Wednesday, March 18, 2009

Overcoming Current Economic Challenges

What are key ingredients for succeeding in these tough economic times? What will increase the chances that foundations will award your organization a grant? Some corporate and foundation leaders made loud and clear suggestions at a seminar* this past Friday. Three major themes cut across their remarks:

1. Focus on what is “mission critical.” Identify the activities absolutely essential to your mission. Get rid of the rest. Focus on core values. If others can do something as well as you, maybe you should let them. Don’t be drawn off mission by “seductive RFPs.”

2. Form strategic alliances. Collaborate with others in whatever way makes sense. Be willing to give up your independence. Speakers questioned why multiple agencies should provide the same services, why they should all spend money on fundraising intended to support delivery of the same service to the same population, why they should have independent “back room” operations duplicating one another’s efforts.

3. Board members, step up and take charge. Boards must take ownership of the tough, high-level decisions. Staff can then move ahead, based upon those decisions, to operate the organization as effectively as possible. Most organizations have “800 pound gorillas” and “sacred cows”. Board action should eliminate these and support executive directors to move ahead. As Ellen Luger of General Mills said, “Be open to new ideas; don’t just think the old way.”

Organizations who incorporate these themes into their planning and action will: (a) increase their impacts; (b) improve the economics of service delivery; and (c) appear more attractive to corporate and private funders (all of whom are experiencing decreases in their endowment income and other sources of revenues).

The worldwide economic downturn will continue for a while. The current recession will include the deepest slide in economic indicators since World War II. State Economist Tom Stinson stated that economic recovery similar to the rebound from the recession of the early 1980s will not occur for two reasons: first, no “pent-up demand” exists to get money flowing to end the recession; second, demographics are not in our favor – older people tend to save, while younger people spend. In the 1980s, the ‘baby boomers” were young; now, they are older and more concerned about saving for retirement.

Significant recovery for nonprofit organizations will lag the overall improvement in the economic environment. Recovery for nonprofits will likely take at least two years, if not more. Full recovery will perhaps take 10 years.

Jon Campbell, CEO of Wells Fargo Minnesota mentioned something he learned from his father: “When things seem as bad as they will get, they are likely to get a little bit worse.”

Let’s heed Campbell’s words, not to foster pessimism, but to keep us vigilant. We can, and will, overcome the pressing challenges we face – if we keep ourselves informed, communicate and support one another, and open our organizations to opportunities to carry out our work in creative and effective ways. Wilder Research looks forward to addressing the challenges of our times, alongside our for-profit, nonprofit, and government colleagues with similar interests in improving our communities.

*Seminar: “UNITED FRONT: Engaging Nonprofit Board and Executive Leadership Facing Unprecedented Challenges”. Friday, March 13, 2009. Minneapolis. Sponsored by Greater Twin Cities United Way, General Mills, and Minnesota Council of Nonprofits. Thanks to those three organizations for offering a forum which provided objective data on current economic conditions, along with wise counsel on strategic approaches for dealing with these conditions! (Opening panel included: Jon Campbell, CEO of Wells Fargo Minnesota; Mayor Chris Coleman, Saint Paul; Suzanne Koepplinger, Minnesota Women’s Indian Resource Center; Ellen Goldberg Luger, General Mills Foundation; Mike Opat, Hennepin County Commissioner; Jon Pratt, Minnesota Council of Nonprofits; Tom Stinson, Minnesota State Economist; Christina Wessel, Minnesota Council of Nonprofits.)

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