Small Boards Lead to Group Think

The Chronicle of Philanthropy recently shared the findings of a report by the National Committee for Responsive Philanthropy that laid a good deal of the blame for the significant foundation losses to Bernie Madoff’s Ponzi scheme on the size of the foundation boards. The watchdog group found that of those foundations that lost between 30 percent and all of their assets, the median board size was just three. In a number of those cases, the boards were made up totally of family members.

I am not surprised by the premise in this report. While most states require only three board members and there is no perfect size for a board, group dynamics’ research teaches us that small groups often lack the diversity of opinion necessary to avoid group think. In some cases it is due to the fact that people ask their friends, or others “like them” to join them on the board. In such cases, there is an increased likelihood of similar thinking – or, as in this case, that many of the members of the board know and rely on the same investment people. In other cases it is just due to the fact that with such few people on the board, it is easier to go along because everyone knows they will have to get along in the future.

If this scandal teaches us anything, it should remind us that one of the most important skills a board member brings to the table is that of critical thinking. This means that every option should be questioned. All the pros and cons should be considered and the ramifications projected. Potential benefits should be tested against potential costs. Underlying assumptions and motivations should be brought to the surface. And board members must remember before making a final decision that they are responsible to the community for leaving the organization stronger than when they came in. Their decision should be consistent with their organization’s values and move the organization closer to the accomplishment of its mission and vision. This charge is made easier with a larger, more diverse board that treasures a culture of challenge.

Tell your funder: "You, too, can be a force for good!"

From the brilliant folk over at The Switchblog:

"Here's a nice plug for the value of funding advocacy - perfect for all our advocate friends trying to overcome a timid (or ill-informed) foundation's reluctance."

Why Do So Few Nonprofits Have Annual Funds? And How to Get Started

During the introductions at an annual funds training, only three attendees of fifteen shared that their nonprofit organizations conducted annual appeals. Across the nonprofit world just 50 percent of nonprofits conduct annual appeals. Yet, almost all nonprofits aspire to find more individual donors. Annual appeals form the base of all individual fundraising. So, why is this percentage so low?
· Campaigns do not pay for themselves especially initial ones. In fact, if you only use direct mail, your cost might average $1.50 for every dollar raised. (On the other hand renewals cost $.25 on the dollar raised.)
· At first glace, annual funds appear complex relative to fundraising via special events or grants. They involve databases, writing intriguing letters and requesting funds face-to-face.

However annual funds, when used year after year, create consistent income. Annual fund drives help you sieve though the potentially interested and discover the fiscally committed. Annual funds encourage donor upgrades. Besides providing unrestricted money to your organization, they offer everyone you know the chance to participate in achieving your mission.

To dabble your toe in the annual fund waters, invest time between now and autumn, the most successful request time, to create a mailing list. Include everyone you know. Include your staff and board members. Include former staff and past board members. Include friends, relatives and civic, social and professional acquaintances. Then go back and really include everyone you know. List people you encounter during the year. Add those who attended your events. Add those who contacted you. Then in autumn, ask those with the most potential for a gift face-to-face and to others, send a letter requesting a gift.

Are you committed to obtaining more individual donors? If yes, are you committed enough to add these tasks to your to-do list?

"If you’re hip to the jive, you avoid using words like nonprofit altogether."

I've certainly sensed sneering at the non profit sector, and Albert at White Courtesy Telephone nails this "sector agnosticism".

Nonprofit Innovation

In a recent e-magazine article, Ruth McCambridge, Editor in Chief of the Nonprofit Quarterly wrote about nonprofit innovation and shared an article about the Colorado Rural Housing Development Corporation (CFHCD). From both, it was clear, that nonprofits who successfully innovate learn that:

• One size does not fit all –but all no matter their size can innovate
  
• It helps to look at options and study them in-depth, i.e., CRHDC's conducted two years of national research on the lease to purchase program before creating one
• Stay flexible and open to opportunities in your markets, you can learn an immense amount even during economic turbulence.
• No nonprofit takes advantage of every opportunity and· What works is to grab hold of your best opportunities now and understand that if you fail to take advantage of one --not to worry. Others will arrive shortly.