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The 7 Most Valuable Assets of a Nonprofit Organization

The 7 Most Valuable Assets of a Nonprofit Organization

When you turn to the financial statements of a nonprofit organization, one of first reports is titled Assets and Liabilities.  I know this an important report, but as a longtime non-financial manager of NPOs, I’ve always been less interested in this report than the statement of annual revenues and expenses and the break out of these results. However, as important as any of these corporate financial assets may be, for the nonprofit organization millions of dollars worth of buildings and cas...

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Choosing Gelato and the Value of Values

Choosing Gelato and the Value of Values

I tried a new gelato café that opened riverside in my town in the Fox Valley this weekend and had to make a difficult choice from about 35 amazing flavors. Do I take a risk, venturing into some new area of taste, or do I stick with the familiar, with something that begins or ends in chocolate or peanut butter? Choices like this, the trivial choices that fill our lives, are made according to taste or curiosity or whim, but even they can be directed by values.  For instance, risk aversion or ...

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“Your young men shall see visions”: Importance of a nonprofit vision

“Your young men shall see visions”: Importance of a nonprofit vision

As an organizational leader, do you have a vision? Is your organization focused on a clear and broadly understood vision of your corporate purpose and future? “If there is no vision, ” a 1599 version of Proverbs 29:18 reads, “the people decay.”  Without a vision, missions can stagnate or waste away. A vision is an answer to the question: “What can and should we accomplish?” Scott, Jaffe and Tobe in their book Organizational Vision, Values, and Mission, write: “Establishing a vision is picturing ...

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Trust Me

Trust Me

The tough work of building organizational trust. Trust is a provisional grant that if not supported by action will be removed. It’s a slippery word because of frequent violations! Trust took a hit with the Joe Isuzu farcical television commercials of the 1980s, and Ronald Reagan redefined trust as he created an arms treaty with the Soviets, coining a kind of conditional trust with the phrase: “Trust, but verify.” Most of us are great fans of trust because at its most basic level, trust is sel...

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7 reasons nonprofits flounder or fail

7 reasons nonprofits flounder or fail

By Jim Jewell A group of our friends led a wonderful start-up that was trying to bring new perspectives to the environment cause, to reach faith-based constituencies who were not traditional supporters of environmental concerns.  They had the plan worked out on paper, and even had a foundation to underwrite the effort for a couple of years.  But although there were many who cheered from the sidelines, very few people were committed enough to provide significant financial support.  When the ...

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7 Disciplines of Highly Successful Charities

7 Disciplines of Highly Successful Charities

How to build the trust that fuels program growth By Jim Jewell  In the last year, some two thirds of Americans responded to appeals from charities for support of projects to meet human needs, create new initiatives, advance faith, and reverse wrongs. Nonprofit organizations received $298 billion in donations and were supported by about 64.5 million volunteers. Unfortunately, the support is fleeting. For every 100 new donors, American nonprofits lost 107. A new report concluded that for ev...

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For Nonprofit Organizations there is no profit in broken relationships

NonprofitDonor attrition has always been a problem in mass fundraising, where personal touches are difficult and the ability to communicate impact is limited.  Now, widespread personal losses in recent years and the failure of institutions of all kinds to prove trust-worthy have produced a dangerous culture of mistrust.  One consequence: the relationships that nonprofits rely on to sustain programming and to keep fundraising costs down are in short supply.

Since the devastating impact of the recession in 2008 and 2009, charities have found ways to raise funds from new sources, and have--as a whole--managed a few percentage points of growth in 2010 and 2011. Fundraisers have done their job.

The problem: although ability to find new donors has kept most organizations afloat since 2009, the number of existing donors who have stopped giving has increased even more.  Put another way, organizations have been able to get first dates, but the number of ongoing relationships is in a tail spin. In 2011, for every 100 new donors to organizations, 107 people ended the relationship.

Over the last five years, the addition of new donors gained has remained strong, annually in the mid to high 50% level.  But the number of people abandoning the relationship has been higher, or at best about the same number.  Organizations are stagnating, not because they don’t know how to present their mission and attract donors, but because they can’t maintain the relationships.

As never before, it is vital that organizations focus more attention on aligning all related groups—board, leadership, staff, volunteers, program partners, members, recipients, and yes, donors—around robustly communicated vision, mission, and core values.  In addition, organizations must drill deep into the principles of developing and maintaining community, a fellowship, ‘small platoons’ around common causes.

For there is nothing more costly to an organization than a broken relationship.

Donors Gained and Lost (%) over previous year*
2007 2008 2009 2010 2011
Gained 63.9% 59.2% 54.2% 58.6% 54.9%
Lost -54.0% -57.6% -60.2% -56.9% -58.5%
Net 9.9% 1.6% -8.0% 1.7% -3.6%
Funds Gained from New Donors and Lost by Donor Attrition (%)*
2007 2008 2009 2010 2011
Gained 63.6% 13.3% 45.0% 53.5% 55.19%
Lost -56.0% -16.2% -61.1% -55.4% -55.0%
Net 7.6% -3.2% -8.1% -1.9% 0.01%

*Source:  Association of Fundraising Professionals Annual Fundraising Effectiveness Survey Report

Trust Gone Wild

The prerequisite of investment of time, money, and energy is a belief that what you invest in will be valued and will return a reward.  This holds true whether in financial markets, relationships, charitable giving, or the sacrifice of time to serve.  The return can be tangible or intangible, measured or perhaps a subjective feeling, experience, or simply the satisfaction of knowing that you “did the right thing.”

Any such transaction is based upon the presence of trust.  Trust provides the investor with confidence that the investment once made will be valued and a reward will be received.

For thousands of years, our financial systems have been built upon this foundation of trust.

That trust is disappearing beneath our feet almost daily.  It is time to do something about it.

Trust with any person or institution is based upon the Four Stages of Trust – shared values, shared vision, assumed responsibility and always delivering on your promise.

The bedrock of trust is shared values.  These values are common heart-motivations and beliefs – values like honesty, fairness, generosity, hard work, and integrity.

Over the past 15 years, we have seen the erosion of these values by Boards, Directors, CEOs and COOs of organizations, institutions and companies we have trusted.  We have trusted many of these organizations for decades, some even for centuries.

The values of hard work, honesty, fairness, generosity and service have been replaced by an unquenchable desire for power, accompanied by arrogance and greed.   The fruit of this can be read in headlines over the last decade as district attorneys have exposed leaders of both public institutions and private corporations taking advantage of our collective trust to manipulate systems, regulations, traditions and inferred promises.  It has become painfully evident they have done this to accumulate personal wealth.  They have “gamed” the system and we have been left holding the bag.

Of course, erosion of trust has always been present.  Historical records provide ample testimony of people in commerce, government and church who have manipulated systems for personal gain.

But not of the scale and breadth we have seen over the last 10 years.  Trillions of dollars have been siphoned off, diverted into back pockets, sketchy bank accounts, and hidden by intricate systems and complexities.

The result is a people who are jaded and skeptical, if not cynical.  The implication is that they have become victims and fools, manipulated by those in charge of a system of trusts, weights and balances.  Most of these leaders and those who have yet to be caught couldn’t care less.  It is precisely their avarice, arrogance and self-serving tendencies that perpetuate this destructive cycle.  Is there no end?

With capitalism, the power resides with the consumer.  Once bitten, the consumer can run away, tell friends and family, and perhaps call into question the trust, reputation and integrity of the organization and its leader.  The result is a loss of customers and revenues.  This has been the foundational basis for capitalism – the buyer’s trust that the seller will keep his promise.

Our system of capitalism and trust in each other is under assault.

It is time for CEOs and leaders of government organizations and nonprofits to step up and make a promise.  It is time to once again state intentionally the values that are shared among the organization’s leaders, its representatives, its partners and its stakeholders to reweave together the fabric of trust.  It is time to demonstrate that the values they hold consistently drive the choices they make, and to prove, indeed, that some of us are different. Some of us are trustworthy.

Eight reasons why your business may not be growing

You know you need to grow.  You need to innovate. And you need to change.

But how?  To what?

What’s blocking your growth?

  • Lack of internal trust?
  • Missing a robust sales pipeline?
  • Unable to sell value?
  • A resistant culture?
  • Misallocation of resources?
  • Missing or outdated strategy?
  • Misalignment with a changing market?
  • No real innovation or product development plan?

In our experience, we’ve identified eight issues that indicate that your organization may be out of sync:

1. Trust issues: Trust in another means you’re willing to invest and take a risk with them.  It is the glue for a team.  A lack of trust in an organization is like throwing sand in the gears.

When trust breaks down, collaboration slows, complexity expands, and costs go up.

Trust is built upon shared values, shared vision, assumed responsibility and always delivering on your promise.

2. Pipelines issues: As organizations grow, strong sales talent rises to the top.  A dependency upon the personal skills of individuals then creates relief when they can magically fill the pipeline.

Relying on individual heroics to make the sales quota creates crises, undermines morale, and puts customer loyalty at risk.

Great organizations nurture disciplined sales processes to create interest, engagement and demand.  In this situation, the organization grows with the talents of a strong sales staff but is not held hostage by their personal client relationships. The company and brand have a predictable, sustainable process to fill the pipeline.

3. Value issues: Perceived customer value of an organization’s products and services is the foundation for pricing, loyalty, referrals and peer-to-peer advocacy.  When value is low, lower pricing and commoditization occur.  This is the beginning of a destructive cycle that you cannot win – the demand for continually lower prices.  Low prices, while they may make a customer happy in the short term, can never be low enough.

When customers don’t recognize a unique value, engagement slows, loyalty disappears, pricing drops, margins fall, and advocacy is non-existent.

Great organizations are constantly listening and developing new ways to solve customer frustrations – in effect, delivering value.  The value is communicated and reinforced at every point of customer contact.

4. Culture issues: At first, every organization starts out focused on meeting each individual customer’s needs.  As organizations mature, they institutionalize to increase cost efficiency.

As organizations institutionalize, they lose flexibility.  Entrepreneurial spirit, innovation and responsiveness are eroded in the interest of creating predictability.

With this strengthening of the organizational structure comes resistance to change, aversion to risk, and departmental silos that keep structures fixed and predictable.

A culture of self-preservation erodes transparency, cooperation, and creates silos.

Great organizations intentionally infuse a strong structure with creativity, breaking down existing barriers, encouraging new business ideas, and investing in emerging leaders.

5. Resource issues: There is never enough money, enough time and enough talent to take advantage of every opportunity that lies before the CEO.  CEOs and COOs are tasked with identifying the best investment of these limited resources to produce the greatest long-term result. Without a roadmap to growth, loud internal voices with limited understanding can influence resource allocation and handicap growth.

Poor allocation of resources creates bottlenecks and uncertainty, limits emerging leaders and saps energy.

A great organization continually refines their growth strategy among their team to ensure that the investments they make will result in predictable growth.

6. Strategy issues: Markets constantly change and with them customer demand, opportunity and predictability.  A focused growth strategy and roadmap are essential for deploying resources and tracking progress to goal.

Without a clear strategy, opportunity is overlooked, vision is obscured, and passion to grow is frustrated.

A great organization is continually refining their business growth strategy, analyzing market trends and the organization’s performance against short-term and long-term opportunities.

7. Market issues: As a leader, it is way too easy to see only the trees in front of you and lose the perspective of the forest.  Consequently, your organization relies on the vision and understanding of your strategic leadership to point to the path of growth.  If you’re out of step with the market, your entire organization can be lost.   Disconnects are apparent at the field level, while the organization is focused on internal matters rather than customer opportunity.

Without the voice of the customer, fragmentation grows, innovation is lost, and staff blames others.

A great organization continually seeks the voice of the customer to ensure a reality check.  They push this voice of the market down through the entire organization to ensure alignment with customers’ needs, to address their frustrations, and to seize emerging opportunities.

8. Innovation issues: Without innovation, every organization struggles with being commoditized.  The heart of innovation is a clear understanding of the voice of the customer – their needs, frustrations and where opportunity lies.

When innovation slows, customers lose interest, differentiation is lost, margins fall, and competitors win.

A great organization pushes the voice of the customer down to every nook and cranny within the company.  Employees, partners and staff hear, take notice and begin to think differently and creatively, about ways they can better serve the market.  Innovation is the result.

The VALCORT Process is proven to address all these issue quickly, efficiently and effectively, providing a framework for internal trust, customer engagement, pricing to value, innovation and growth.

What’s holding you back?  Take the ROI Survey now.

A Leader’s Secret Sauce – Heinz Kohut’s secret for leading change

Creating business transformation and market growth

Heinz Kohut, noted 20th century psychologist and behaviorist, gave us insight into leading people to change.

He, along with his colleagues and peers, found the old adage to be true:  “You can lead a horse to water, but you can’t make him drink.”

Unfortunately, many managers and leaders don’t believe this.  As a result, too many leaders and managers promote their thinking, their solutions, their products, their perspective and dump it on the listener expecting them to hear, accept and adopt their proposition.

People don’t do this.

While its true that when people respect a leader who has demonstrated success they give more credence to the proposition, they do not simply accept and adopt it.  For them to accept and adopt the proposition it must make sense to them, and fit into their own view of the world.

Kohut came face to face with the reality that for people to change, people have to WANT to change and arrive at their own conclusions about the why, how and what.  With this as a premise, he identified a sequenced series of interactions that can lead a person to want to change, accept a proposition and make a sustainable change.

Simplistically, he set out three conditions or interactions that must be established.

  1. Common structure –
    1. This condition references a shared environment.  In Kohut’s view a structure could take many forms.  It could be a physical space like a room or gym, a social structure like a family or community, or an organizational structure like a business culture, club or a academic institution.
    2. Kinship/Twinship –
      1. Kinship is a shared life experience. Whether constructive or destructive, we have had an experience, emotion, elation or frustration that we can observe in another and resonates with us.   Empathy is a natural result.
      2. Trust and trial –
        1. When one has arrived at the truth about the situation, frustrated and in pain, we begin to seek a solution from someone else who has had a similar experienced.  Thus, a common structure provides a way to discuss the influences causing the dissatisfaction, and kinship provides the empathy from another opening the door for me to ask, “what would you do.”  That trust provides the basis for action – emotional and cognitive –to relieve the frustration with another’s potential solution.

His research and life work proved this out – change can occur when people are led through these steps.

Trust, then is built through this process, to the point where the individual trusts that you, the leader, has a proposition that works for them, solving their problem.

The implications for leaders and marketers is clear. Intuitive sales people have known it all along:  Before you can provide a solution, you make sure the prospect knows you understand his problem, that you have experienced similar situations and that your proposition worked for you, and can work for them.

These stages of trust building are essential for moving anyone to make a change.  The greater the impact of the change, the deeper the process and the more time required to establish that trust.

I have distilled Kohut’s approach into The Four Stages of TrustSM.

  1. Shared values (common structure)
  2. Shared vision (Kinship/twinship)
  3. Assumed responsibility (trust and trial)
  4. Always delivering on your promise (trial success)

Anytime change is proposed, trust is required.  Building this trust always is built upon these four stages whether intentional or intuitively communicated.

Of course, the more intentional a leader or marketer can be about this process, the faster and deeper the trust can be established, trial created, leading to change for good.

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The Valcort Group

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