William Harper Associates

April 2008 NEWSLETTER

William Harper Associates Newsletter

This newsletter is a free service to the North American not-for-profit community from William Harper Associates. Its focus, like everything we do, is on helping organizations that do good, do better!

Thought for today


Have you got a good idea or a comment on this newsletter?

Share your thoughts with me and our community.

Is this useful?

Please, pay it forward, and forward to a friend in the sector.

Subscription Information

Manage your newsletter subscription preferences. If you are "just visiting" this newsletter (that is, sent by a friend) you are welcome to subscribe directly.


In this issue:



FEATURE ARTICLE: What Executive Directors Need

This feature article addresses the needs of executive directors. Based on our original research from a group of Toronto-area executive directors, this article highlights professional needs identified by executive directors, for executive directors.

This article is in four parts:

  • who took part in the survey;
  • professional needs around peer learning and sharing;
  • professional development training needs; and,
  • other activities.

Who took part in the survey

We invited approximately 60 executive directors from registered charities across the greater Toronto area to respond to a Web survey. 18 responses were received, for a 30% response rate. Though small in number, it is a diverse group, and one which, in our opinion, speaks to the needs of a much larger group of EDs. Please read on and see if you don't agree.

Of the 18 participants, approximately half were from organizations of one to five employees. Another quarter of the group represented organizations with six to 25 employees, with the remaining quarter representing more-than-25-employee organizations.

About a quarter of these organizations had annual revenues of less than $250,000. The next quartile represented $250,000-$1,000,000; the next quartile up to $3 million, and the remaining 25%, representing organizations of more than $3 million in annual revenue.

Finally, these organizations represented a broad range of catchments, or spans of operations. About half the organizations represented local community or Toronto/GTA-wide organizations. The other half represented national organizations, with just a small number of either provincial or international organizations.

Peer learning

The focus of the survey was on meeting executive directors' professional needs. One powerful means of doing so is peer learning, and this is the first focus of the survey. Participants had all recently completed a formal "Peer Learning Circle" program offered through Altruvest (the BoardWorx program), and were invited to reflect upon their experiences, identifying ways in which the Peer Learning Circle could be made more valuable.

Two trends of interest were identified: first, participants supported a relatively unstructured format for peer learning opportunities. While there was value to be had, for example, in having a theme or focus for a discussion, as well as having a professional facilitator directing the discussion, any greater structure was felt to be a constraint on the free-flowing dialogue that participants had found so valuable in their sessions.

Second, participants generally found that a variety of executive directors taking part in discussion groups added value through diversity of views, opinions and experiences. This diversity spanned size and type of organization, extent of experience as an executive director, and the nature of particular problems or issues being shared. (Indeed, the experience in the BoardWorx Peer Learning Circle program previously mentioned, indicated that even novice executive directors add significant value in these discussions, based simply on their own life experience, intellect and perspective.)

One exception to this latter observation was a cluster of opinions, generally among those representing larger organizations ($5 million and more in revenue), that the peer learning sessions might be more valuable if limited to executive directors from similar-sized organizations. This, it was felt, recognized that executive directors in larger organizations, while facing many of the same issues as their smaller-organization peers, had resources at their disposal that smaller organizations simply did not have. As such, while the problems were often the same, the solutions differed based on the resources available to address them.

Irrespective of the particular format and structure of Peer Learning Circles, participants found value in them, and were committed to continuing in them as a key component of their ongoing professional learning and development.

Professional development

Professional development is an important component of learning and growing in most jobs today. The role of executive director is no different, and survey results indicated a significant pent-up demand for relevant, focused training for executive directors of not-for-profit organizations.

In terms of subject matter, over half of the executive directors surveyed indicated that the following types of professional development programming would be either extremely, or very, valuable:

  • presentations on topical, sector issues
  • fundraising/resource development
  • governance/board development
  • strategic planning
  • financial management
  • human resource issues

That's a pretty comprehensive program! In fact, the only area that was not identified as being very valuable by over half of the participants was program-related professional development. This was not surprising, inasmuch as the executive directors surveyed represented a diversity of organizations and programming, hence, there would be little expectation of finding relevant training in this area.

Finding the time to take part in formal professional development programs is a key challenge, of course. In this area, our executive directors share this difficulty. Despite the acknowledged value and interest that a majority of executive directors reported in each of the above areas, only about 20% of the group was in a position to spend more than one day per year in any one of these areas. That said, knowing the challenges facing organizations such as these and their chief executives, there nevertheless was a strong commitment to professional development.

Other activities

Consistent with the value identified in peer learning, there was significant interest across the entire group in mentoring. It was not unexpected to see less experienced executive directors interested in being mentored by more experienced peers. Of great interest, however, was that the more experienced executive directors were also strongly committed to mentoring their less experienced peers. In fact, some 60% of the entire executive director group was willing to spend two or more days per year participating in a mentoring program. For those more experienced executive directors, this is a significant commitment to helping peers in other organizations, on top of their already busy professional lives. Mentoring can be tremendously powerful, and is a strong complement to peer learning programs of other types -- see our earlier feature article.

Other activities surveyed among the group included social networking opportunities and job search services. Neither of these were seen as particularly valuable to the group, which we believe is indicative of a very busy and committed group of individuals, focusing more, perhaps, on their organizations' needs than on their own career development.

Online discussion forums and other online resources were also included in the survey, garnering a mixed reaction. While a majority of the group placed relatively little value on such services, a smaller segment was more strongly in favour of them, representing, perhaps, a digital divide? The challenge in providing online resources for any group, of course, is providing the right online resources -- none of us needs more information, we just need the right information!

Conclusion

So, where can executive directors turn to meet their professional needs? To the group's knowledge, there is no association of executive directors of charities and other not-for-profit organizations. The Canadian Society of Association Executives, for example, serves a valuable purpose in the associations subsector, but those participants who were familiar with it acknowledged a different set of needs among the non-association-executive group. Other subsector-specific groups also exist, it was noted, but diversity and variety was found lacking. While the subsector-specific groups do provide some value -- for example in the area of program-specific training -- much was lost in the lack of diversity.

So, where to turn? Please tell me. I invite your reaction to this survey, and to this issue. Does this feedback resonate with you? Are you grappling with the same needs, and don't know where to turn?

As a society, we rely immensely on not-for-profit organizations to deliver on their mandates. And, those organizations rely immensely on their executive directors to get the job done. And yet, there appears to be a void in support for these key executives. Please write to me with your suggestions. Continue the dialogue. Be part of the solution.


NEWS AND RESOURCES: Newsletter Archive

See our new newsletter archive for access to over 100 great articles, news items and resources on the sector. Simply click on the link at the top of this page to find a comprehensive index of materials on the site. The index is updated regularly, and includes not only actual subject title, but also keywords.


NEWS AND RESOURCES: Imagine Canada launches Insurance and Liability Resource Centre for Nonprofits

Imagine Canada has launched a new Insurance and Liability Resource Centre for Nonprofit and charitable organizations. The Centre's mission is to help charities and nonprofits become informed insurance consumers and take a practical approach to managing risk so that they can protect their people (volunteers, staff, board members, clients, participants) and fulfill their missions. For more information visit http://insuranceinfo.imaginecanada.ca.


DID YOU SEE: Our March 2008 Newsletter Line Up

Last month's Newsletter included the following items. If you missed any of them, click here:

  • Managing in Challenging Times
  • Study Rates Not-for-Profit Leaders Tops
  • Record Retention
  • New CRA Filing Requirements
  • Should we change our budget when our plans change

QUICK TIP: Looking for HR Help

Did you know that our sector has its very own HR “supersite”, dedicated specifically to the unique challenges and needs of the not-for-profit sector?

The HR Council for the Voluntary & Non-profit Sector (HR Council) works with organizations, educators, labour and government to identify and address issues related to paid employment in the voluntary and non-profit sector. Their priorities are to:

  • Build and share knowledge
  • Promote good HR practices
  • Foster training and learning opportunities
  • Provide leadership on HR issues
  • Engage voluntary and non-profit organizations in their work

Their recently redesigned Website has a wealth of practical resources – check it out!


NEWS AND RESOURCES: Ready to Lead: Next Generation Leaders Speak Out

“Daring to Lead” captured headlines with the news that three out of four executive directors were likely to leave their jobs within five years' time. The Meyer Foundation has now published “Ready to Lead: Next Generation Leaders Speak Out”, a survey of over 6000 next generation leaders.

To quote Meyer Publications, “a skilled, committed, and diverse pool of next generation leaders would like to be nonprofit executive directors in the future, according to a new national survey of nearly 6,000 next generation leaders. However, the survey also finds that there are significant barriers: work-life balance, insufficient life-long earning potential, lack of mentorship and overwhelming fundraising responsibilities which may prevent many younger nonprofit staff from becoming executives.”

The report makes numerous recommendations to the various stakeholders in the sector. Access highlights, and the full document, at: http://meyerfoundation.org/newsroom/meyer_publications/ready_to_lead


FROM THE ARCHIVE: Cash is King (from July 2007)

"Cash is King". At least, so the old saying goes. And, it was, is and will continue to be true! Why so?

Well, anyone who has ever juggled an income (like a salary) and expenses (like food, clothes, rent or mortgages payments, and so on) understands this basic principle: they don't ask you at the grocery store what your income is - they ask if you've got the cash to pay, now.

This principle applies equally to people, to corporations large and small, and to not-for-profits. (In fact, the only one it doesn't necessarily apply to is the government, which can print its own money!). It applies to Conrad Black, and it applies to the homeless men, women and children in our communities.

Cash is King, simply because it is the "medium for exchange". It is the lubricant for every economic engine. It is the language of buying and selling everything. Without cash, our system of commerce would grind very rapidly to a complete halt.

Notice that we are not talking here about profits. This is not an issue of "making money"; this is an issue of "having money". Profits are for accountants (more on this later) - cash is for people and organizations with bills to pay.

After all, you can't spend your profits; you can't spend your accounts receivable or inventory; you can't even spend your surplus or retained earnings. The only thing you can spend is cash. And so, the only value that all these other things have, ultimately, is the amount of cash that they can be turned into. Cash, you see, is King.

OK, perhaps we are belabouring this point. But, it is the single-most important factor in knowing whether we as not-for-profits will be able to carry on our good works another day. We can continue if - and only if - we have the cash.

I recall working on a charity's budget a few years ago. They had cash in the bank. And, they had a realistic, breakeven budget for the coming year. But when we looked at the timing of its revenues being received (its cash inflows), compared to the timing of its expenses being paid (its cash outflows), we saw a potential problem arising during the year: the cash was coming close to running out! They were starting out with cash, breaking even for the year, but were running the risk of going out of business in the meantime. Cash is King.

Accountants and Cash

Even accountants know that Cash is King. So, why do they spend so much time measuring things other than cash - like profit?

Why do accountants even worry about profit? Why do they make all of those accruals and adjustments every year to come up with a figure that isn't cash? Because profit is supposedly a better predictor of cash over time. Profit, or earnings, or excess of revenues over expenditures - whatever you want to call it - is supposed to be a "normalized", "undistorted" measure of the organization's operations. It is supposed to measure an organization's ability to generate (or consume) cash. It is supposed to be a better indicator of future cash flows. We measure profit because … yup, Cash is King.

Now, sometimes accountants can get wrapped up in their profit determinations, in their generally accepted accounting principles, in the accounting for it all. But, when you pin down your accountant about what to focus on, most will admit, directly or indirectly, that Cash is King.

Focusing on the Cash

Understanding that Cash is King is the first important step in managing and planning for your organization's finances.

When it comes to managing your operations, you probably know this lesson all too well. Monitoring the bank balance is a key regular activity. And, juggling it against expenditures that need to be made on the one hand, and deposits of donations and other income on the other hand, is a continuing challenge for most organizations. And, if this isn't a challenge, juggling it against long- and short-term investments is the other challenge you are likely facing. Either way, having just the right amount of cash on hand is the goal.

For planning, the budget is your number one operational planning tool, and here the focus again needs to be on the cash. Budgeting for cash is a tricky business, though. Not only do you need to estimate and predict the amounts of revenue and expense items well, you also need to predict the timing of those items well (as illustrated earlier).

In fact, timing issues will likely have a greater impact on your cash requirements than the budget amounts. Accordingly, a good proportion of your time and attention in preparing and reviewing the budget should be spent on timing issues, and projecting (and planning for) your maximum cash requirements for the coming year.

Remember, Cash IS King, and as every chess player knows, you must protect the King.


Be Sure to Check Out Our Upcoming Events

© 2007 William Harper Associates.
Design elements courtesy of Darren Hester, some rights reserved.