s passPoint Nonprofit Services, March 2017),important and adjust programming, staffing, and w w w. r a f f a . c o m / s u c c e s s i o n a n d s u s t a i n a b i l i t yfinancing accordingly—is fostered by distributed /documents/executivetransitionreport.pdf.leadership, wherein more people than just a man- 4. Ibid., 23.agement team are doing the sensemaking.6 This, 5. Ibid., 12.too, has been part of the leadership discourse 6. Brian J. Robertson writes about the role of “sensor”for many years. And yet, too few of us have actu- in Holacracy: The New Management System for aally deconstructed our top-down management Rapidly Changing World (New York: Henry Holt andto empower the diverse sensemakers across Co., 2015), 4–7.our staff, board, and constituency. As such, weare extremely vulnerable to the once-visionaryexecutive who can’t sense the shifting sands fastenough.• • • To comment on this article, write to us at feedback @npqmag.org. Order reprints from http://s​ tore.nonprofit quarterly.org, using code 240104.SPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​33

Callout tk Blending Succession34 ​T H E   N O N P R O F I T   Q U A R T E R LY  Planning and Executive Transition: A Successful Case by Tom Adams Experts have come to understand that responsible succession planning for most nonprofits requires much more than the question of how to fill the c-suite spot. This new approach involves blending sustainability and transition planning— groundwork that makes the most of a leadership transition and better positions the nonprofit for long-term success.  “PAN-IKONIKO-3” (DETAIL) BY CHRISTOS SIMATOS/WWW.CHRISTOS-SIMATOS.COM

Twenty-five years ago, when an executive • Prepare for unplanned and planned transi- While it is tempting to director left a nonprofit, it too often tions through a deeper approach to succes- meant a decline in performance—or even sion planning. going out of business. Today, throughsupportive investments by national and regional The case study that follows is intended to provide deny it, every leader willfoundations and the development of a practice readers with an example of the power and poten- transition someday.focused on executive transition, most nonprof- tial of executive transition and its allied practice.its move through times of executive transition It offers an example of how an organization facedwithout trauma or tragedy. The evolution of this and addressed big shifts in funding, board ner-practice and the development of nonprofit suc- vousness about viability and succession, and acession and sustainability planning are topics potential internal succession where the board wascovered in a recently published essay (see The divided in its enthusiasm for it.2Evolution of Executive Transition and AlliedPractices, 2017).1 This article offers board leaders Case Studyand executives a hands-on look at that essay’skey points, and focuses on the experience of one Six years ago, Community Builders Southeastorganization, and what’s different today from faced a turning point.3 Their aging executive direc-twenty-five years ago about the choices boards tor had let the board know he would retire in threeand executives have when they are faced with years. On paper, the organization was doing wellimminent or future executive transitions. programmatically and breaking even financially in the midst of the recession. Yet the board chair While it is tempting to deny it, every leader and other executive committee members felt thatwill transition someday. The approaches listed the organization was drifting and that they neededbelow offer leaders expanded choices that do the a more strategic thinker. Three more years withfollowing: the current executive scared them. These board members envisioned less government money, • Transform the fear of executive transition into a resulting in major changes in programs, and they proactive, empowering opportunity to increase doubted that the current executive, though opera- focus on mission results and the leadership tionally effective, could lead them through such team needed to achieve the desired results. a major change. • Reduce the disruption and risks of executive Tensions grew. The board chair was a success- transition. ful business executive and an action-oriented, fix-it guy. The board treasurer longed for leader- • Support organizations where needed in major ship like that of the executive who had left ten repositioning or turnaround. years earlier. The governance chair, who led a different kind of nonprofit, was getting impatient • Make more coherent the emotionally charged with the executive of this one. transitions of founders and long-tenured executives. What’s different: Many boards in this situation would either do nothing or overreact and termi- • Expand the culture and practices of leader nate the executive rather than wait three years. development, inclusion, and diversity. This organization chose instead to step back and consider its options before deciding. • Open the possibility of new approaches to sharing power and leadership. Tom Adams is a director on the search, transition, and planning team at Raffa P.C., a B-Corp certified, national • Consider more fully the possibility of a new Top 100 CPA advisory firm specializing in nonprofits and partnership or merger before deciding to hire socially responsible businesses. another executive. • Address shifts in funding and the political envi- ronment, and rethink the connection between mission, strategy, and how the work of the organization is supported.SPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​35

The possibility of a Deciding on Focus strategy/business model, resources (financial andsudden, unexpected human), and organizational culture.transition can be scary to The board was divided about what to do next.managers and staff, and Some wanted to do nothing and wait until the What’s different: The board proactively decidedcan result in rumors and executive was ready to leave, and then do a search. to use the three years’ informal notice to get readyunnecessary anxiety. The board chair and a few executive committee for transition rather than waiting. The executive members felt strongly that to do nothing was to director overcame his fear that this process might abdicate and accept a status quo that looked okay result in the board deciding to pressure him to but was more risky than it appeared. From their leave sooner. The board decided to focus on suc- corporate experience, succession planning looked cession planning in order to be thoughtful about like the next action, so they started researching leader continuity and the possibility of internal how to do nonprofit succession planning. A review succession. The succession planning was done of articles on the topic led them to a firm that with a focus on organizational sustainability—a offered succession planning for nonprofits. more recent option particularly relevant to organi- zations with long-tenured or founder executives, The approach offered included a replacement or facing major changes in funding and environ- review of all management positions, including a ment. The board and the executive and manage- review of job descriptions and key functions and ment teams embarked on this broader planning roles (sometimes called “unpacking the job”), process, which looked at strategy more broadly along with an emergency backup plan for the in the context of culture, resources, and leader- executive director, chief operating officer, and ship. They thereby reexamined their assump- four other senior managers. The board members tions about organizational sustainability and how would also develop a succession policy and get they updated their strategic plan. This decision clear on their preference for internal promotion allowed them much-needed time to go deep on or an external search for the new executive when these questions and not rush a decision. the executive transition occurred. Getting Started The board chair and executive committee were successful in convincing the board to make this Once there was agreement on the broad scope of investment. The fact that the board was divided the work with the consultant, the first focus was in its opinion about the likelihood of internal suc- learning more about the management team and cession as well as in its level of confidence in the board. The possibility of a sudden, unexpected current executive helped make it clear that outside transition can be scary to managers and staff, and guidance was needed. can result in rumors and unnecessary anxiety. By working with the management team and the The other complicating factor was the timing executive director together toward understand- of strategic planning and how the organization ing how succession planning would be done—and did that strategic planning. The board chair had clarifying the roles of the management team and enlisted a private sector consultant to help with board in the process—some of the anxiety and dis- the strategic plan. This process had been repeated tractions are reduced. For the management team, several times, had resulted in a complex set of first actions included finalizing the questions for measurable outcomes, and was understood by an organizational self-assessment to be completed long-time board members (but not newer board by all staff, and agreeing to complete a worksheet members or staff). to unpack their jobs. The board’s concern about reduced govern- The board formed a succession and sustain- ment support and decline in services to the ability committee and guided plans for a board community resulted in agreement to include a self-assessment. The findings from these two sustainability review to accompany the succes- surveys were compared to understand board and sion planning. Once the complexity of the strategic staff perceptions and alignment/disagreements. plan was made visible, willingness was height- These data informed the later discussion on ened for an organizational sustainability review that focused on board and executive leadership, a36 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

organizational sustainability and the connection viability. Community leaders on the board could One of the risks ofbetween where the organization was at the time see that their neighborhoods and people served by executive transitions isand what was needed going forward. the organization were at risk if the reductions in the board’s beginning to public support were not addressed. This concern think about who the The unpacking of the management team jobs— made it hard to evaluate the internal candidate next executive might bekey functions and roles, key relationships, and fairly, because she was associated with the old before there is claritypossible backup in an emergency—helped all to ways of supporting the organization. about the organization’sbetter understand the current roles of the CEO, direction and priorities.COO, and management team, as well as how they The board and staff survey had asked ques-were progressing. The COO quickly let it be known tions about the four domains of sustainability:that she was interested in a CEO position at Com- leadership, strategy/business model, resources,munity Builders or at another organization at some and culture. The survey data showed that somepoint in the future. The unpacking showed where programs worked better than others both in termsthe CEO (who had been promoted from COO nine of results and paying for themselves. The sustain-years earlier) was still the detail person for the ability review engaged the management team andorganization. The COO was in many ways more board in a process that included:of a strategic thinker and visionary. This insightbecame helpful as the board began to consider • Detailed discussion of the survey resultsthe question of internal succession. Some of the and the questions the data raised about theboard’s anxiety about the pending transition was organization;reduced by learning more about the very talentedmanagement team the CEO had put in place. • A line-of-business (programs) review to better understand the programs, their impact, their Succession planning resulted in a written, funding now and in the future, and their poten-board-approved emergency backup plan and tial for growth (the board decided to ask thesuccession policy for the CEO, and written COO and her potential internal successor toemergency backup plans and worksheets with work with the CEO in organizing and leadingleader-development and cross-training plans for this review); andall the managers. • A board and management team retreat toWhat’s different: Too often, succession planning discuss sustainability, succession, and the con-is avoided entirely because it can seem uncom- nection to the strategic plan.fortable for the executive and board. Or, it is donein a check-the-box superficial way by taking a Unexpectedly, this process resulted in a shifttemplate and filling in some details. Once the fear among the board leaders to unanimous supportof succession planning is overcome, it is a very for the possibility of the COO’s becoming theempowering process for both the board and man- next CEO. This happened largely because ofagers. The process makes real everyone’s passion the deeper appreciation the board gained fromfor mission by focusing on ensuring that they are knowing the managers better and seeing (viapreparing the leaders that the organization needs. the line-of-business review) the strengths of theIn this situation, the succession-planning process COO and the key leadership role she alreadyimproved trust and communication between the played.board and managers, and affirmed the progressin developing internal talent. What’s different: Community Builders looked at its need for a new executive through the broaderConnecting Succession and lens of adapting its mission to a rapidly changingOrganizational Sustainability environment. One of the risks of executive transi- tions is the board’s beginning to think about whoCommunity Builders faced more than the chal- the next executive might be before there is claritylenge of transitioning its executive and planning for about the organization’s direction and priorities assuccession. Changes in federal and state funding well as the competencies and attributes required.for its work raised real threats to its long-term Doing so comes from anxiety, and this anxiety isSPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​37

Integrating the normal. We have a vacancy: Who do we know who needed to change and wasn’t sure how. Thissustainability review could fill the position? This approach, however, process supported the board and managementwith succession planning misses the opportunity for growth and refocusing team in exploring questions we had not been ableallowed the board to of organizational impact. Integrating the sustain- to address, and making decisions that positionedgain a much better ability review with succession planning allowed Community Builders for long-term success.”understanding of the the board to gain a much better understandingorganization, its future, of the organization, its future, and the leadership What’s different: The board navigated a complexand the leadership team team already in place. This resulted in a much situation and achieved both a good ending withalready in place. more informed decision about whether or not to its retiring executive and a great beginning with a do an external search and how to shape the suc- new CEO who met their present and future needs. cession policy and eventual transition.4 Notes The Executive Transition 1. Tom Adams, The Evolution of Executive Transition and Allied Practices: A Call for Service Integration From the planning described above, the board (Oakland, CA: CompassPoint Nonprofit Services, March decided to offer the executive position to the 2017), www.raffa.com/successionandsustainability COO on an incremental basis. Eighteen months /documents/executivetransitionreport.pdf. before the CEO intended to retire, the COO was 2. For additional examples, see Tom Adams, The promoted to president. This promotion included Nonprofit Leadership Transition and Devel- increased involvement and work with the board, opment Guide: Proven Paths for Leaders and and overall responsibility for implementing Organizations (San Francisco: Jossey-Bass, the strategic plan and reporting organizational 2010); Tim Wolfred, Managing Executive Tran- results. Based on six-month and one-year perfor- sitions: A Guide for Nonprofits (St. Paul: Field- mance reviews of the president by the board, the stone Alliance, 2009); and other articles found COO was promoted to CEO six months before at  www.raffa.com/successionandsustainability her predecessor retired. The former CEO became /pages/publicationsandresources.aspx. a senior policy advisor (and was also available 3. This case is based on a real situation, with the orga- as requested to the new CEO), and carried out nization name and industry changed. discrete duties as assigned by the COO. (This 4. The 2008–09 recession intensified for the sector arrangement is somewhat unique, and it worked the question of organizational sustainability. Most because of a long, positive, and trusting relation- organizations faced funding challenges and the need ship between the CEO and COO; typically, this to operate with fewer resources. Jeanne Bell, Jan type of overlap is not recommended.) Masaoka, and Steve Zimmerman advanced atten- tion to sustainability in 2010 with the book Nonprofit The board managed the communications about Sustainability: Making Strategic Decisions for this process throughout to ensure both confi- Financial Viability, which helped leaders to look at dentiality and transparency as appropriate. The mission impact and financial viability together. This new CEO retained an executive coach during the initial focus was followed by a second book, in 2014, process, and continued those services after she The Sustainability Mindset: Using the Matrix Map became CEO. The board established an onboard- to Make Strategic Decisions, by Steve Zimmerman ing committee to work closely with the two execu- and Jeanne Bell. The Foraker Group, the management tives during the overlapping six months, and with support organization for Alaska nonprofits, and Tran- the new CEO during her first year. Two years sitionGuides (now part of Raffa, P.C.) also developed later, the organization has adjusted to the budget approaches that broadened the discussion of sustain- changes, expanded the role of a chief develop- ability beyond mission and finances to include leader- ment officer, increased private fundraising, and ship, strategy, and culture. successfully continued to achieve and expand mission results. To comment on this article, write to us at feedback @npqmag.org. Order reprints from http://​store.nonprofit During this process, the board chair com- quarterly.org, using code 240105. mented, “When we began planning for our CEO’s retirement, I was really concerned. I knew we38 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

The Nonprofit Quarterly Digital Books Collection Gain access to the nonprofit resources you need with the swipe of a finger. Visit npqmag.org to purchase these and other digital books. Nonprofit Communications: Managing the Message in a 21st Century Environment Does everyone understand your organization’s mission and needs? This 71-page digital collection of writings from 13 experts discusses the theory and practice of modern nonprofit communications. Price: $39.00 Board with Care: Perspectives on Nonprofit Governance Existing systems are seldom built to fit each organization; instead, we often “borrow”governance structures and bylaws from other organizations. NPQ delves into these problematic practices. Price: $24.95 Strange Accounts: Understanding Nonprofit Finance This collection of articles selected from the Nonprofit Quarterly explores the strangeness of nonprofit finance and provides best- practice approaches so that the reader may become as skillful a strategist—as manager or board member—as he or she should. Price: $24.95 NPQ’s Reader on Executive Transitions This reader on nonprofit executive transitions includes almost a decade’s worth of well-researched and insightful articles on what can be a difficult and risky moment for many organizations. The sector has been blessed with a small but talented group of thinkers on this topic, and most of them are published here. Price: $24.95

40 ​T H E   N O N P R O F I T   Q U A R T E R LY  Five Insights from Directors Sharing Power by Jeanne Bell, Paola Cubías, and Byron Johnson Far too many leaders bemoan how lonely it is at the top, yet bristle at the suggestion of a codirectorship. But why? When preparing for a leadership transition, we would do well to reflect on what we lose by sticking to traditional practices of leadership and what we stand to gain from being open to alternative frameworks and approaches. “PAN-IKONIKO-3” (DETAIL) BY CHRISTOS SIMATOS/WWW.CHRISTOS-SIMATOS.COM

s part of a two-year project to reflect sharing power. It’s also important to note that We share these on our role in the field of execu- none of the organizations is by any means putting reflections to open itself forward as expert or as having “figured it up a conversationAtive transition management (ETM), out.” Rather, we share these reflections to open CompassPoint Nonprofit Services up a conversation with others who are question-convened a discussion in August 2016 among ing aspects of traditional leadership and exploringfive progressive organizations that have formal alternative frameworks and approaches.shared leadership structures. This made sense aspart of CompassPoint’s reflection process for two 1. Sharing leadership is an expression of our with others who arereasons: First, we had been exploring alternative individual and organizational identities. questioning aspects ofstructures internally. Second, we had become traditional leadershipincreasingly concerned about our external prac- Soon into our conversation, we noted that of and exploringtice of ETM—which, in focusing on the search for the ten leaders, nine are people of color, and all alternativean organization’s next, single leader, was uphold- identify as queer. Darlene Nipper of Rockwood frameworks anding some traditional assumptions and practices of reflected, “The thing is that we’re just different approaches.leadership that in the rest of our work we had been from white guys. We’re different people fromquestioning for some time. We wanted to under- the folks who have informed the thinking aboutstand the motivations, benefits, and challenges the organizational leadership and management overleaders saw in moving away from the traditional, the last one hundred years. We come at it dif-single-executive-director model. The leaders we ferently.” Susan Misra of MAG put it this way: “Iinterviewed and their organizations are as follows: think our innate approach is collaborative and collective. When the organization was thinking • Building Movement Project about who should be the next leader, it just felt www.buildingmovement.org wrong to think of one executive director.” Sean Sean Thomas-Breitfeld and Frances Thomas-Breitfeld of Building Movement Project Kunreuther, codirectors linked shared leadership to feminist theory: “I’m curious if people have thought about the interest • Community United Against Violence (CUAV) and appetite for alternatives to very top-down, www.cuav.org hierarchical, one-person-in-charge models as Lidia Salazar and Essex Lordes, codirectors informed by feminism in terms of a world view, but also the organizational theory that might be • Housing Rights Committee of San Francisco coming out of that branch of academic research.” www.hrcsf.org Others referenced past experiences of traditional Fred Sherburn-Zimmer, executive director, leadership that were oppressive. Essex Lordes of and Aileen Joy, administrative director CUAV reflected, “That’s also part of the motiva- tion—having this bad experience of power.” It was • Management Assistance Group (MAG) clear that, in part, the organizations are experi- www.managementassistance.org menting with shared leadership because tradi- Susan Misra and Elissa Sloan Perry, tional, hierarchical leadership is not resonant for codirectors the individual leaders themselves. • Rockwood Leadership Institute They are also experimenting with shared lead- rockwoodleadership.org ership structures because top-down leadership is Akaya Windwood and Darlene Nipper, in contradiction to the work that they do as organi- partner leaders zations. In various ways, each of the organizations It’s important to note that the organizations Jeanne Bell is CEO of CompassPoint Nonprofit Services.had differences in how they were unpacking and Paola Cubías is an associate project director at Com-distributing the single executive role: there were passPoint Nonprofit Services. Byron Johnson is a seniorvariations on codirectorship, and some were project director at CompassPoint Nonprofit Services.experimenting with even broader committee orcollective structures. Despite these differences,there were powerful commonalities across theorganizations’ motivations and aspirations forSPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​41

“It’s not that you are is trying to change the way that people, organi- and when it’s working well, it’s not just about thedoing less work or zations, and systems relate to one another. They few people who are the codirectors, it’s actuallythat somehow having are all concerned with elevating the voices and about the whole organization.” Essex Lordestwo people is going wisdom of marginalized people and communities. reflected, “Unless you have a certain backgroundto reduce the work. It They are all concerned with the conscious, respon- or training, oftentimes in organizations you’re notactually is a lot of work, sible use of power. Given that, they feel a responsi- allowed to bring whatever your lived experiencebut the results are bility to structure themselves to the reality they are is. For us, it’s having a structure that allows peopleexponentially better, working toward. Elissa Sloan Perry of MAG put it to embody more of their leadership; to be able toin my experience. this way: “We were really, really clear that MAG bring the fullness of their experience; to bring inWhat we’re able to needed to shift its internal practice behavior and that wisdom that we inherently have as oppressedaccomplish together culture to reflect the world that we are contribut- people in different ways and turn that into insightis way more than I ing to making.” Fred Sherburn-Zimmer of Housing into how we can support the broader community.”believe any one person Rights Committee talked about developing acould accomplish.” committee-based structure that keeps the deci- Building equity internally extends to sions with those most involved and impacted by organization-wide practices such as compen- an issue: “While we do all affect each other’s work, sation, which most of the groups had lately it doesn’t make much sense that folks who are not rethought. As Elissa Sloan Perry described it, in public housing and working with public housing “Internally, we are working to get closer to a prac- tenants, or come from public housing, have much tice where the highest paid do not make more than say-so over the public housing program.” He added three times the lowest paid. We have also created a that engaging tenants is their next challenge in decision-making guide so that people understand sharing leadership system wide: “We have tenant where and how they can make decisions on their leaders who are not only taking on their own evic- own.” Darlene Nipper added, “We, too, have a tion, but are taking on evictions of everyone on policy of no one making more than three times their block. These people need to have a part in our anyone else. And there are others besides the codi- decision making, strategy, and vision.” Similarly, rectors who have lots of decision-making author- CUAV came to the realization that internal leader- ity. Give lots of different people the opportunity to ship composition and structure are directly linked make decisions [we say] and move me and Akaya to external impact. According to Lidia Salazar, “We out of the center of decision making for lots of the were noticing that our programmatic work wasn’t work.” Institutionalizing shared leadership and reaching marginalized communities. So, in our equity means giving everyone, not just the codirec- transition, we also changed our mission to center tors, the power to step into their capacity to lead. black and brown people, people of color. Then, in turn, it made sense to have a leadership model that 3. Sharing leadership is not about less work; in some reflected this in order to reach these communi- cases, it may be about more. ties and in order to make informed decisions for the organization.” These evolutions of leadership For the majority of us, neither the primary moti- structure are breaking down the false distinction vation nor the result so far of shared leadership between the organizations’ external organizational is having less work to do. As Darlene Nipper put identities and their internal practices. it, “It’s not that you are doing less work or that somehow having two people is going to reduce 2. Sharing leadership is not only about the individual the work. It actually is a lot of work, but the leaders sharing power; it is also an organization- results are exponentially better, in my experi- wide ethos. ence. What we’re able to accomplish together is way more than I believe any one person could Each of the organizations is working to include accomplish.” Interestingly, some codirectors the voices of all staff in decision making and were attempting to split the job into fairly dis- direction setting for the organization and to adopt tinct domains, while others have the same job practices that deepen equity on all fronts. Susan description and work out where they intend to Misra said, “Shared leadership does really work, co-decide and where they can act on their own. And co-deciding, of course, can add time to42 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

decision making—a challenge that was raised 5. Sharing leadership is both relational and replicable. Shared leadership canby some. Sean Thomas-Breitfeld said, “I think challenge the notionamong staff under us there is frustration some- When it came to the question of whether the orga- that decision-makingtimes around the length of time it takes to make nizations would continue with shared leadership if efficiency, rather thandecisions that lead to action.” Susan Misra added, one or more of the people currently sharing power decision-making quality,“Theoretically, you could have one person do it were to leave, to a person the folks in variations of is the desired end game.faster, but I think that Elissa and I are doing it the codirector model were clear that the quality ofbetter collectively. It’s not a time-sharing strat- the relationship between them, which often pre-egy, though I think initially we thought it would dated their current leadership partnership, wasbe.” Shared leadership can challenge the notion a critical success ingredient. Elissa Sloan Perrythat decision-making efficiency, rather than said, “Susan and I are pretty clear that one ofdecision-making quality, is the desired end game. the things that really makes this work is that we knew and trusted each other pretty deeply before Though it’s not less work, the leaders spoke to we came into these roles.” Similarly, Darleneanother kind of burden being lessened: the psy- Nipper said, “I’d been working with Rockwoodchological burden of solo positional leadership. as a consultant and trainer for a number of years.Frances Kunreuther, who had led Building Move- Akaya is someone I had gotten close to and reallyment Project on her own before joining forces with respected.” And Sean Thomas-Breitfeld said,Sean Thomas-Breitfeld, described the difference “Frances and I had a very strong relationship,this way: “It’s not fewer hours, but it is less pres- mutual trust, and admiration. I was really lookingsure and isolation. I can’t even say how different forward to learning with and from Frances.”it is. It’s dramatically different, which is a big sus-tainability issue for me.” And Darlene Nipper said The group grappled with what these stories ofthat although she and her codirector consult each close relationship meant for adoption of codirec-other constantly and “partner-lead,” their distinct torship and other shared leadership structuresrole clarity “brings me a lot of psychological space across the nonprofit sector. Sean Thomas-Breitfeldto really focus on what I bring to the table in terms challenged us—and by extension the sector—elo-of my gifts and attributes for our work.” quently: “I’m thinking about how many of us can’t imagine doing this with someone else. How do we4. Sharing leadership requires balancing individual reframe that as not a barrier to replicability? How and collective voice. do we instead lift up the virtue of relationship and of incorporating a value of relationship into leader-All agreed that shared leadership requires ongoing ship structures in our organizations? How do weattention to the issue of voice. Elissa Sloan Perry make it a virtuous thing instead of saying, well, ifasked, “Where do we speak as ourselves indi- people can’t find the right match, then this modelvidually and where do we speak together? For is just this quixotic thing that only applies to a fewexample, one of the things we have talked about is random POC, queer-led organizations?” That’s acreating a codirectors e-mail address so that there powerful reframe of who leads and how.are things that people cannot attach to just oneof us.” Darlene Nipper added, “I think, depending We left the conversation inspired to continueon how we demonstrate and use our voices dif- with our respective efforts and to stay in dialogueferently, it can create some fissures—a little bit with one another and others wanting and needingof different people aligning in different ways. So something different from organizational leader-that just takes a lot of care and attention.” And ship—something more closely aligned with ourthere is the outside world, of course, that often individual and organizational identities.expects one voice. As Frances Kunreuther said,“Funders can sometimes be a challenge in that The authors thank the David and Lucile Packardthey expect to talk with the person they know; I Foundation and the Annie E. Casey Foundationwouldn’t underestimate that.” Clear and frequent for their generous support of this project.communication between the leaders is the foun-dation for their clarity of voice with others. To comment on this article, write to us at feedback @npqmag.org. Order reprints from http://s​ tore.nonprofit quarterly.org, using code 240106.SPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​43

Nonprofit Capital How to ThinkaDbioffuetrently Your Money: Capital Explored by Hilda Polanco and Dipty Jain How can your organization better comprehend and work to optimize “CELTIC ROCK” BY RAYNA TODOROV/WWW.ETSY.COM/SHOP/RAYNAART its capital structure, identify key sources and uses of capital, and understand how to budget for and monitor capital grants and expenditures over time? This article discusses how nonprofits typically obtain capital, and how that capital can be put to use— not only to acquire a hard asset like a building but also to build capacity to recover from past economic shocks, innovate, or scale up.W hen you use the word capital in the nonprofit sector, you must take the time to define your terms, because so far there is no thorough understanding of the structures of financialcapital inside nonprofits. This lack of shared understandingis a big problem, because it is capital that helps organizationsto both smooth out the inevitable rough spots and expandimpact and improve quality.Hilda Polanco is founder and CEO of Fiscal ManagementAssociates (FMA). Dipty Jain is a principal at Fiscal ManagementAssociates (FMA).44 ​T H E   N O N P R O F I T   Q U A R T E R LY



None of this is brand new, but our increasingly shared clarity about capital is—and the stronger that clarity gets,the easier it will be for all of us to raise capital, grant capital, and reflect capital in our financial statements. Some of this capital exists in areas other than money—in investment. A chronic lack of liquidity drains organizationsthe unpaid time people are willing to spend on the mission, in of staff time, reputation, and social capital. It also obfuscatesthe social capital that an organization builds with stakehold- the real financial position of the organization. To operate con-ers, and in things like reputation and clarity of purpose and fidently, organizations need a sense of security that they canfit with the environment—but this article discusses financial meet their operating obligations without a feeling of crisis.capital, which does not stand completely apart from theseother types but is a structural support that needs to be much For more unstable times, we need a different sort or levelbetter understood and deployed by nonprofit board members, of liquidity in a healthy reserve fund. Reserves help us tofunders, leaders, and managers. face and survive unpredictable but not uncommon problems such as loss of a revenue source or an unexpected need forWhat It Is an outlay—or, as many of us may remember confronting, a recession.A simple way of thinking about capital is as the type of finan-cial resource that supports an organization for the longer term. Change CapitalThis can be contrasted with the operating revenue that a non- Change capital—sometimes referred to as risk capital,profit needs to operate day to day over shorter periods. growth capital, or innovation capital—may include money for expansion, changes in strategy, and replenishment of Of course, for a very long time among nonprofits, the depleted funds. If an organization can see an opportunity forword capital was used almost exclusively in relationship to greater impact through growth or innovation—and if it cana capital campaign, and it was largely understood as capital lay out a clear case for how to get from its current state to afor brick-and-mortar (and related) costs. But current usage is more desirable one—it may be able to raise capital to do so.more sophisticated, and lays out a number of types of neces- Such efforts are inherently risky, as they are often based onsary capital: strategy and assumptions. This is why some foundations refer • Working capital for liquidity and reserves; to change capital as risk capital. In some cases, your busi- • Change capital (sometimes referred to as risk, growth, or ness model may require regular recapitalization—as in the performing arts, where the product needs to be paid for before innovation capital); it’s ready for consumption and before patrons choose to pay • Capital campaigns for hard assets; and for it. This is inherently risky, and repeatedly so. Or, maybe • Endowment in perpetuity. you’re in the mental health field, and there is some research and testing of a new approach that needs to be done. These are In addition, capital is no longer thought of as needing to the kinds of things many organizations regularly must do inbe primarily associated with a traditional campaign, but may order to stay current with their environments and responsivebe raised: to their own evaluations—and all of it needs capital. • Internally over time, or • From external sources. Also in this category of change capital is a periodic need for replenishment. If an organization has had rocky opera- None of this is brand new, but our increasingly shared tions in the past and has accumulated deficits, it may need toclarity about capital is—and the stronger that clarity gets, replenish some of those resources that have faltered. A goodthe easier it will be for all of us to raise capital, grant capital, example of this would be the hundreds of arts organizationsand reflect capital in our financial statements. caught mid–capital outlay in the beginning of the recession. As mentioned above, performing arts organizations make thoseWorking Capital for Liquidity and Reserves outlays quite often—for example, on scenery, rehearsals, andWorking capital is necessary to most nonprofits even in stable any number of other items—but if the economy goes verytimes, in that it helps to smooth out the misalignments in the sour between the time an organization makes such an outlaytiming of revenue and cash outlay. This is the definition of and the time it stages the event, it may not reflect on the orga-liquidity. Liquidity allows an organization to pay its bills on nization’s management in the least. Thus, while these needstime and not have to worry about vendors being unhappy orthe organization being delayed in payroll or any other critical46 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017

Without an understanding of capital structure, a declining position may not be clearly noted before pricey ground has been lost.may be due to internal issues, like a faulty business plan or do not only the replenishment—because that only gets us toinadequate technological capacity, they can also be driven by zero—but also to build toward the future. So, there are waysexternal circumstances, like a recession. not only to replenish through capital but also to combine it with growth and expansion. And those are a part of what we Sometimes, this manifests through the balance sheet, a could call a capital campaign—a campaign for sustainability,statement of financial position for an organization, which in the fund for the future, capacity capital. There are many differ-such cases would show that the organization is in a negative ent ways to describe what we refer to here as change capital.unrestricted net assets position—an indication that the orga-nization is in need of replenishment. Capital Campaigns for Hard Assets In terms of capital campaigns for hard assets, it is important In none of these circumstances does the capital need pose to emphasize that these are not just for construction or forthe same kind of ongoing requirement for funds as does oper- building acquisitions. Capital campaigns that involve buildingsating revenue. also need to include two additional elements. One element is on the ramp-up side: these newly constructed buildings that The capital for growth, expansion, and innovation is really are now up and running are not necessarily going to be fullycapital for areas for investment and infrastructure (facilities, utilized immediately—an organization may be doubling itspeople, technology). An organization has a vision. It wants to capacity to deliver a program, and it may need some fundingbe in a different place. The capital needed to get from here to to get to the point where it can actually maximize the use ofthere pays for infrastructure but also sometimes for an oper- the building to fully cover its costs. Another component ofating plug during a limited period. This gives a new revenue a capital campaign that is critical is some level of reserve tomodel a chance to catch up. So, it’s for a period of time when cover operations in the future. The more that the organizationthe organization needs some extra infusion of funds to be able can raise toward this reserve, the more peace of mind it willto build these new capacities that it doesn’t have right now. have when the building is ultimately up and running. Without an understanding of capital structure, a declining Endowment in Perpetuityposition may not be clearly noted before pricey ground has In some cases, endowment money that feeds investmentbeen lost. If an organization has a building it has invested income to the organization becomes necessary. With endow-in, its unrestricted net assets may look very strong, because ments, we encourage organizations to challenge themselvesthey include that building. But, in our definition of LUNA with the question: Do we have the capacity to raise sufficient(Liquid Unrestricted Net Assets)—a concept that you may funds such that the earnings from these funds would have suf-have been exposed to through Fiscal Management Asso- ficient impact on our operating results? A $100,000 endowmentciates (FMA) materials and webinars—we look at unre- in the days that we’re in right now—and probably will be forstricted net asset balances without that building. And, when some time in terms of interest rates—doesn’t really contributean organization does that, it might find itself in what we call much to operations, yet such an endowment is locked in per-negative LUNA, which means that the organization has had petuity for use. In addition, we have seen several cases wherethese deficits, and oftentimes it’s not that clear—it’s not the creation of an endowment has cannibalized contributionsthat transparent. But, for leaders of organizations that find from operations and in the short term hurt the organization’sthemselves in that situation, it can be almost impossible fundraising efforts. Grants for reserves and grants for changeto raise operating revenue to recover those accumulated capital provide much more flexibility for the organization.deficits. Still, in such circumstances a nonprofit may be able Finally, an endowment can also be a component of the capitalto wage a one-time campaign to rebalance the organiza- structure of an organization. Endowments generate revenue intion’s infrastructure, replenish those resources that were perpetuity. So, the base of the endowment—the principal—isinvested in the past, and set the organization on a path to never touched, and the funding that is available comes fromsuccess. (A word of caution: this is a well one shouldn’t the residual income that the organization earns.1visit repeatedly.) Despite what you may think, however, change capital is notimpossible money to acquire. We at FMA have worked withorganizations where grants have been made by foundations toSPRING 2017 • WWW.NPQMAG.ORG  T H E   N O N P R O F I T   Q U A R T E R LY  ​47

At FMA, we believe that understanding the net assets composition—unrestricted, temporarily restricted, and permanently restricted(also known as “endowments”)—and the goals for each is critical to creating an effective long-term capital plan for an organization.How to Get It question the use of a line of credit in the nonprofit sector, and we often refer to this fear as having scars of war. They’ve beenCapital accumulation can happen in one of two ways. It can on nonprofit boards where the line of credit wasn’t managedcome from internal resources—for instance, when a nonprofit as strategically or carefully as it should have been, and there’sstrategically grows a pool for investments and risk taking. Such concern. We believe that a line of credit is a necessary busi-internally developed funds may be accrued through budget- ness tool, and any organization that needs to weather stormsing surpluses—and, indeed, this is often how working capital of timing in terms of cash should look at this as an option.has been accumulated in the sector. The second method is, ofcourse, to raise funds from outside investments, particularly PRIs come in different forms, but in most cases a PRI is ato act as capital not just to purchase equipment or space but recoverable grant that looks like a long-term debt instrument.also to grow an organization or to strengthen an organization’s In these arrangements, the third party (primarily foundations)operations as the business model is refined. is looking at this as a type of investment just like it would a grant—but the vehicle in this case is a recoverable grant,Internal Resources meaning that the organization will need to return those dollarsAn accumulated surplus for an organization is an internal at some point, and there’s a return on investment that theresource that has accrued over time, and this excess repre- foundation is looking for, which becomes for the organizationsents the organization’s profit. The excess of revenues over a cost of capital.expenses—or surplus—is absolutely critical for long-termsustainability. When organizations have a focused strategy to How to Record and Monitor Itaccumulate a certain level of surplus so that accumulation canbe available for the right decisions at the right time, that is a In this next section we focus on recording and monitoringsource of capital. LUNA is part of an organization’s internal growth capital. Our focus is due to the multiple ways in whichcapital structure. Also—somewhat a cross between internal this capital is at times presented in audited financial state-and external—there is the idea that organizations can at times ments, and the need to best correlate this external reportingleverage either free or low-cost resources that are available with ongoing operating results as managed internally. Weto grow the organization, whether it’s donations of time or of also believe it is important to connect this financial realityspace. Those are often overlooked when we think about where to external dialogue with funders who are investing in theour capital is coming from. growth plan.Outside Investments Impact at a Point in TimeOutside investments would normally come from foundations So, when we think about all these sources of change capital,or major donors, and those outside investments are earmarked we wonder how they show up in our financials. Some fundsfor things like we mentioned earlier, either physical capital or come in the form of debt, some are operating revenue, andchange capital—meaning for things that are going to be done some are additions to reserves. Where can we find all this, anddifferently in the future. Grants may also be given to provide how should you monitor your capital structure?liquidity through working capital or reserves. An organization’s net assets composition is one of the most An area of outside investment not always thought of as important components of financial health and an indicator ofsuch is debt. In this context, debt may serve as a short-term capitalization. At FMA, we believe that understanding the netsource of working capital or as a long-term vehicle. In both assets composition—unrestricted, temporarily restricted, andcases, it represents leverage. An organization might have a permanently restricted (also known as “endowments”)—andmortgage—or, an organization might have a line of credit or the goals for each is critical to creating an effective long-termmight be interested in exploring a program-related invest- capital plan for an organization.ment, also known as a PRI. The following illustrates where capital may be found The line of credit as a source of capital can have a lot of in the net assets section of the statement of financial posi-emotion attached to it. There are many board members who tion—also known as the balance sheet—recorded as of a point in time.48 ​T H E   N O N P R O F I T   Q U A R T E R LY  WWW.NPQMAG.ORG • SPRING 2017