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Asking More Commentary: Perspectives from Mendoza College of Business

Commentary Post - Thomas Harvey

The 'Four Horsemen' rules that nonprofits need to heed

November 22, 2010

Note: This article originally was published as "The Four Horsemen of Agency Success: Infrastructure development should center on buildings, equipment, staff, and succession planning," in Issue 4 of On Board, published by Nonprofit Director.

The title for this column alludes to an image from Notre Dame football history that dates back more than 80 years. The Four Horsemen refers to a legendary backfield that could score at will because each player had unique skills that complemented that of the other players. Their strength and success came from combining their talent and actions.

It may seem like a stretch to relate great football players to the four infrastructure requirements of a successful nonprofit human service organization. Nonetheless, that is what we intend to do. In this analogy, each horseman corresponds to a component of nonprofit organization infrastructure that agencies should be attentive to.

Face to the Public In these difficult economic times, it may seem strange to ask nonprofit leaders to prioritize infrastructure development—both physical and social—as essential to success. However, we believe that such consideration is important.

In the last On Board with Nonprofit Governance column (available at nd.alliance1.org), we talked about examining an organization’s value proposition. This can lead to refusing government funding that doesn’t cover the full costs associated with providing high-quality services. Similarly, the same lens can be used to assess the value of individual donor or foundation support.

Often, providers assume that donors only want to support programs. This is a myth, and if organizations accept such an assumption, the quality of service will be starved by the lack of support for quality.

In this column, we ask senior leaders and board directors to focus on their own organization’s physical appearance and business practices. We encourage them to take a look at what needs to be done to improve and enhance the organization’s face to the public.

Horseman 1: Investment in Setting Regretfully, the physical settings of many agencies we visit do not look good. They appear decrepit or uncared for. As such, they do not convey the aura of professionalism that clients should be entitled to experience. Potential clients may decide to go elsewhere, causing a loss of income.

The blemishes we often notice may be fixed at little cost to the agency during a single weekend service project organized by the board, staff, or volunteers. A painting or landscaping project, for example, can be undertaken with minimal investment.

A food pantry in a smaller city in Indiana once asked the University of Notre Dame for some pro bono advice about improving their services and community image. We learned that 75 percent of current clients were Latino. A new sign was built at little cost to welcome people in both English and Spanish.

We also learned that the agency worked with local religious congregations to collect used clothing for families to choose from when they visited the food pantry. The clothes were left out in messy piles, which made selection difficult, as well as demeaning to clients. We recommended some simple solutions for improved organization and presentation. One congregation, upon hearing the recommendations, donated chrome clothing racks. The gift was modest; but the impact was dramatic.

The result of these and several other low-cost projects was that the local Latino community is now a major source of financial support and volunteers.

Lastly, boards can develop a fundraising plan that specifically targets physical infrastructure. Often nonprofits trick themselves into believing that donors won’t support improvements to infrastructure and fail to include such opportunities in their fundraising case statement. Yet, larger nonprofits, such as universities, have thrived on raising funds for their physical infrastructure.

Horseman 2: Equipment Efficiency
All too often nonprofit human service providers resist modernizing their technology. This can limit functionality and be counterproductive to the goal of saving money. When tasks take four or five times longer than they should, or records are not easily accessible, the costs related to productivity, staff resources, and overall efficiency snowball quickly.

As with the earlier discussion about the physical setting in which services are provided, there needs to be both an equipment acquisition plan and a companion fund development plan to assure feasibility.

Horseman 3: Social Development During recessions, nonprofit human service providers are notorious for cutting travel and training to save money. Short term, this makes sense. However, it is not a good priority in the long run. It is through participation in professional conferences and academic seminars that organizations gain new ideas about how to conduct their business more efficiently and with greater impact.

Members of the Alliance for Children and Families and United Neighborhood Centers of America (UNCA) have the opportunity for key staff to gain new competencies during the annual Executive Leadership Institute (ELI) at the University of Michigan. This quality program is offered at a modest cost.

We hope many boards will commit to allowing the CEO or key middle managers to participate in ELI for three reasons. First, because they will be exposed to best practices that can benefit their agencies. Second, ELI is akin to a mini-sabbatical that allows an executive to step out of the day-to-day stress and unwind. Third, ELI offers a great opportunity to network with peers for future support.

Let us also suggest that nonprofits consider local business schools as a practical and valuable partner in creating knowledge development opportunities. There’s an example of this taking place at the University of Notre Dame Mendoza College of Business, which recently offered a 10-day education program to local nonprofit leaders.

Horseman 4: Succession Planning Just as our second horseman, good equipment, is an extension of the first horseman, a functional physical infrastructure, so too is this fourth horseman, succession planning, an extension of staff development.

What happens to an organization if a CEO, or one of the people who hold other key positions, becomes ill or decides to move on? Is the board prepared? Many are not. Succession planning is like a will; most agree on its importance, yet do not act to draft one.

Having a board-designed succession plan is helpful during the CEO evaluation process. It forces the leadership to keep focused on the future needs of the organization and the depth of its management structure.

Planning: First Step to Victory We encourage nonprofit boards to add some of the considerations in this column to their strategic plans. It is good to remember the adage, “Only those with small dreams do no planning.”

The agency that plans succeeds. Add in the unique but complementary strengths of the Four Horsemen and the agency is even better prepared for victory.

For more information related to the first horseman, read an Oct. 3, 2010 article in The New York Times. It discusses four essential leadership types and can be accessed at nytimes.com. Additional information about the second horseman can be found in a 2009 article by Ann Goggins Gregory and Don Howard titled “The Nonprofit Starvation Cycle.” It appears in the Stanford Social Innovation Review and addresses the myth surrounding the assumption that donors only want to support programs.

Thomas J. Harvey, MSW, is director of the Master of Nonprofit Administration Program at the University of Notre Dame’s Mendoza College of Business. John Tropman, Ph.D., is professor and associate dean for faculty affairs at the University of Michigan School of Social Work. He’s also an adjunct professor at the university’s Ross School of Buisness. Harvey and Tropman are co-authors of “Nonprofit Governance,” a book published in 2009 that offers modern information and practical guidelines for directors and executives of nonprofit organizations of all sizes.