The Next Big Thing

In my last post I described the challenges the shifting dynamics of the sector will bring. In exploring the nexus of these issues, we often start by looking at ourselves.

Among the sector’s leading capacity builders, La Piana Associates is itself uniquely structured – and intentionally so. We were founded in 1998 by a unique partnership among the Irvine, Packard and Hewlett foundations as a consciously sector-crossing early example of the kind of hybrid the future will bring. For example:

• We have a nonprofit mission, but a forprofit tax structure.
• We have an office with meeting rooms and support staff, but all professional staff work from home, in Los Angeles, San Francisco, Pittsburgh, and Boston.
• For ten years we have adopted every new generation of technology in an ever-more-robust virtual structure: PDA’s, intranets, virtual meeting services, video conferencing, podcasts, etc.
• We have successfully combined financial success and the profit motive with a deep staff commitment to our social change mission.
• We take community-building and cultural competence seriously. We continuously invest in becoming a culturally competent consulting resource for all nonprofits and communities.

While there are for-profit capacity builders and nonprofit capacity builders, some more technologically advanced than others. Our firm has chosen a virtual organization model, which we have maintained and evolved for ten years.

Despite the economic toll of high rents and the human toll of long commutes, few groups serving the sector have been willing to think outside of the rented office box.

Our founding funders were prescient ten years ago when they urged us to break all the molds in designing a new kind of consulting firm.

We have continuously faced the challenges of this innovative structure, and have learned a great deal about how to do it right: from supervising distant staff to our innovative performance management system; from project management to Internet-based time tracking; and from compensation to managing virtual teams, we have developed many tools for the new era and learned invaluable lessons along the way.

As I think about the challenges of the future, we will now consciously bring this legacy and this perspective to thinking about strategic solutions for the sector.

In my last post I outlined some of the exciting developments facing the sector.

The confluence of these issues presents an exciting if unknown future: how the generational shift, new technologies, the desire to build community across difference, the increasing permeability of the very concept of “nonprofit,” and the redefinition of the workplace will combine to transform the nonprofit sector.

I believe the next decade will bring new leaders, new technologies, new structures and new partnerships.

It will bring new, well-capitalized competitors, and some may be for-profit companies that crossover into the sector of traditional nonprofit work. It will also bring new donor demands for accountability and impact if nonprofits are to maintain their already-tenuous hold on identity as a sector and not just become under-capitalized competitors in an increasingly crowded and sector-blind blended economy.

One key to success in this environment will be a collective rethinking of what it means to be an organization, what we mean by “workplace,” and what it means to both compete and partner across many permeable boundaries.

This transformation will not be optional.

Just as the days have largely passed when nonprofits were viewed as “charities” or volunteer auxiliaries led by do-gooders, so too will the current conceptualization of nonprofits as “institutions” and perhaps even as “organizations” give way.

Many nonprofits will instead become known as their brands and will operate through networks.

Even those that maintain institutional cohesion will be organized to a far greater degree around shifting coalitions, online activism, a mobile workforce or perhaps even volunteers whose day jobs are in completely unrelated fields.

In this changing world the current modes which foundations use to advance their missions, and the traditional approaches used by capacity builders, will fall far short.

In recent musings about generational and cultural awareness, I discussed sociocultural trends that are influencing the nonprofit sector.

Thoughts about our future would be incomplete without a thorough consideration of technology, sector crossover, and shifts in traditional organizational models and tax exemptions.

Traditional boundaries between the business and nonprofit sectors are evaporating. Examples of this trend are plentiful. Corporate leaders now occupy CEO roles at major foundations; businesses develop nonprofit subsidiaries. Wall Street investment houses aggressively compete with community foundations for donor-directed funds.

Nonprofits develop fee-for-service programs and develop products to sell, often online.

Government regulations that once made many services an exclusive nonprofit domain are falling; local government taxing authorities question the value nonprofits provide the community; and Washington asks if nonprofits devoted to the high arts deserve tax exempt status or deductibility of gifts, since their work does not benefit the poor but rather fulfills their wealthy donors’ personal passions.

Meanwhile, technology allows us to reconsider the traditional organizational structure. Concerns over rising gasoline prices, high downtown rents, elevated greenhouse gases, and the quality-of-life impact of long commutes from the suburbs, combine with the possibilities offered by fast Internet connections, high-quality video conferencing, affordable all-in-one printer-scanner-fax-copiers, and virtual intranets, to make “virtual workplaces” an appealing alternative for many organizations, nonprofit or otherwise.

Moreover, the widespread adoption of Web 2.0 social networking technology presents a new, non-hierarchical, non-controlled, not yet fully understood, format for connectivity among nonprofit sector workers and activists and between the sector and its constituents.

In thinking about trends that are shaping the future of the nonprofit sector, Diversity and Cultural Competency continues to be a critical issue.

During our recent historic primary season, the epic Clinton/Obama battle has once again turned our nation’s attention to race, gender, ethnicity, and the larger topic of cultural competence—how we manage difference—in ways unimagined just a year ago.

Whatever happens in the general election, a door has been opened and it is up to the nonprofit sector to walk through it, leading the dialogue.

As a sector, nonprofits are poised at an historic moment.

Several developments are coming together to make the next few years a time of unusual opportunity for positive change in the way we are structured, the way we work together, and the way we interact with constituents.

The sector has already been buzzing about a perceived generation gap, particularly as it relates to leadership succession planning. But this generational shift has implications beyond the role of Executive Director.

The sector has to adapt to engage constituents as well as leaders.

The aging of the Boomer generation presents opportunities for emerging leaders to step into key roles in the sector and for experienced Boomer leaders to redefine their roles as they redefine retirement.

Still, the generations will need to bridge differences and work together as partners for years to come.

At the same time, many nonprofits will need to fundamentally shift their expectations for engagement of supporters in internal processes, decision-making, and “membership” activities if they are to survive. We have recently worked with several large membership groups which recognize that engaging younger generations will require a different kind of organization.

In my first Getting To Yes post, I described our collaborative committee model and the requirements for joining the collaborative effort. Then I described the process of defining an organization’s seemingly intractable problem and discovering a solution that satisfies previously rival stakeholders.

At this stage, we advise clients to begin testing this solution with key constituents who are not on the committee.

It is at this stage that a strange and wonderful thing happens.

The committee members, with newly found “ownership” of the possible solution, become advocates for it. And the committee of previously rival stakeholders begins to form a real team.

The larger organization takes notice: “If Joe and Jane can agree to anything, it must have some merit,” they think. And the ownership of the solution spreads throughout the organization.

A lasting benefit of this approach is that it can model collaborative problem solving throughout an entire organization. Often the original problem addressed through the collaborative committee model is just one component of a much larger organizational conflict, and the process serves as a successful strategy for leaders to address other large and complex issues facing their organization.

In my previous post, I described a first step in addressing the complex interpersonal issues that can hinder an organization’s governance effectiveness. After forming a committee of rival stakeholders we work to clearly define the issue that has the organization seemingly deadlocked.

This process includes detailing the history of the issue, past attempts to address it, and any other pertinent facts or observations.

But the goal of this process moves beyond pure catharsis when we begin to pose “what if” scenarios. By engaging the committee members in a reasoning process without immediately requiring they declare their support or opposition for any given idea, stakeholders begin to see commonalities of interest that were previously masked, and the vague outlines of a solution start to emerge…

Complex questions about governance structure, function, and purpose often get confounded by interpersonal histories. This leads to avoiding key issues rather than risk facing the wrath of fellow board members who are in different camps.

Our collaborative committee model is a simple yet amazingly effective technique. Our approach brings together varied interests from large organizations to tackle what have been seen as intractable problems.

The key ingredient to this model’s success: forming a committee of stakeholders who represent the organization’s different, and even conflicting, viewpoints.

We propose our client’s adopt two requirements for committee membership:

1. Members must be identified within the organization as staunch advocates for their position and as key influencers. Any compromise these members reach will cause others throughout the organization with similar views to take notice.

2. Members must be reasonable. Not necessarily easygoing or un-skeptical, but members should be critical thinkers who are capable of fair and rational judgment.

When targeting prospective clients and seeking new contracts, other consulting firms may focus on the size of an organization’s annual operating budget or on how their particular offerings can be repackaged and served up to fit a prospective client’s need.

At La Piana Associates, we approach our prospective clients as partners.

Our earliest motivation to serve an organization usually stems from the nonprofit’s compelling mission. We get inspired by our clients’ causes. Whether it is protecting human rights, saving the planet, or healing victims of abuse, it’s the mission that animates our work.

Next, we are moved by the possibilities for personal connection and collaboration with the people at the client organization. Our best work comes from partnering with clients who are open to learning with us, open to change, open, ultimately, to seeing us as partners.

For example, the consulting project may not be well-articulated by the client at the outset, which is natural because they are seeking help, in part, to frame their understanding of the issues. Through our joint scoping process, we partner with the client to help define the project goals and reinforce why it is important.

If a prospective client views our firm in a more utilitarian light, what Peter block calls “an extra pair of hands,” the client is overlooking one of our greatest assets – our eagerness to forge a long-term relationship. As partners, the relationship with our clients does not end at the close of the project. We keep in touch, clients feel comfortable coming back to ask us questions, or we might forward an occasional article they may find interesting…

Unlike other firms who may focus solely on project outcomes and deliverables, La Piana Associates invests in relationships.

The May 26, 2008, New York Times news article, “Tax Exemptions of Charities Face New Challenges,” discusses the alarming trend of how nonprofits are perceived by government and society.

Few will argue that Massachusetts imposing a 2.5% annual fee on Harvard University’s $35 billion endowment is unreasonable, but where do we draw the line?

Rather than raise voters’ taxes, government officials are hastily seeking less politically suicidal “revenue enhancements.” While government needs a workable financial model, it should not forget its dependence on the nonprofit sector.

When government reduces its services, nonprofits step-in to fill the gap, and in many cases, offer higher quality services at a lower cost. Government contracts with these nonprofits – off-loading responsibilities to organizations that cover the difference between their costs and the government’s payment rate through a combination of fees, donations, and below-market salaries.

Government’s short-sighted trend of taxing the nonprofit sector’s narrow margins will have a crippling effect and many nonprofits may not survive. This will hurt the communities they serve and will result in fewer nonprofits for government to rely on over time.