Time to Look Up
Thursday, December 18, 2008
By: Susan Raymond, Ph.D

Being from Indiana, there is an argument to be made that all I really know anything about is basketball. When you teach children to play basketball, they always look at the ball when they are dribbling. And you run up and down the side of the court shouting "Look Up! Look Up!"

And, of course, they don't. They don't because they are afraid they will lose control. And, as in life, the illusion of control provides comfort in the face of uncertainty. Then sometime around second grade, your point guard starts down court and he or she looks up! And then, and only then, can you begin to play the game.

It is time for us all to look up.

All that can be said has been said about the recession.  We only have three or four meaningful numbers in the nonprofit sector anyway, and we have combined, compared, and contrasted them in every possible way, from every possible pundit (yours truly included) with every possible interpretation.  Enough looking at the ball, already.  It is time to look up, and to see how, given what we know, we are going to play this game.

As we open the doors to 2009, we have before us five opportunities masquerading as challenges.  These opportunities, painful though they are, lie before us precisely because of current economic conditions.  Look Up!

First, the last two decades has seen extraordinary organizational proliferation in the nonprofit sector.  Economic challenges provide the opportunity to think about whether that is rational.  The opportunity in the challenge is for consolidation.  Nonprofits need to think about their businesses, their clients, and their mission.  Mergers, acquisitions, deep collaboration in program provision all should be on the table.  The question for any nonprofit is not How shall we survive?  It is How shall services best be provided to those who depend on us?  The mission should be kept clearly in focus: services not self preservation.  Harry and Maude, who pay the taxes for the sector and voluntarily contribute hard earned dollars to it, do so not so that the sector can turn on the lights, but so that mutually-held problems are solved.  The very real and, yes, painful opportunity is to form partnerships -- even mergers -- that will strengthen both balance sheets and service provision.

Second, there is opportunity to regain lost ground in our approach to civil society.  The explosion of (partially illusory) wealth led many organizations to believe that security and ease rested with “the hedge fund guy.”  Just get a couple of those hedge fund guys on the Board and all will be well. Life will be easier.  Gifts will flow with less effort.  The flaw in that argument is now in evidence.  The opportunity before us is to return to the hard work of fertilizing the root systems of the nonprofit sector.  Now is the time to reach out and cultivate broad constituencies, to communicate with communities, and re-establish deep and trusting relationships with Harry and Maude.  The core of community is still there, still committed to betterment, still willing to be engaged.  With a $1 billion gift?  Hardly.  But the job of the nonprofit in civil society is to engage the people in its efforts.  And the people await.

Third, there is an opportunity for nonprofits to think deeply about revenue diversification.  To some extent, that is also part of the second, engagement opportunity.  But, the way in which capital is flowing on the societal commons is changing markedly.  We have commented on this in previous work.  Whole new definitions of philanthropy are emerging that are using capital mechanisms to link nonprofits to larger resource flows.  Now is the time for nonprofits to look seriously at these program related investment tools, social networking and electronic tools, cause related marketing tools.  Will one size fit all? No.  Is every sophisticated idea right for every problem? No.  Is it possible to be too clever by half?  Certainly.  Evidence in support of the last is scattered about the economic landscape.  Still, now is the time for entrepreneurship and creativity.  You will only be able to think and look in that way if you look up.

Fourth, and in a related manner, now is the time for new skills.  There are two opportunities here.  One the one hand, there are many really, really smart people on the market now.  This is the time to renew Boards, find new CFOs and CEOs, reach into the huge reservoir of talent and bring it into the nonprofit sector.  Yes, we are in a deep recession.  Yes, firms have failed.  Yes, Wall Street is in turmoil.  But nobody died.  Reach out to these people NOW, not for what is in their wallet but for what is between their ears.  To seize the opportunity of the future, you need their ideas, their organizational experience, their entrepreneurship far more than you need their money.  Reaching out will not be the hard part; listening and acting will be the hard part.  But the opportunity is now, before the economy turns up again and they once again look at you only with their checkbooks.  On the other hand, it is time for the sector to speak frankly to the academic programs producing “nonprofit managers.”  Academic and professional training programs need to re-assess the skills they are imparting.  Nonprofits need managers who are entrepreneurial, who understand the structure of capital, who have modern communications and electronic networking skills.  Nonprofit leaders should sit down with training programs and begin to update curricula and urge joint collaborative programs with business and communications schools.  The next generation of nonprofit managers will need entirely new capacities if they are to take advantage of the changes in financing and communications on the societal commons.

Fifth, there is opportunity for America’s foundations to join in this process.  Nonprofits are one side of the institutional coin.  Foundations are the other side.  Foundations also need to look up.  Every one of the four opportunities also has an application to them.  Foundations need to think about how to become more entrepreneurial with what they have, how to find new skills, how to take advantage of change to renew their links to community.  Watching assets disappear can be morbidly fascinating, it is true, but it is not a productive use of time.  Look up!  Re-evaluate portfolios, form true resource-sharing collaboratives with other foundations to wring every last cent of value from grantmaking, renew communications with and engagement of communities in your work, reach out to new skills and perspectives and bring them into your foundation to become more entrepreneurial. 

The additional challenge for foundations is, of course, clear.  Every foundation has a very fundamental question before it right now: What business am I in?  Foundations are responding with two different answers.  One set is answering that they are in the business of institutional self-preservation.  One set is answering that they are in the business of charity in the face of need.  The former are turning inward to preserve capital.  The latter have decided to worry about capital later.  There is nothing easy about these decisions, and there is nothing necessarily right or wrong about either answer.  But in these painful decisions, for nonprofits and foundations alike, lies opportunity -- to become stronger, smarter, and more creative. 

About the Author

Susan Raymond, Ph.D., an Executive Vice President at Changing Our World, Inc. a leading philanthropic consulting firm, is the co-author of Mapping the New World of American Philanthropy: Causes and Consequences of the Transfer of Wealth, published by Wiley. She can be reached at sraymond@changingourworld.com.