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A FRESH LOOK AT LEVERAGING LIMITED RESOURCES IN SMALL NONPROFITS: 7 KEYS TO UNLOCK THE POWER OF HUMAN SERVICES ORGANIZATIONS

Copyright (c) 2012 Wobbly Nonprofit. All rights reserved.

EXECUTIVE SUMMARY

How a small nonprofit organization invests it’s time is critical. Resources are
often limited and competition with larger organizations for similar resources can present problems of many kinds. These include fundraising, cash flow, infrastructure, human resources, governance, market and visibility dilemmas. Human services organizations (HSO’s) tend to be labor intensive and, as such, must be especially aware of time constraints. Small HSO’s are particularly suspect to a multitude of problems resulting from the suboptimal use of time and other resources.

Small HSO’s are particularly suspect to a multitude of problems resulting from the suboptimal use of time and other resources.
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Common solutions can be overly complex and do not always promote the optimal use of time. This suggests a need for HSO’s to reconsider operating strategies in order to tap the power that resides within them. These choices will ultimately play a pivotal role in HSO’s success or failure.

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Lock #1- Immobilized Board Resources

Common expectations of nonprofit Board members are to make monetary donations and to open up their rolodex file to the organization. The number of business contacts and amount of money an individual
can provide to the HSO are often used as barometers to gauge the value of a Board member. Consistently applied, this approach can alienate and dishearten Board members. This in turn can lead to poor governance and increased turnover of Board members.

The failure to properly tap the collective wisdom of Board members is clearly a waste of time. HSO’s that foster this approach risk stagnation. That inaction filters down to the operational levels of the organization. Employee morale and the quality of services ultimately suffer. Consequently, the image of the nonprofit becomes tarnished. HSO’s with limited capabilities cannot always discern this dangerous path. Consequently, they are at especially high risk of being damaged by an ineffective Board.

Lock #2- Cash Flow

The cash flow problems of HSO’s are typically blamed on “overspending” and/or an insufficient amount of contributions.

Yet HSO purchasing practices are often the culprit. Funders and communities expect a prudent use of funds and to realize acceptable returns on their investments. Failure to do so destroys confidence levels. This in turn has a potential negative impact on future cash inflows from these very sources. When HSO’s fail to live within their means, cash flow difficulties and financial irresponsibility become inevitable. Engendering the support of donors becomes a trying task, debt levels may rise, employee wage increases may be reduced or foregone and/or critical services curtailed. The time spent addressing these cascading effects can be substantial and redirect focus away from the mission.
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Lock #3- Meeting Increased Demand for Services

High levels of unemployment have resulted in a greater number of people seeking help. HSO’s are scrambling to keep pace in meeting this rising
demand. Limited resources have made this struggle even more difficult for HSO’s. To simply hire additional employees without careful thought is not the best option. The necessary funding is not always available. This creates a need for HSO’s to maximize the use of available resources. Failure to take this first step results in poor stewardship. Time management is a prerequisite and becomes a more critical issue as labor resources get stretched beyond original expectations.

Lock #4- Overreliance upon Government Funding

U.S. governments at all levels – federal, state and local- are facing budget crises. With a long-term shift in jobs and business activity to other

countries, tax receipts have markedly declined while spending has spiraled out of control. This has resulted in financial shortfalls, increased debt loads and less funding available for HSO’s. Attempts to increase the amount of government funding appear to be a high-risk, low-return strategy. Competition for a smaller pot of government funds will likely intensify. Cost based contracts may increasingly transition to performance based ones as well. Late payments continue to remain a looming concern too. Time spent securing government contracts will need to be closely monitored. HSO operations will need to demonstrate the highest levels of efficiency and a competitive advantage will be necessary to secure funding. Too many eggs in the government funding basket may prove to be catastrophic for HSO’s in the future.

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Lock #5- Lack of Infrastructure Funding

The funding of nonprofit infrastructure has traditionally been difficult to obtain. Administrative expenditures are clearly treated differently than
pure program expenses when proposals are evaluated. Nevertheless, proper infrastructure is a necessary foundation to assure sound programming. In fact, due to the reluctance of funders to pay for infrastructure, small HSO’s tend to underperform in this area.

In response to this trend, HSO’s lean towards investing fewer resources in infrastructure. A weak infrastructure can result in excessive costs due to rework, duplication of effort, lack of training and compliance issues. When the administrative support for programs is weak, their overall image tends to become tainted. Confusion often results with a spillover effect to the quality of services being provided as employee time is misdirected.

Lock #6- Staff Burnout

Unrealistic workloads can take a heavy toll on HSO employees.

Leaving staff mentally and physically exhausted is a high price to pay in accomplishing missions. Burnout typically reduces productivity. It also causes resentment, hopelessness and cynicism. When the vision painted by leadership is not crystal clear, confusion results. Most importantly, burnout of the entire organization- in wildfire proportions- will ultimately occur. This can be a threat to the very existence of a small nonprofit. Ultimately it will tarnish the mission and have a serious negative impact upon all stakeholders. Typically the burnout problem is “fixed” by adding more staff or giving a raise to placate one or more employees. Unfortunately, these are weak long-term solutions that don’t address the real issues, have little staying power and result in greater costs.

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Lock #7 – Lack of Visibility

It is common for HSO’s to spend a great deal of effort on various marketing and public relations activities. The quest to create awareness

consumes the time of many people associated with the organization. While increasing visibility is certainly a worthwhile goal, the time and cost to obtain it should be carefully monitored. Limited resources can easily be wasted on this activity. When fee for service activities are involved, the situation becomes even more complicated. Marketing becomes confused with fundraising. A lack of visibility prevents an HSO from successfully reaching those in need. Conversely, too much promotion can financially cripple a smaller nonprofit. Many HSO’s find themselves at one end or the other of this spectrum.

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UNLOCKING THE POWER OF YOUR HSO KEY #1- Endear, absorb and mobilize Board members. The process of endearment is a prerequisite to tapping the strength of a Board. Impart the goodness of your HSO to each Board member, allowing every person to intimately learn about your mission and the people behind it. Next, absorb the responses of Board members. Learn in detail what they see, hear and feel. Finally, call your Board members to specific action. KEY #2- Fuel in-kind contributions. Clearly identify your unfunded expenses. These will consist of (a) budgeted items paid through operations/reserves and (b) unbudgeted items that could further enrich a program. Match and endear potential contributors-preferably well in advance of planned purchase activity. Cash conservation will be a primary benefit. KEY #3- Get better. Focus upon how activities are to be completed. Carefully evaluate inputs and the associated outputs. This will help your HSO to respond to demand issues at any point in the business cycle. Make this an ongoing activity to be prepared for rising, falling or constant demand. KEY #4- Be flexible. Be prepared to respond to financial crises before they occur. Budgetary measures should be put into place that adjust for changes in activity, funding, legislation or economic circumstances. Resources can be successfully reallocated and opportunities that may present themselves seized. Introducing financial flexibility that extends beyond the standard static budget is a prudent measure.

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KEY #5- Break new ground on infrastructure. Efficiently expanding administrative support can be helpful to a small HSO. Since output is typically low and input high, the cost per unit tends to be high. Options should be explored to streamline processes, consolidate output and broaden the range of in-house administrative services. KEY #6- Incessantly nourish employees. Recognize human resources as your greatest asset. Empower employees and link performance to reward. KEY #7- Open your doors. A straightforward yet overlooked concept by many HSO’s. Be cautious not to fall into the trap of overweighting communications with stakeholders via electronic means. Steer away from convenience and revert to the old-fashioned face-to-face variety when appropriate. Do not become enamored with social media and create obstacles. Just open the doors to the real essence of your organization.

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FINDING THE BEST SOLUTION TO LEVERAGE LIMITED RESOURCES Here’s what to look for in a solution.  Simple. Easy to understand.  Systematic. Proceed in logical order.  Durable. Designed for long lasting benefits.  Balanced. Harmonizes all parts of the HSO.  Affordable. Designed for a high return on investment.  Energy Efficient. Saves time and money.

Copyright (c) 2012 Wobbly Nonprofit. All rights reserved.

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Wobbly Nonprofit has introduced the Multiplying Good program to assist small nonprofit HSO’s ready to leverage their limited resources and unlock their true power. Create a splash moment and get your free copy today.

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