Monday, March 29, 2010

Executive choices and nonprofit ratings

There has been a lot of discussion recently about the "right ways" to review, rate, measure, and analyze nonprofit organizations. In the aftermath of January's devastating earthquake in Haiti both trade and mainstream blogs and the press were full of recommendations of nonprofits for donors' consideration.

Most of this type of analysis is based - loosely or not - on financial analysts reviews' of companies and industries. They review financial information, performance metrics, measures of social return (these last two being particularly subject to dispute), and others. How to review nonprofits is an emerging specialty, full of (important) methodological disagreement and debate.

Today, I received a press announcement of two new vice presidential appointments at The Foundation Center that made me realize one area that seems particularly weak when it comes to reviewing nonprofits - executive personnel. The Foundation Center announced the appointment of Anjula Duggal as its vice president for marketing and communications. Ms. Duggal's prior experience includes:
"...chief marketing & communications officer of the nonprofit Count Me In. Previously, she served as vice president for marketing & site operations at Retailer Networks Inc., oversaw the day-to-day marketing and operations for, and held marketing positions at both Sony Music and Universal Music. She has led web-based expansion initiatives and e-commerce operations, built online brands, provided business-to-business marketing solutions, and orchestrated small business membership programs."

All of this signals - fairly clearly, in my opinion - a clear commitment by The Foundation Center to get its products and services onto social networks, recognized in online channels, and to seek new, interesting partnerships. This is great news and reflects well on the Center's plans, projections and current leadership.

If nonprofits were really reviewed for competitive advantage the way companies are reviewed by equity analysts, those reviews would dive into executive leadership, transitions, succession plans, and what they say about current and future plans. I don't know if the rating agencies and reviewers are planning to go this way or not, but this announcement from The Foundation Center is the kind of signal we should be seeking from organizations.

FULL DISCLOSURE: I know several board members and executives at The Foundation Center. I do not know Ms. Duggal.


EmilySullins said...

Brilliant! Without solid succession and transition plans, an organization is only as good as its current leadership. I'd like to see a BBB weight for clear, useful succession planning.

Will Hull said...

I agree with Emily above. However, I would also like to point out that leadership, for the most part, in nonprofits does not change for years on end. After reading Forces for Good: The Six Practices of High-Impact Nonprofits by Leslie Crutchfield and Heather McLeod Grant, I have become wary of nonprofit leadership in their approach to succession planning and sharing leadership. I would come to suspect that this type of performance metric when considered, does not take account for a solid sharing of leadership and employee satisfaction in their own leadership. The board is, for the most part, removed from the day-to-day operations of the organization and will likely rubber stamp the tenure of a given Executive Director or CEO of the organization.

Perhaps, with service organizations, a start in this direction can be made toward gathering qualitative data on the subject of how well the organization is being run by interviewing the recipients of the services.

Great post.


Lucy Bernholz said...

Thanks Will and Emily for writing in. It never ceases to surprise me which part of a post will resonate with folks - The Fdn Center example isn't even about succession, its about new executive leadership and the skills the organization is seeking.

As for succession planning, it would no doubt be tricky to assess for most NPOs, which like most small businesses probably don't have a plan or a plan for a plan, in place.

All this raises an interesting set of questions - what are the best indicators of human capacity and future planning from NPOs - strategic plans? job descriptions? hiring announcements? Board nomination procedures? All of the above?

ANd while we're at it - Twitter is alive with pushback on the analogy of industry/investment analysis. I agree with the critics - its not a great analogy, though it is one that plenty of orgs in the space not only hint at, they claim directly. So what other types of analysis serve as better models for reviewing/rating nonprofits?


Unknown said...

Good post. I just wrote about the need to move beyond ratings -- to assess the larger needs (in society, in the sector) and consider all at the same time.

Mazarine said...

We shouldn't fetishize metrics, it's true, but nor should we try to close our eyes to the reality of BAD LEADERSHIP, which is an epidemic in the nonprofit field.

Succession planning, while important, is like many "bylaws" in nonprofits, ignored when it is convenient.

Making a rating system is nice, but popular opinion is not as well informed as the staff of a nonprofit.

The responsibility must fall on us, the nonprofit workers, to form unions which will help us demand accountability from our nonprofit leaders. Only then will the CEO and board see any reason to change a system which mostly benefits them.