Being the executive director of a nonprofit always has been a challenging job, but leading a charitable organization through and beyond the greatest economic upheaval in decades can be brutal, experts say.
And for those nonprofit chiefs whose organizations survived the market downturns of 2008 and 2009, nationwide drop in charitable giving that has yet to rebound, and sharp spike in demand for services, the latest round of government budget cuts is yet another blow.
“Nonprofit leadership has never been an easy role,” says Sylvia Oberle, executive director of Habitat for Humanity of Forsyth County in Winston-Salem, N.C. “But now with extreme funding difficulties and uncertainties, even if you’re not directly affected by state budget cuts, you’re affected by the trickle-down.”
Just as the economy is starting to improve, and charitable giving attempts a turnaround, battered and weary nonprofits must stay in the ring for another grueling round.
“In a sense, we see this new major curveball coming that is bringing back some of the crisis mentality that we thought we were moving beyond,” says Kim McGuire, director of Western North Carolina Nonprofit Pathways, an Asheville-based group that provides capacity-building services for local nonprofits. “Executive directors are at the core of all of this,” she says. “And by design, they take the brunt of the stress because they are the boss.”
Some leaders were better prepared than others going into the recession and made necessary changes in 2009 and 2010 to engage their boards and look for new ways to operate, says McGuire.
Others, however, were caught unprepared.
“There’s a second group of organizations that continue to be threatened and haven’t gotten their heads above water,” she says. “Either because they haven’t been realistic about what’s happening or they don’t know how to adapt.”
If they haven’t already, now is the time for executive directors to identify and strengthen the skills they need to survive multiple bouts with the Great Recession.
Given that the downturn caused financial stress on both sides of the equation, with revenues falling while demand for services rose, leaders unfamiliar with deciphering and managing cash flow struggled.
“Executive directors need more financial know-how than they have in the past,” says Oberle. “Now more than ever, we need to dip back in and understand the situation, not just get reports from our financial staff or finance committee.”
Rick Moyers, vice president for programs and communications at the Meyer Foundation in Washington, D.C., and a major funder of capacity-building efforts, agrees.
“It continues to surprise me how executive directors say they are not comfortable with financial management, get confused by their organization’s financial statements and don’t understand basic terms,” he says.
The organizations that have come through the best are those that demonstrated what Moyers calls “financial conservatism.”
Rather than waiting to see how 2009 would turn out, for example, they implemented austerity measures, including painful cuts, early in the meltdown.
“They did it at the first sign that things were going wrong,” says Moyers. “And in some cases that bought them six months to a year of savings that others didn’t have.”
Being good financial stewards of their organizations, a few executive directors had built up sufficient operating reserves in advance of the recession, thereby providing a cushion that allowed them to make thoughtful, well-planned adjustments.
“It’s well documented how little margin nonprofits have in terms of operating reserves,” says Moyers. “One of the reasons you have operating reserves is for times like these, so every decision doesn’t need to be made right now because the organization is balanced on the head of a pin.”
And while charitable giving was down a cumulative 13 percent during the recession, according to Giving USA’s 2011 report, individuals continued to drive the vast majority of giving.
And individuals donors, when there are enough of them, are more reliable than foundations and corporations, says Moyers.
“Individual donors don’t desert you en-masse like one large funder can,” he says. “And many can increase their support if you can make a good case.”
Given the importance of fundraising as the primary source of support for most nonprofits, leaders need to understand, accept and embrace that fundraising is an important, unavoidable part of their job, says Moyers.
“It’s not something they have to do because they don’t have a development director,” he says. “It’s a core, inherent part of the job. If you’re not comfortable with fundraising, maybe you shouldn’t be an executive director.”
Unlike other recent downturns, the Great Recession has penetrated deeper and lasted longer than most organizations expected or were prepared for.
In that volatile and uncertain environment, creativity, flexibility and adaptability are critical, says McGuire.
“The most important skill is a willingness to see what’s before you and make changes,” she says. “You have to understand the need to do things differently or you might not be around to see the future.”
The more thoughtful executive directors were able to gather data about their financial situation and the external environment, tweak their approach and make some hard decisions.
“There’s not an easy fix,” says McGuire. “It’s about knowing what you don’t know, knowing when you need help, and being assertive about getting it.”
And those softer skills, that can’t be taught in the classroom, are best honed through long and varied experience, says Oberle, who herself came to the sector after careers in journalism and public-affairs consulting.
That prior life experience provides a level of seasoning and confidence that breeds creativity, she says.
“Creativity frees you up,” says Oberle. “When we’ve done something different and new, and aren’t so scared, that’s good for the organization.”
Armed with that kind of agility, nonprofits need not be simply a victim of the economy.
“I’d hate to think that’s the face that nonprofits are putting on now, because there are so many people who find ways to thrive even in the most difficult circumstances,” Oberle says of the people and communities nonprofits ultimately serve.
“We as nonprofits need to build our own story of thriving and not just surviving in the midst of these tough times,” she says. “The human spirit certainly does that, and organizations can embody that spirit organizationally.”
But the job is hard even for the most flexible and creative executive director.
Nonprofit leaders are pulled in multiple directions on a daily basis, says Moyers, and there is always a vast universe of things he or she could be doing at any given time.
That means executive directors must manage their time carefully and make strategic decisions about what they can do themselves and what can and should be delegated.
“The job can eat you alive unless you’re really clear and focused on how you need to spend your time, what’s important and what path you’re on,” says Moyers.
It is possible for executive directors to spend the vast majority of their time putting out fires, he says, but operating in that mode for any length of time places in jeopardy the organization’s long-term goals and priorities.
“I really think we’ll see some organizations go by the wayside, unfortunately,” says McGuire. “Leadership has everything to do with who will come out of this and who won’t.”
Given the toll the recession has taken on nonprofits, with many working with fewer staff and struggling to plug budget holes, organizations are learning to collaborate.
Whether out of desperation or a desire to serve their communities more efficiently, partnerships — whether mergers or simply space-sharing — generally are positive.
“For most leaders, these things are all on the table,” says McGuire. “They know that the dollars aren’t out there to fund everything, so they have to find other options.”
In her role as head of a Habitat for Humanity affiliate, Sylvia Oberle has learned to find potential partnerships by looking for the natural places where one organization’s mission intersects with that of another.
“It points you to potential partners and together you can look at additional funding sources,” she says.
The Habitat Deluxe program was born of that type of process.
The program, a joint effort with Goodwill Industries of Northwest North Carolina, developed out of a conversation at a Rotary lunch, she says.
Goodwill was offering job-placement and job-training services and needed potential clients, while Habitat’s would-be homeowners needed better-paying jobs and steadier sources of income.
“That was an excellent example of what’s at the nexus of housing needs and income enhancement,” says Oberle.
That said, collaboration in any form, particularly in the form of a merger, can be difficult for many organizations to consider, she says.
“The Achilles heel might be being so concerned about your own organization and its survival that you forget about the people you serve and are not open to collaboration with someone else,” says Oberle.
The truth may be that not all organizations should survive in their current form, she says, a realization that for many people is a “very scary path to go down.”
“It’s creativity and networking like never before,” says Oberle of collaboration. “And it’s freeing yourself up from the rigid thinking that, ‘This is my organization and my mission.'”
Networking, mentoring and coaching
With dollars scarce and skills-building at a premium, formal avenues of professional development may not be possible for every executive director.
But less formal avenues for learning may be opening up, particularly since the recession has touched everyone, making nonprofit leaders more willing to discuss their problems in the open, says McGuire.
“People are much more willing to say, ‘We’re all going through these difficult times, so let’s see how we can learn from each other,'” she says. “Successful executive directors are finding small groups of confidantes and getting support and ideas, realizing they’re not alone going through this.”
And for those executive directors who feel they should be beyond the need for a mentor, Oberle says, it’s never too late.
“You’re never too old or too experienced to seek out a mentor,” she says.
When she joined Habitat, Oberle sought out someone she admired and met with him regularly, asking advice about time-management skills and running an organization.
More than five years into her leadership role, she still meets with him occasionally.
Moyers agrees that mentoring relationships can be beneficial, particularly when executive directors seek out role models with solid skills and several years of experience.
That longer tenure gives leaders realistic expectations about fundraising, board management, and what does and doesn’t work.
“By the time you’ve been through 12 budget cycles, including a downturn or two, and the board chair who was out to get you, followed by the board chair that was totally checked out, there’s a lot of wisdom there that’s not necessarily what you get from a half-day training class,” says Moyers.
And during this difficult economic environment, when professional-development dollars are scarce, Moyers recommends professional coaching over group trainings or academic classes.
“That type of training has its limitations because it takes the leader out of context and presents info out of context,” he says of classroom-based options. “In this climate, it’s difficult for executive directors to sit through hours and hours or training or class work to get two or three things they can use.”
Coaching and mentoring, on the other hand, have a just-in-time element and a customized quality that, if done well, creates a richer learning experience for executive directors, says Moyers.
And while that type of one-on-one, customized training from a professional coach does cost money, Moyers believes the investment is worthwhile.
Coming up with the cash right now for professional development may be difficult, but considering the entire universe of what an organization might spend money on, investing in the capacity and very survival of an organization is important, he says.
“One of my concerns is the mindset we have in the nonprofit world that certain types of expenses can’t be incurred unless someone else pays for them,” says Moyers. “Professional development ought to be a core part of every organization’s operating budget, just like the phone system and health insurance.”