Managing in difficult times
April 20th seminar.
Russell Pomerantz of Fiscal Management Associates provided insight and technical expertise in his recent seminar under the aegis of Berkshire Taconic Community Foundation, Ulster County Community Foundation, and the Dyson Foundation. Following an overview of historical precedents, Pomerantz led the participants through a systematic review of how to assess and implement financial priorities and develop processes-especially scenario budgeting. Pomerantz's presentation was reminiscent of recent discussions I've had with independent school board chairs regarding short and intermediate term options for dealing with the economic down turn.
The session underscored the chasm separating organizations with endowment/financial reserves and groups who rely on uninterrupted income to make payroll. Organizations with some form of financial reserve are able to plan for systematic cost reductions. Pomerantz provided a 'tool box' of tactics to help manage expenses ranging from furloughs, reducing or eliminating 'entitlements' such as annual COLA, and reducing or eliminating un/underutilized benefits.
From my perspective the single most important take-away from today's presentation was the opportunity provided by economic hard times to dispatch certain sacred cows in non-profit financial planning such as-
'Everyone should be treated the same.' In fact merit or performance based pay will likely increase in the future.
'The financial folks handle budget and program directors provide content.' Pomerantz distributed an article [CPA Journal Feb 2008] on how the CFO balances the dual role of 'visionary protector' and/or myopic bean counter.'
Undergirding Pomerantz's approach was a critical assumption-NPO's that survive will have been supported by effective engagement between staff and board. Establishing priorities, articulating the state of the organization, ameliorating the impact of income swings cannot be the sole province of even the most visionary Executive Director or the heaviest of heavy-hitting boards.
FYI in a 'previous life' Pomerantz was the Business Manager of an independent school!
Tuesday, April 21, 2009
Monday, February 9, 2009
Frugal Teacher Leaves $2 Million Gift--ho hum
Frugal Teacher Leaves $2 Million Gift
[AOL Headline.....]
posted: 15 HOURS 35 MINUTES AGOcomments: 59
filed under: NATIONAL NEWS, CHARITABLE NEWS
A math teacher who never made more than $40,000 a year but pinched her pennies leaves $2 million to her Ohio alma mater. Laura Bickimer donated most of her estate to Baldwin-Wallace College when she died in April at age 93
filed under: NATIONAL NEWS, CHARITABLE NEWS
A math teacher who never made more than $40,000 a year but pinched her pennies leaves $2 million to her Ohio alma mater. Laura Bickimer donated most of her estate to Baldwin-Wallace College when she died in April at age 93
How many stories like this have I read? Actually, quite a few. Our local YMCA got a multi-million dollar stock gift not too long ago and there are at least 6 other bequests of $100,000+ that I've seen to nearby, worthy non-profits.
Is this just the luck of the draw? Usually not though everyone loves the story of the bolt from the blue.
Ex teachers are often frugal and sometimes have remained unmarried. These folks have often been life long investors in TIAA-CREF and even though we've all taken a pounding if you make it to 93 dollar-cost-averaging is on your side!
Do you promote planned giving to your staff, present and past---if not would that be worth considering? Yup
Sunday, November 30, 2008
The New Work of the Nonprofit Board
Some of these aphorisms [governance='rare and unnatural act'] have become commonplace in discussions of non-profit governance and, yet, the four characteristics of 'the new work' are deceptively easy...
I'd buy each member of the Governance/Committee on Trustees their own copy of the full article and use it as a starting point for a discussion of how your board operates.
The New Work of the Nonprofit Board
Is your board adding value or simply wasting its members’ time?
by Barbara E. Taylor, Richard P. Chait, and Thomas P. Holland
Effective governance by the board of a nonprofit organization is a rare and unnatural act. Only the most uncommon of nonprofit boards functions as it should by harnessing the collective efforts of accomplished individuals to advance the institution’s mission and long-term welfare. A board’s contribution is meant to be strategic, the joint product of talented people brought together to apply their knowledge and experience to the major challenges facing the institution.
What happens instead? Nonprofit boards are often little more than a collection of high-powered people engaged in low-level activities. Why? The reasons are myriad. Sometimes the board is stymied by a chief executive who fears a strong board and hoards information, seeking the board’s approval at the last moment. Sometimes board members lack sufficient understanding of the work of the institution and avoid dealing with issues requiring specialized knowledge. Individual board members may not bring themselves fully to the task of governance, because board membership generally carries little personal accountability. And often the powerful individuals who make up the board are unpracticed in working as members of a team. No matter which cause predominates, nonprofit board members are often left feeling discouraged and underused, and the organization gains no benefit from their talents. The stakes remain low, the meetings process-driven, the outcomes ambiguous, and the deliberations insular. Many members doubt whether a board can have any real power or influence.
The key to improved performance is discovering and doing what we call the new work of the board. Trustees are interested in results. High-powered people lose energy when fed a steady diet of trivia. They may oblige management by discussing climate control for art exhibitions, the condition of old steam lines, or the design of a new logo, but they get charged up when searching for a new CEO, successfully completing a capital campaign, or developing and implementing a strategic plan. New work is another term for work that matters.
The new work has four basic characteristics.
First, it concerns itself with crucial, do-or-die issues central to the institution’s success.
Second, it is driven by results that are linked to defined timetables.
Third, it has clear measures of success.
Finally, it requires the engagement of the organization’s internal and external constituencies. The new work generates high levels of interest and demands broad participation and widespread support.
I'd buy each member of the Governance/Committee on Trustees their own copy of the full article and use it as a starting point for a discussion of how your board operates.
The New Work of the Nonprofit Board
Is your board adding value or simply wasting its members’ time?
by Barbara E. Taylor, Richard P. Chait, and Thomas P. Holland
Effective governance by the board of a nonprofit organization is a rare and unnatural act. Only the most uncommon of nonprofit boards functions as it should by harnessing the collective efforts of accomplished individuals to advance the institution’s mission and long-term welfare. A board’s contribution is meant to be strategic, the joint product of talented people brought together to apply their knowledge and experience to the major challenges facing the institution.
What happens instead? Nonprofit boards are often little more than a collection of high-powered people engaged in low-level activities. Why? The reasons are myriad. Sometimes the board is stymied by a chief executive who fears a strong board and hoards information, seeking the board’s approval at the last moment. Sometimes board members lack sufficient understanding of the work of the institution and avoid dealing with issues requiring specialized knowledge. Individual board members may not bring themselves fully to the task of governance, because board membership generally carries little personal accountability. And often the powerful individuals who make up the board are unpracticed in working as members of a team. No matter which cause predominates, nonprofit board members are often left feeling discouraged and underused, and the organization gains no benefit from their talents. The stakes remain low, the meetings process-driven, the outcomes ambiguous, and the deliberations insular. Many members doubt whether a board can have any real power or influence.
The key to improved performance is discovering and doing what we call the new work of the board. Trustees are interested in results. High-powered people lose energy when fed a steady diet of trivia. They may oblige management by discussing climate control for art exhibitions, the condition of old steam lines, or the design of a new logo, but they get charged up when searching for a new CEO, successfully completing a capital campaign, or developing and implementing a strategic plan. New work is another term for work that matters.
The new work has four basic characteristics.
First, it concerns itself with crucial, do-or-die issues central to the institution’s success.
Second, it is driven by results that are linked to defined timetables.
Third, it has clear measures of success.
Finally, it requires the engagement of the organization’s internal and external constituencies. The new work generates high levels of interest and demands broad participation and widespread support.
Thursday, November 13, 2008
Letter from President Faust about the global economic crisis
President Faust is an eloquent scholar; her brillant book on the impact of death during the Civil War, A Republic of Suffering, puts our current challenges into perspective! The following letter [excerpted with my added emphasis/italics] show how to balance core mission with financial realities. Even if your endowment is less than Harvard's the emphasis on collaboration and hard choices resonates for all of us.
November 10, 2008
To Harvard Faculty, Students, and Staff:
I write today about the global economic crisis and its implications for us at Harvard.
We all know of the extraordinary turbulence still roiling the world’s financial markets and the broader economy. The downturn is widely seen as the most serious in decades, and each day’s headlines remind us that heightened volatility and persisting uncertainty have become our new economic reality.
For all the challenges such circumstances present, we are fortunate to be part of an institution remarkable for its resilience. Over centuries, Harvard has weathered many storms and sustained its strength through difficult times. We have done so by staying true to our academic values and our long-term ambitions, by carefully stewarding our resources and thoughtfully adapting to change. We will do so again.
But we must recognize that Harvard is not invulnerable to the seismic financial shocks in the larger world. Our own economic landscape has been significantly altered. We will need to plan and act in ways that reflect that reality, to assure that we continue to advance our priorities for teaching, research, and service.
Our principal sources of revenue are all likely to be affected by these new economic forces. Consider, first, the endowment...we can hope that markets will improve, we need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.
The economic downturn also puts pressure on other revenues that fuel our annual budgets. Donors and foundations will be harder pressed to support our activities.
Tuition remains an important source of revenue, but in times like these we want to keep increases moderate, mindful that many students and families are facing economic strain.
We have to think not just about what more we might wish to do, but what we might do at a different pace or do without. Tradeoffs and hard choices that can be avoided in times of plenty cannot be averted now. And, given the ongoing volatility and uncertainty, we need to plan and budget with a range of contingencies in view, including scenarios for reducing our spending both this year and next.
As we plan, we must also affirm our strong commitment to financial aid for our students.
Harvard values its reputation as a stable and supportive employer, and we view our workforce as a critical part of all we do. We recognize as well the responsibility that comes with being one of the largest employers in the commonwealth of Massachusetts. At the same time, changing financial realities will require us to look carefully at compensation costs, which account for nearly half the University’s budget.
We are assessing all aspects of our ambitious capital planning program,
We are working with administrative and financial deans from across the University to develop new approaches for generating both savings and new revenue sources, building on the ideas and best practices of each of the Schools.
Harvard is a famously decentralized place, and one size will not fit all. Each School will face its own particular challenges. But we must at the same time join together to address these new circumstances with creativity and a spirit of common enterprise.
Today, perhaps as never before, we need to work collectively to develop approaches and efficiencies that will allow every part of Harvard to thrive in the years to come. Together, we must continue to advance the priorities that define us.
For all that has changed in recent weeks, we remain devoted to attracting the very best students, faculty, and staff to Harvard. We will undertake the daily work of education and scholarship with the same intensity and imagination. We will set our academic sights just as high, and we will ensure that the ambitions and vibrancy of our community and the strength of its commitment to the pursuit of truth remain unsurpassed.
Drew Faust
November 10, 2008
To Harvard Faculty, Students, and Staff:
I write today about the global economic crisis and its implications for us at Harvard.
We all know of the extraordinary turbulence still roiling the world’s financial markets and the broader economy. The downturn is widely seen as the most serious in decades, and each day’s headlines remind us that heightened volatility and persisting uncertainty have become our new economic reality.
For all the challenges such circumstances present, we are fortunate to be part of an institution remarkable for its resilience. Over centuries, Harvard has weathered many storms and sustained its strength through difficult times. We have done so by staying true to our academic values and our long-term ambitions, by carefully stewarding our resources and thoughtfully adapting to change. We will do so again.
But we must recognize that Harvard is not invulnerable to the seismic financial shocks in the larger world. Our own economic landscape has been significantly altered. We will need to plan and act in ways that reflect that reality, to assure that we continue to advance our priorities for teaching, research, and service.
Our principal sources of revenue are all likely to be affected by these new economic forces. Consider, first, the endowment...we can hope that markets will improve, we need to be prepared to absorb unprecedented endowment losses and plan for a period of greater financial constraint.
The economic downturn also puts pressure on other revenues that fuel our annual budgets. Donors and foundations will be harder pressed to support our activities.
Tuition remains an important source of revenue, but in times like these we want to keep increases moderate, mindful that many students and families are facing economic strain.
We have to think not just about what more we might wish to do, but what we might do at a different pace or do without. Tradeoffs and hard choices that can be avoided in times of plenty cannot be averted now. And, given the ongoing volatility and uncertainty, we need to plan and budget with a range of contingencies in view, including scenarios for reducing our spending both this year and next.
As we plan, we must also affirm our strong commitment to financial aid for our students.
Harvard values its reputation as a stable and supportive employer, and we view our workforce as a critical part of all we do. We recognize as well the responsibility that comes with being one of the largest employers in the commonwealth of Massachusetts. At the same time, changing financial realities will require us to look carefully at compensation costs, which account for nearly half the University’s budget.
We are assessing all aspects of our ambitious capital planning program,
We are working with administrative and financial deans from across the University to develop new approaches for generating both savings and new revenue sources, building on the ideas and best practices of each of the Schools.
Harvard is a famously decentralized place, and one size will not fit all. Each School will face its own particular challenges. But we must at the same time join together to address these new circumstances with creativity and a spirit of common enterprise.
Today, perhaps as never before, we need to work collectively to develop approaches and efficiencies that will allow every part of Harvard to thrive in the years to come. Together, we must continue to advance the priorities that define us.
For all that has changed in recent weeks, we remain devoted to attracting the very best students, faculty, and staff to Harvard. We will undertake the daily work of education and scholarship with the same intensity and imagination. We will set our academic sights just as high, and we will ensure that the ambitions and vibrancy of our community and the strength of its commitment to the pursuit of truth remain unsurpassed.
Drew Faust
Wednesday, November 12, 2008
Robert's Rules of Order or Phil's Rules of Order?
While a passing familiarity with Robert’s Rules of Order is important for every non-profit board http://www.robertsrules.com/default.html , I’d like to suggest supplementing those procedures with a few of my own.
No surprises. This begins at the top---the executive director/head and the board chair need to insure that neither of them is surprised with new information or a sudden motion from the floor at meetings.
Preplan meetings. Set and circulate the agenda in advance and insure that no document is handed out at a board meeting which has not been circulated in advance. Consider-“What is the single most important concept/discussion/decision that everyone should take away from this meeting?”—answer this in advance of the meeting.
Business, not friendship or family. A board meeting isn’t a social occasion. Friends and family can goof around, not board members and staff. Whispered, ‘sidebar’ conversations work at a party, not a board meeting. Board members and staff can plan vacations or debrief on the latest party somewhere else.
Vary the format. Use this approach at 1 meeting a year…
Approval of Minutes
Old Business
Finance
Development
Building Project
New Business
Consider-beginning with a phrase from the mission statement “the school/museum is committed to diversity…” and discuss. Hand out all the written committee reports at the same time and have them reviewed in 3-5 person break out groups. End some [every meeting] by handing out a 3” x 5” card and ask for input on the meeting and asking for suggestions for the next one.
No surprises. This begins at the top---the executive director/head and the board chair need to insure that neither of them is surprised with new information or a sudden motion from the floor at meetings.
Preplan meetings. Set and circulate the agenda in advance and insure that no document is handed out at a board meeting which has not been circulated in advance. Consider-“What is the single most important concept/discussion/decision that everyone should take away from this meeting?”—answer this in advance of the meeting.
Business, not friendship or family. A board meeting isn’t a social occasion. Friends and family can goof around, not board members and staff. Whispered, ‘sidebar’ conversations work at a party, not a board meeting. Board members and staff can plan vacations or debrief on the latest party somewhere else.
Vary the format. Use this approach at 1 meeting a year…
Approval of Minutes
Old Business
Finance
Development
Building Project
New Business
Consider-beginning with a phrase from the mission statement “the school/museum is committed to diversity…” and discuss. Hand out all the written committee reports at the same time and have them reviewed in 3-5 person break out groups. End some [every meeting] by handing out a 3” x 5” card and ask for input on the meeting and asking for suggestions for the next one.
Monday, November 10, 2008
The New Work of the Nonprofit Board
Some of these aphorisms [governance='rare and unnatural act'] have become commonplace in discussions of school governance and, yet, the four characteristics of 'the new work' are deceptively easy...
I'd buy each member of the Governance/Committee on Trustees their own copy of the full article and use it as a starting point for a discussion of how your board operates.
The New Work of the Nonprofit Board
Is your board adding value or simply wasting its members’ time?
by Barbara E. Taylor, Richard P. Chait, and Thomas P. Holland
Effective governance by the board of a nonprofit organization is a rare and unnatural act. Only the most uncommon of nonprofit boards functions as it should by harnessing the collective efforts of accomplished individuals to advance the institution’s mission and long-term welfare. A board’s contribution is meant to be strategic, the joint product of talented people brought together to apply their knowledge and experience to the major challenges facing the institution.
What happens instead? Nonprofit boards are often little more than a collection of high-powered people engaged in low-level activities. Why? The reasons are myriad. Sometimes the board is stymied by a chief executive who fears a strong board and hoards information, seeking the board’s approval at the last moment. Sometimes board members lack sufficient understanding of the work of the institution and avoid dealing with issues requiring specialized knowledge. Individual board members may not bring themselves fully to the task of governance, because board membership generally carries little personal accountability. And often the powerful individuals who make up the board are unpracticed in working as members of a team. No matter which cause predominates, nonprofit board members are often left feeling discouraged and underused, and the organization gains no benefit from their talents. The stakes remain low, the meetings process-driven, the outcomes ambiguous, and the deliberations insular. Many members doubt whether a board can have any real power or influence.
The key to improved performance is discovering and doing what we call the new work of the board. Trustees are interested in results. High-powered people lose energy when fed a steady diet of trivia. They may oblige management by discussing climate control for art exhibitions, the condition of old steam lines, or the design of a new logo, but they get charged up when searching for a new CEO, successfully completing a capital campaign, or developing and implementing a strategic plan. New work is another term for work that matters.
The new work has four basic characteristics.
First, it concerns itself with crucial, do-or-die issues central to the institution’s success.
Second, it is driven by results that are linked to defined timetables.
Third, it has clear measures of success.
Finally, it requires the engagement of the organization’s internal and external constituencies. The new work generates high levels of interest and demands broad participation and widespread support.
I'd buy each member of the Governance/Committee on Trustees their own copy of the full article and use it as a starting point for a discussion of how your board operates.
The New Work of the Nonprofit Board
Is your board adding value or simply wasting its members’ time?
by Barbara E. Taylor, Richard P. Chait, and Thomas P. Holland
Effective governance by the board of a nonprofit organization is a rare and unnatural act. Only the most uncommon of nonprofit boards functions as it should by harnessing the collective efforts of accomplished individuals to advance the institution’s mission and long-term welfare. A board’s contribution is meant to be strategic, the joint product of talented people brought together to apply their knowledge and experience to the major challenges facing the institution.
What happens instead? Nonprofit boards are often little more than a collection of high-powered people engaged in low-level activities. Why? The reasons are myriad. Sometimes the board is stymied by a chief executive who fears a strong board and hoards information, seeking the board’s approval at the last moment. Sometimes board members lack sufficient understanding of the work of the institution and avoid dealing with issues requiring specialized knowledge. Individual board members may not bring themselves fully to the task of governance, because board membership generally carries little personal accountability. And often the powerful individuals who make up the board are unpracticed in working as members of a team. No matter which cause predominates, nonprofit board members are often left feeling discouraged and underused, and the organization gains no benefit from their talents. The stakes remain low, the meetings process-driven, the outcomes ambiguous, and the deliberations insular. Many members doubt whether a board can have any real power or influence.
The key to improved performance is discovering and doing what we call the new work of the board. Trustees are interested in results. High-powered people lose energy when fed a steady diet of trivia. They may oblige management by discussing climate control for art exhibitions, the condition of old steam lines, or the design of a new logo, but they get charged up when searching for a new CEO, successfully completing a capital campaign, or developing and implementing a strategic plan. New work is another term for work that matters.
The new work has four basic characteristics.
First, it concerns itself with crucial, do-or-die issues central to the institution’s success.
Second, it is driven by results that are linked to defined timetables.
Third, it has clear measures of success.
Finally, it requires the engagement of the organization’s internal and external constituencies. The new work generates high levels of interest and demands broad participation and widespread support.
Sunday, November 9, 2008
What do we do in a recession?
All schools are looking at some stern realities. For some, financial management in tough times may entail increasing the reliance on endowment, for others, it's a question of institutional survival. A recent discussion elicited some suggestions/comments:
$Contingency contracts-step shy of reduction in force, staff contract contingent on income
$No-raise policy-salary freeze applied across the board-will staff super stars get cherry picked?
$Immediate, across the board reduction in budget
$0-based budgeting
$Increase in ‘productivity’-increase section size and or reduction in force
$Premium program charges
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