Strong Leadership Required: Nonprofit Management During Challenging Economic Times
Our current economy is creating challenges for the nonprofit sector, a sector historically strained to generate the revenues it must have to meet the ever-expanding needs of the millions of individuals it serves each year. During average years, nonprofit executives are called upon to demonstrate inspired leadership and creative vision. During these unprecedented times, however, the demands on nonprofit executives are greater than ever.
With increased costs and reduced revenue, many nonprofit organizations are facing deficits. For some executives, this is new and uncharted territory. They are faced with decisions about cost containment and whether to reduce services and/or personnel. These decisions are often among the most difficult decisions an executive faces. These are times when confidence and competence are paramount in an executive.
In challenges I see opportunities and this challenge is no different. This economic shift provides a board of directors (and other stakeholders) with a critical opportunity to see more clearly an organization’s capacity to weather storms and its leader’s strength and effectiveness to lead the organization in difficult times as well as good. As Warren Buffet famously said “[i]t’s only when the tide goes out that you learn who’s been swimming naked.” The tide has indeed gone out for many nonprofit (and for-profit) organizations. Without strong leadership, both at the executive and board levels, there is little doubt but that many nonprofit organizations will fail in our current economic climate. Alternatively, though, if organizations act early and proactively to strengthen their leadership and identify and address any weaknesses, they are likely to come through this turbulent period a stronger organization.
Suggested Action Items:
- Board Members: Have you conducted a review of your executive director in the past year? A performance review (ideally a 360 review) should be conducted annually (more frequently in first year). It is recommended that the review include a self-evaluation to be completed by the executive director. The evaluation process provides a good opportunity to discuss the following with the executive: roles and responsibilities; priorities; expectations; professional development in the coming year, etc. Executive Directors: If your board has not reviewed you, ask for it from your Board Chair, first verbally and then in writing.
- Make time to review the current year’s strategic plan and financials. This data is critical to realistically projecting performance in the coming year. Compare what you set out to do this past year with what you actually accomplished in all priority areas. In those areas where you fell short, identify what happened and whether the factors will be in play again in the coming year.
- Consider retaining an independent third party to conduct an organizational assessment. This objective evaluation will provide you with information about the organization’s effectiveness and capacity in various areas and will be the foundation for a plan:
- to address an organizational shortfall/deficit;
- to identify economies of scale;
- to approach funders (individual or foundation) for money for capacity-building or other support; and/or
- to conduct annual or long-term strategic planning.
