This is from a great article written by: Dan Cummings – CBIZ – EFL Associates
The best-equipped not-for-profit leaders are adept at meeting challenges head-on.
Boards of directors, revenue generation, and community interfacing make not-for-profit management unique.
Not-for-profit chief executive officers (CEOs) and executive directors must balance mission objectives with an ever-more-challenging economic reality while serving as the face of the organization to potential donors and the population the organization serves.
The challenges of not-for-profit leadership demand a certain skill set to balance the demands inherent in the sector.
The ability to understand and manage fiscal affairs is crucial for a leader of a not-for-profit. Smaller organizations may not have a designated chief financial officer (CFO), and some of the traditional CFO roles may be rolled into the CEO’s position.
Executives must understand the sources of funding and how those sources may be affected by economic conditions and other external factors. The CEO will ultimately be responsible for determining which programs receive funding and at what level.
During periods where revenue streams are affected, the CEO must decide whether the organization should pursue alternative sources of income, such as the sale of real estate investments, sale of property or tangible assets or undertaking licensing agreements. They should understand the risks and benefits of each and how tapping these alternative sources of funding will affect the long-term sustainability of the entity.
Fiscal management requires an understanding of the regulatory environment as well. Some jurisdictions are employing payment-in-lieu-of-taxes (PILOT) programs, where large not-for-profits traditionally exempt from property taxes are being asked to pay a flat fee instead.
Other states are considering altering their charitable giving statutes, which could potentially affect donors’ willingness to contribute.
Leadership that stays on top of these developments can promote the opportunities created by regulatory change and develop strategies to minimize any negative consequences, such as looking for additional revenues to offset PILOT payments.
Revenue stream generation
As the face of the not-for-profit organization, CEOs often assume the role of “closer” on fundraising efforts. Significant contributors may want to interact with the CEO directly when discussing donations.
The CEO should be well-versed in the benefits to the donor for contributing and be able to discuss outcomes from the programs funded by donors. The CEO should also maintain relationships outside of giving campaigns and other requests for contributions so that donors continue to feel valued by the organization.
Smaller organizations may not have a designated development team to solicit funds, so it falls to the CEO to shape fundraising efforts. Even if CEOs have fundraising support, they should have an understanding of which events have been the most successful for the not-for-profit and which have not, so that they are promoting a successful strategy as well as one that aligns with the not-for-profit’s mission.
Drive for staff development and succession planning
Many for-profit organizations actively encourage staff development and mentoring, and the same attitude should be taken within the not-for-profit sector. Reputation and outcomes are particularly important in the not-for-profit world, and both can be damaged if there is not a smooth transition to a new CEO.
Outgoing CEOs and their board members should encourage a succession plan that allows for more of a hand-off in responsibilities to help ensure the next generation takes over with little to no effect on the operations of the organization.
One of the reasons succession planning can be difficult in the not-for-profit sector is that resources and positions may be limited. Many organizations do not have the room to promote internally, and that’s where staff development becomes critical.
If the CEO builds and encourages employee growth, it can be a critical tool to retaining talented staff members. Allow younger staff members to take part in planning discussions and encourage feedback on how things are running. Employees who feel part of the team are more likely to stay around and contribute to its mission.
Particularly in smaller organizations, the CEO has to be flexible to address emerging issues and provide support where needed. The job description may not be what the CEO spends most of his or her time doing.
Financial difficulty could lead to the CEO spending more time fundraising or working with program leaders to pare down budgets. Remodeling or construction to a not-for-profit’s facility could mean that the CEO’s day is spent addressing concerns or issues that come with that task.
During times of staffing shortages, the CEO may be pitching in to fill in roles that need to be covered. Unlike the for-profit sector, not-for-profits may not have the depth of resources or “bench strength” to have separate divisions for the various functions of the organization. Ultimately, everything falls to the CEO to oversee and manage, from maintenance to ensuring operations run smoothly, no matter what.
Focus on culture
Although every organization strives to build its brand, the culture of a not-for-profit organization is particularly important. As a mission-focused organization, ensuring that the mission is communicated and actively embraced often dictates the public support it receives and how the community it serves responds to its outreach.
The CEO is responsible for building and maintaining a positive culture, which requires an “always on” attitude. Out in the community, the not-for-profit executive and her/his team are always representing the organization. People met at social engagements could be potential donors or board members, and the savvy executive will need to reinforce a culture that leverages these opportunities at every turn.
Understanding what makes not-for-profits unique
Leadership experience alone does not make a candidate a good fit for a not-for-profit. Every organization has its unique challenges and not-for-profit organizations are no different. From uncertainty regarding revenue streams to limited staffing resources and turnover risks and increasing demand for limited donor dollars, the best-equipped not-for-profit leaders are adept at meeting, and relish the opportunity to meet, each of these challenges head-on.
Image provided by Getty Images (Georgijevic)