Strengthening Nonprofits:

Transcription

1 Strengthening Nonprofits: what are we learning? August 26, 2016 Foellinger Foundation Honoring Donor Intent - 2 Overview of the Foellinger Foundation-invited Initiative - 3 What are we Learning? - 6 What Triggers a Change in Organizational Capacity? - 8 Appendix o Supporting Frameworks - 9 o Mastering The Basics 10 1

2 Foellinger Foundation Honoring Donor Intent The Foellinger Foundation, Inc. is a private charitable foundation that awards grants for the benefit of people in Fort Wayne and Allen County, Indiana. Helene R. Foellinger (right) and her mother Esther A. Foellinger The values and principles of the founders are: Integrity Accountability Responsibility Results Our Foundation models its commitment to donor intent by stating its Vision, Mission and Strategic Intent: Vision is that Allen County residents increase their self-reliance by moving from dependence to independence to helping build community through recognition of their interdependence. Mission is to provide grants, technical assistance, and other forms of support to strengthen organizations that serve children and their families within Allen County, particularly those that serve individuals with the greatest economic need and the least opportunity. Strategic Intent is to support mission-driven, well-governed, results-oriented nonprofit organizations. Helene and Esther Foellinger expected their funds would be well stewarded. The Foundation focuses the Foellinger gifts strategically. It invests in organizations led by people who have demonstrated adaptive leadership, a relentless focus on mission, and a commitment to results. This summary provides an overview of the Foellinger Foundation-invited Initiative, launched in 2008, with the Founders values and principles in mind. 2

3 Overview of the Foellinger Foundation-invited Initiative Purpose The Foellinger Foundation-invited Initiative strategy is designed to increase the effectiveness of organizations through a portfolio of grants. Capacity building work is based on the results of an assessment of organizational effectiveness derived from the input of board and key staff of the organization. As organizations improve and sustain their effectiveness through capacity building work, programs are impacted and program recipients benefit as they move from needing help to helping themselves to helping others. As of August 2016, the Foundation has invested in 23 organizations with grant portfolios totaling approximately $26.7 million. Three Grant Portfolios Building on accepted best practices of selecting mission-driven, well-governed, and results-oriented organizations and providing the leadership with the flexibility to invest to create the greatest impact, Initiative organizations receive multi-year commitments of operating support, capacity building funding every months, plus support for capital repair and replacement at least once each grant cycle. Capacity Building Organizational development in nonprofits, typically referred to as capacity building, is often accomplished with a combination of internal staff and board efforts, plus the outside support of a trainer, facilitator, consultant, or coach. For many nonprofits, seeking foundation funding for a strategic plan or board training would be typical examples of capacity building. From the beginning, the Foundation has expressed that the most important part of the grant portfolio to each organization is the funding to build the capacity of the organization. Though capacity growth is rarely linear, the organizations successful in becoming more effective remain in the Initiative. In the 2013 Foellinger Foundation Annual Report, capacity building grant support is defined: Capacity-building is a type of grant support designed to improve an organization s internal abilities (Transform), or engage in reflection and learning (Inspire), or identify an organization s culture (Renew). In all cases, the purpose of a capacitybuilding grant is to allow a nonprofit the opportunity to reach, to grow, to improve. Capacity-building grant support is the most important tool the Foundation offers to assist nonprofits in reaching and maintaining organizational effectiveness. The Foellinger Foundation s 2014 Annual Report expanded on the theme by suggesting that capacity-building could be viewed as research and development funding : 3

4 The Foundation is convinced that the nonprofit sector should have the same opportunity to think, reflect, consider, discard, or refine ideas as the for-profit sector does. Capacity-building grants, which are based on a clear assessment of the organization and contain measurable, relevant goals may, in fact, be the research and development funding for Allen County s nonprofits. The challenge for nonprofits, then, is to focus on the issue(s) which are critical to ensuring mission success and financial sustainability. In 2015, the Foundation focused on the relationship of capacity building thinking to leadership. The Foellinger Foundation has a long history of developing and supporting leadership in its grantees as a way of staying true to the values of its donors. We have done this primarily through strategic grantmaking, which focuses less on what an organization does and how it does it and more on why it does what it does, and the thinking and strategies that support those actions. For the purposes of the Foundation-invited Initiative, the Foellinger Foundation has highlighted ten important practices as common building blocks for each organization. It is the Foundation s theory of change that organizations that consistently execute in each of these areas will have a higher likelihood of furthering their sustainability and impact. On-going Board Development High Board Member Engagement Dashboard for Finance, Plans, Programs Increasing Financial Stability Leadership Transition Planning and Staff Development Strategic Plan, Used Routinely Board Recruiting and Orientation Program Evaluation and Improvement Accreditation, Legal, and Financial Compliance Board/CEO Teamwork, Evaluation Process Each of these ten practices are included in a broader context in the Appendix on page 9. The practices naturally support or feed into the four major areas of capacity used in the assessment process each cycle Governance, Program Impact, Financial Sustainability, and Leadership Continuity. 4

5 Monitoring The Foundation monitors organizational effectiveness beginning with the initial assessment. Grant application questions are focused on the organization s ability to be mission-driven, well-governed, and results-oriented, and provide the Foundation with details about how governance-level capacity work will be implemented, measured, and sustained. The Foundation utilizes a proprietary model to assess and monitor the financial strength of each funded organization. This model tracks key financial components and trends, and typically includes ten or more years of the organization s financial history. In addition, program outcomes are reviewed to determine the short- and long-term evidence of program impact. A thorough review of the yearly progress report is conducted and results in a meeting between Foundation staff and key agency leadership. In addition, board-to-board site visits focus on the impact and sustainability of the capacity building work. The sum of this communication is a key component in determining the organization s future involvement in the Initiative. In addition to these Initiative-cycle activities, the Foundation also looks to the grantees and other sources for input on how organizations become stronger and more effective: 1) Outside Evaluators (Formative Evaluation Research Associates) 2) Each organization s self-identified evidence of change 3) Each organization s program evaluation efforts 4) Foundation Staff interactions with each organization 5) Input from other community funders 5

6 What Are We Learning? Over the past eight years, the Foellinger Foundation in Fort Wayne, Indiana has worked with Charitable Advisors of Indianapolis, Indiana and partnered with a cohort of 20 of their grantees as they seek to expand their program impact and financial sustainability to better fulfill their missions. This has been a unique opportunity to observe, for almost a decade and over multiple capacitybuilding efforts, how different organizations respond to diverse approaches and fully grasp the significance of strong staff and board leadership. Insights on Initial Capacity Building Efforts The Initiative focused the spotlight on the board of directors as a frequently underdeveloped and underutilized resource. Following are a few of the most significant takeaways: On-going capacity-building support with high expectations can be very successful, even transformational Not every nonprofit is in a position to benefit from capacity-building or consulting help, even if it is badly needed Both staff and board leadership need to buy into the effort and hold hope and vision for improvement Progress is rarely linear and real change takes time Isolated training efforts do not have the same impact as longer commitments with accountability to a partner or funder Taking board and staff to visit similar organizations in other communities, or even other neighborhoods, can produce great benefits as both frontline staff and leaders take more ownership from hands-on learning. Mapping past successes can establish groundwork and understanding for continued developmental progress. New or better information about the people served, the community or the funding environment can be a catalyst for new programs, new approaches, or new funding strategies. The most frequently observed organizational challenges to effective capacity-building: Apathy, when capacity-building efforts are viewed as outside the organization s real work results in low attention and/or priority Staff leaders focus on short-term and operations often a practical limitation in smaller organizations Board member turnover makes it hard to institutionalize changes and improvements Lack of clarity about the board s on-going role in organizational leadership (observing vs. active/informed vs. micro-managing) Insufficient preparation and development of board leaders/chairs 6

7 What Triggers a Change in Organizational Capacity? While capacity-building and organizational development are typically not linear processes it doesn t mean they are random or only happen by chance. Through review of the 23 organizations that have participated in the Foellinger Foundation-invited Initiative plus research and writing in the field we can identify a number of factors, triggers, or inflection points that could be leveraged by leadership to increase their impact and/or financial sustainability. Each is stated in the positive but it can generally be presumed that the negative will reduce or impede capacity (i.e., the lack of a strong financial staff leader or loss of a revenue stream/source). Governance Increased member engagement Active committee work Measuring performance and building accountability Challenging the status quo A big idea or vision Board sharing leadership Strong, influential board leaders Diverse perspectives that can reach agreement Board and organizational self-assessment Financial Sustainability New revenue streams Capital campaign Major gifts effort Planning/feasibility study Strong finance staff leader Facility review/change Formalizing systems and processes Leveraging technology Community leadership (advocacy) Benchmarking, learning from similar organizations Program Impact Vision clarity New info need/clients New info - what works Shared solutions, (collaborations) Accreditation cycle (CARF, COA, JCAHO, PTQ, etc.) Program evaluation New program Theory of change/logic model Change in delivery model Community leadership (advocacy) Leadership Board/CEO partnership Staff leadership team Smooth leadership transition Executive director/ceo delegation of operations Executive director/ceo change Succession planning Staff role specialization Institutionalizing values and culture Staff evaluation and development 7

8 Appendix Supporting Frameworks A tool was developed in 2008 and refined in 2013 that created a four-level framework for use in assessing participating organizations in four broad areas of impact and sustainability. These are represented below by the Organizational Effectiveness Pyramid and Areas of Focus. Foellinger Foundation Organizational Effectiveness Pyramid Adaptive & Sustainable Effective & Efficient Organization consistently performs in executing plans and accomplishing work and excels at reviewing work and making improvements based on what is learned. There is a culture of developing and sustaining strong staff and board leadership through transition and challenges. Stakeholders and the community are engaged. Organization has a good grasp of what it should be doing and how to do it and is able to consistently perform in how it executes its plans and accomplishes its work. Capable & Accountable Compassionate & Incorporated Organization has a good grasp of what it should be doing and how to do it, but not yet able to consistently perform. Organization functions in an informal and grassroots way. It is driven by passion and good intentions and may have limited understanding of how nonprofits work. Organizational Effectiveness Areas of Focus 1) GOVERNANCE 2) IMPACT Mission/ Purpose/ Culture 4) LEADERSHIP CONTINUITY 3) FINANCIAL SUSTAINABILITY 8

9 Mastering The Basics of an Effective and Efficient (Third-level) Organization Organizations are selected for the Foellinger Foundation-invited Initiative because of a positive grant history with the Foundation and evidence that they are mission driven, well-governed, and results-oriented. Based on the assessment and the criteria of the assessment evidence, this checklist of ten basic operational practices has been developed as a tool to assist board and staff leadership in aspiring to or maintaining practices proven to strengthen or sustain performance. Many of these practices will already be in place when an organization is invited to join the Initiative and it is expected that most will be executing all ten by the end of their first funding cycle and maintain them during future cycles. The ten are listed below with brief explanations: Ten Basics Explanation 1) On-going Board Development 2) Strategic Plan Used Routinely 3) High Board Member Engagement 4) Board Recruiting & Orientation 5) Dashboard for Finance, Plans, Programs 6) Program Evaluation & Improvement At least two board training activities each year, internal or external. Occasional meeting self-assessments and discussions of board structure and performance. Strategic or Business Plan in place to define direction and prioritize work, regularly reviewed and updated as needed. Board meeting and committee participation, attendance at organization events, projects, and learning opportunities outside board meetings Board Committee or sub-group drives recruiting effort based on needed skills, connections, key aspects of diversity. Standard orientation promptly provided to new members. Quickly engaged in a committee or project role. Key measures for finance, programs, and plans defined and tracked on a regular basis in a format understood and accessible to all board members and staff leaders. Logic Model or Theory of Change in place for key programs supported by industry best practice/evaluation. Outcomes tracked and reported to board. 7) Increasing Financial Stability Declining deficits or increasing surpluses. Strengthening/growing at least one revenue stream. Moving away from dependence on one primary funder/stream. 8) Accreditation, Legal and Financial Compliance 9) Leadership Transition Planning and Staff Development 10) Board/CEO Teamwork, Evaluation Process Clear processes in place to keep board informed of completion or potential shortcomings in audits, tax payments, risk management, or critical reaccreditation, audits, certifications, etc. Emergency CEO/ED succession plan in place and known by board leadership. Next board chair identified twelve months prior to beginning of term. Concerted efforts to hire and develop strong senior staff leadership team. Clear goals and expectations set between board leaders and ED/CEO each year. Strong communications and respect for everyone s perspective and contribution. Regular conversations about organization performance and written annual review with CEO/ED. 9