Wednesday, September 3, 2008

A CEO is not a Rainmaker

In times of economic downturn, many public charities are between a rock and a hard place. Donations tend to decrease from practically all sources while the demand for their services increase. Many agencies expect their CEO and/or Director of Development to do a magical fundraising dance that will open up the heavens and bring money raining down on the cash needy agency.

I am finding it more and more common to see job ads for CEOs that are almost entirely focused on this one thing - raising money. Furthermore, if I had a nickel for every agency strategic plan that calls for huge increases in raising private money, I would be a wealthy man. Such a one dimensional Board focus on their CEO recruitment and planning is dangerous, because all agencies have needs for CEO talent in other critical areas including:

1) Program/Service Quality, Development and Implementation
2) Public Relations
3) Financial Management
4) Board Administration and Support
5) Strategic Planning
6) Human Resources Management

When the CEO is tasked with raising an impossible amount of money, all of this other critical stuff can fall by the wayside. What happens then? The agency can deteriorate in all of the areas listed above and become an empty shell of its former self. If the CEO does happen to be one of the lucky few who succeed at this herculean task, the money ends up being shoveled into an agency more concerned with inputs than outputs. Financial margins reign supreme and program quality is trivialized. Of course the financial health of an agency is vitally important, but not to the exclusion of service quality!

At the same time, given that the task is nearly impossible, most will fail with a shrinking pie and ever increasing pressure to draw a greater amount from it. As a result, there is increasing turnover in the CEO and/or Director of Development positions as they do not fulfill the unrealistic expectations placed on them.

So what is our recommended solution to this problem? To begin with, one of the critical variables we consider in rating Organizational Capacity is an agency's working capital. Generally speaking we recommend that a charity have a year or more of liquid assets on hand for down times such as we are currently going through. This is a process that takes years of planning and hard work, not a Rainmaker a minute before the witching hour. Agencies must understand that they need to make strategic use of the good times to lay the foundation for withstanding and even thriving through the tough times.

The fundraising plan must be developed JOINTLY by the Board and staff. The staff must be willing to speak plainly and clearly about what is realistically achievable and the Board must be willing to LISTEN. The starting point for the plan should be the agency track record, followed by conservative projections for adding revenue based on a level headed SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. Furthermore, CEOs have a responsibility to make sure that their job descriptions include all of the functions noted above and that the Board understands that adequate time must be allocated to each of them. These realities need to be factored in when planning the amount of CEO involvement in fundraising efforts.

Sadly, most agencies are not that forward thinking or willing to face current realities. Therefore, the CEO or other executive staff becomes the fall guy/gal until the economy rebounds and more money for programs and services is available. At the point of rebound, Board expectations at least have some chance of once again being grounded in the "earth" of reality, rather than the "rains" of fantasy.

5 comments :

KToro said...

Amen!

petsnpatients said...

Yes, the strength of the organization must come from an involovedm active board and volunteers that make the growth and awareness of the mission a second job to their own. The CEO is the full time face to the place, the events, the watchstander of all the facets of the enterprise who feels the needs in the community. It is often a much longer job that what a days pay is worth in a for profit biz.

Especially in the beginning, it's a passion, not pay.

dog to dog said...

Amen. Thank you for phrasing, so succinctly, the misconception that only one person (the CEO)is responsible for fundraising. Unfortnately, many non-profits do the right thing (prepare a fundraising plan jointly, with CEO and board) but then the board ignores it and still believes fundraising is up to the CEO. Sigh.

IronMal said...

With such a huge range from small NPO's to massive we have to take size into perspective. The CEO is always going to be the Captain of the team, but the smaller the NPO, the more hats the boss has to wear. Including being the major breadwinner. That's why we see so many recruiting ads for CEO / fundraiser especially with small operations like poorly funded disease research and so forth. And I give those CEO's tremendous credit... their ability to break even these days is a credit to our country and our charitable way of life as Americans.

Ken Berger said...

Dear ironmal,
I agree that size matters when it comes to fundraising, but so does everything else! In very small agencies there is no one to delegate to in ALL the areas I listed as the CEO duties. So in the case of small agencies I think it is even less fair to put the entire burden on the CEO. The Board needs to do even more of the heavy lifting in that case.