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Nonprofit Radio for September 26, 2022: In Nonprofits, Do We Trust?

 

Gene Takagi: In Nonprofits, Do We Trust?

Gene Takagi

Public trust in nonprofits is eroding. Why is that, what does it mean for our work, and what can the nonprofit community do about it? Gene Takagi, our legal contributor and principal of NEO Law Group, returns with his insights.

 

 

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[00:00:52.08] spk_0:
Hello and welcome to tony-martignetti non profit radio big non profit ideas for the other 95%. I’m your aptly named host of your favorite abdominal podcast. Oh, I’m glad you’re with me. I’d get slapped with a diagnosis of fragility as angry. Um if you nailed me with the idea that you missed this week’s show in nonprofits, do we trust? Public Trust in nonprofits is eroding. Why is that? And what can the nonprofit community do about it? Gene Takagi are legal contributor and principal of neo Law group returns with his insights On Tony’s take two. This is not planned, giving

[00:00:57.14] spk_1:
we’re

[00:01:41.13] spk_0:
sponsored by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot c. O. And by fourth dimension technologies I. T. Infra in a box the affordable tech solution for nonprofits. tony-dot-M.A.-slash-Pursuant four D. Just like three D. But they go one dimension deeper. It’s always a pleasure to welcome back Gene Takagi, you know who he is. Of course he he we owe him the introduction that he that he deserves, but you know who he is, He’s our legal contributor, Managing attorney of neo the nonprofit and exempt organizations law group in saN Francisco he edits the wildly popular nonprofit law blog dot com, which you should follow and he’s a part time lecturer at Columbia University. The firm is at neo law group dot com and jean is at G tech. Gene

[00:01:58.66] spk_1:
thanks

[00:01:59.11] spk_0:
for being back Welcome.

[00:02:00.73] spk_1:
It’s great to be here.

[00:02:03.15] spk_0:
It’s always a genuine pleasure. Thank you.

[00:02:07.78] spk_1:
We’re

[00:02:20.77] spk_0:
talking about public trust today. Uh not only your concerns, but you’re, you’re seeing evidence of. And I’m certainly reading some things too about eroding public trust in nonprofits. What what are you seeing? What are you thinking about that?

[00:02:27.69] spk_1:
You know, my first thoughts, tony is that trust really is the foundation of, of good relationships, right. No matter whether we’re talking about person to person,

[00:02:39.09] spk_0:
person to

[00:03:18.40] spk_1:
charity, you know, person to other institutions and charities I think are especially reliant on trust because if you’re asking people and groups and organizations to give money to you, um, they’ve got to trust that you’re gonna do use that money for charitable purposes, not for personal gain, not for other things, but for the charitable purposes that they want to support. And when trust erodes in our charities, that’s really a red flag and sort of a harbinger of things, bad things that could follow. So trust is really important, I think, um, to talk about. And the study, the most recent study that came out from independent sector and Edelman Data and intelligence found that there’s low trust amongst all institutions. So maybe not completely surprising, but less than a third say the trust, government, large corporations and the news media

[00:03:35.93] spk_0:
and

[00:04:08.91] spk_1:
charities, relatively speaking are better than that in terms of the trust factor, but it’s been dropping and nonprofits as a, as a sector, The trust and nonprofits now is 56%. The rest either are neutral on it or have a distrust of nonprofits, only 56% and only 36% trust philanthropy or foundations and grantmaking organizations, so that’s really, really low. And women’s trust and non profits dropped even more than than men. Um, and I think another flag to point out is our younger generations, especially gen Z

[00:04:17.56] spk_0:
really

[00:04:18.43] spk_1:
have a distrust of nonprofits. Um, and

[00:04:22.83] spk_0:
with

[00:04:23.75] spk_1:
the wealth transfer that’s expected from baby boom generation to millennials and two gen Z, that’s got to be alarming to nonprofits. And I, I think it’s just worthy to call out right now.

[00:04:35.97] spk_0:
Do you know what that number is among gen z. Trust in nonprofits that in the independent sector include that in in their survey.

[00:04:49.81] spk_1:
Well, the statistic that I, I saw that that called out to me was 57% of gen z. Americans say giving directly to individuals makes a bigger impact than giving to nonprofits. So they would rather give to individuals on go fund me or another crowdfunding site than to give to a nonprofit. They find that more trustworthy.

[00:05:16.77] spk_0:
There’s another dimension to the, to the trust, which is government, trust in nonprofits. And you could read government as congressional or, you know, I. R. S. But you know, they they, the the U. S. Government has bestowed the charitable deduction so that the money is used for, as you said, you know, for charitable purposes as disclosed in your organizing documents. And if if I’m thinking more of Congress, you know, if congress feels that

[00:05:43.59] spk_1:
the

[00:05:43.80] spk_0:
nonprofit community can’t be trusted, you know, we could start to see some erosion of, uh, clawback of some of the, the benefits that nonprofits enjoy. Tax free status, for instance, and the charitable deduction to name a couple of

[00:06:00.50] spk_1:
wildly

[00:06:01.37] spk_0:
wildly valuable ones.

[00:06:22.64] spk_1:
Yeah, and that’s such a great point because just a few days ago, there was news about a case in Minnesota where government funding to feed poor Children, um, there was a huge scandal involving tens of millions of dollars. So, um, it really speaks to two if government stops trusting nonprofits or certain government agencies and cuts funding to agencies, how harmful that might be to charities and the beneficiaries they’re trying to serve.

[00:06:35.87] spk_0:
I think that one was even worse. I think it was like $240 million dollars

[00:06:41.59] spk_1:
worth

[00:06:42.04] spk_0:
of pandemic aid money. I saw that in, in Minnesota is supposed to be going to feed Children during the pandemic and, and pocketed. Yeah,

[00:06:52.51] spk_1:
patterns there as well. It’s, it’s,

[00:06:55.94] spk_0:
yeah,

[00:06:58.09] spk_1:
it

[00:06:58.93] spk_0:
is. It’s, it’s, um, and then of course there’s always been Charles grassley. I mean, he’s been, he’s been nipping at, uh, foundations and donor advised funds for for years

[00:08:03.64] spk_1:
now. Yeah. And in fact, the whole charitable sector, I think, um, and a significant portion of our lawmakers, um, take a consumer protection perspective of, we want to protect donors, um, and not strengthening the nonprofit sector perspective they want to create laws that will per, you know, try to prevent, um, uh, fraud or misuse of charitable funds as if this is rampant amongst the nonprofit sector, which my position is, it is not, but there are certain high profile cases that hit the new york times and the Washington post and all the other newspapers. And there’s so much media coverage that focuses on scandals because that’s what’s gonna sell right. The tweet or the short snippet that people’s attention span will, will actually stop on. Um, it’s gonna sell much more if it’s a scandal rather than a long term growth in in impact. Even, you know, the, the great news that child poverty has, has been really declining in in the country, which should be huge news gets short shrift compared to some of the big scandals that we hear about.

[00:09:08.60] spk_0:
Yeah, yeah. When I name dropped Charles Grassley, I should have said Senator, senator from Iowa, Republican, senator from Iowa Charles grassley. Um, yeah, right. It’s, it’s the scandals that, that’s, that get clicks that sell papers that get attention. I remember, I’m sure you do several years ago there was a scandal among an, an organization supposedly raising money for Navy Veterans like Navy Navy Veteran Foundation or something like that several years ago, but it was very high profile. Um, what was the other, do you remember, I don’t mean to put you on the spot. It’s okay if you don’t remember because I don’t the, uh, the veterans organization that was accused of squandering, you know, tens of millions of dollars on lavish retreats and high, high executive salaries. But, but, but it it had it had great outcomes. It was, it was funding lots of veterans organizations.

[00:09:25.25] spk_1:
I think the one you’re talking about is the Wounded Warriors.

[00:09:29.11] spk_0:
Thank you. Yes. Project.

[00:09:51.07] spk_1:
And yeah, it’s, um, it’s always difficult. Um, looking at an organization through the eyes of the media, um, about how, you know, how well or unwell they did. I don’t want to create, um, you know, uh, discuss particular scandals too much other than to say that they create problems for the whole sector. So, you know, that’s, it’s just something to be aware of. And they’re not necessarily reflective of the vast majority of nonprofits out there trying to do good work and help people.

[00:10:17.64] spk_0:
The 99.99% you know, our our that’s even higher than the nonprofit radio 95% No, uh, 99.99% of nonprofits are not scandalous. And could they, could many of them be running more efficiently. Yes, but we’re not, we’re not talking about mere efficiency. You know, we’re talking about erosion of trust because of high profile crises or scandals malfeasance.

[00:10:37.97] spk_1:
Yeah, high

[00:10:39.21] spk_0:
profile,

[00:10:39.92] spk_1:
not

[00:11:55.21] spk_0:
representative. It’s time for a break. Turn to communications. They know the nonprofit community and they know pr and journalism. Both partners are former journalists peter pan a pinto, one of the two worked as senior managing editor at the Chronicle of philanthropy. And after that he was at the council on foundations. So he understands the nonprofit space very well, which means he understands your challenges, understands how important pr and being a thought leader is to to your work. And the two of them together know how to build relationships with outlets, not just with journalists, but you know, also podcasters, um, conference organizers. So they understand nonprofits, they understand communications, how to build relationships and that’s what’s gonna get you heard across all media. So let’s turn to turn to communications. Your story is their mission turn hyphen two dot c o Now back to in nonprofits. Do we trust?

[00:12:00.88] spk_1:
It takes me to another tangent though, now that you talked about efficiency, tony and that’s kind of, we’ve talked about it before and you’ve talked about it with the writers of uh, article or a letter called the overhead myth. I don’t know if you recall

[00:12:16.06] spk_0:
that many years ago. Yes. The C E O. S of charity Navigator better business. Bureau wise giving alliance and guidestar.

[00:13:08.09] spk_1:
Yeah. And you know, they were saying that we shouldn’t, you know, base ratings on a charity in terms of how worthy they are to receive funds from donors simply based on overhead ratio. You know what their admin and fundraising costs are relative to their programmatic costs and those are really wise wise words, um, that that were stated in that letter. But even today we still see organizations even high profile ones that talk about their low overhead ratio. And it can engender trust um, in their organization at the expense of trust of other organizations that legitimately have higher overhead ratios because the infrastructures and you know, the things that they need to do may be completely different. So it’s not fair to, you know, compare across the board and across the maturity of an organization. So

[00:14:06.82] spk_0:
another very valuable thing to invest in is is research, research, uh, maybe maybe going beyond research, activating a new program that, you know, that may or may not succeed, but you have to invest upfront, you know that it’s annoying the folks who hold different opinions about wise investment in technology, you know, it’s Uber should be losing money for the 1st 12 years, you know, because it’s investing in the future. Um, Tesla, you know, non profit unprofitable for many years, but you know, look where they are now, but, but in the nonprofit sector, you know, we don’t we don’t allow that that research and um, spending on innovation, we consider that overhead like, you know, like, like rent, which rent happens to be important too, but you know, something, something um, rent is not a good example, but sort of, you know, frivolous or you know, self indulgent when it could very well be research and and scaling up for for a for a dynamic

[00:14:29.60] spk_1:
future or even things like a living wage.

[00:15:22.90] spk_0:
Yeah. Good. Exactly. Thank you. Yes. Um, yeah, I I don’t like the, you know, I don’t like the double standard where we we we praise it in in some industries, but we we we criticize it uh, in in non profits. And I’m thinking specifically about investment in the future and whether that’s people or programs or even technology, technology is a is a valuable investment. It saves time. It creates productivity, makes people more comfortable at work. It enables them to work out of an office now and be remote, give them that benefit, which so many people are craving now, you know, but these are these are all wise investments, not not um, detrimental overhead.

[00:16:33.02] spk_1:
Yeah, I absolutely agree. And there’s a way to do it cheap. You could invest in technology on the cheap and that might have long term adverse consequences, including to kind of the sort of the data protection and privacy issues that can result. So if you’re really thinking ahead and investing in, not only just technology, just to be sort of more effective and efficient in the short term, the protective of your beneficiaries and your staff and others your donors in the long term, um, then you need to make more of an investment in that. And that’s another thing where, you know, we lose trust if you if you sort of blow your donor lists that are supposed to be private and you know, other big companies get ahold of it and start to target your donor base for unrelated things or even if they’re related sometimes, but not your organization and it was due to a slip on your part or your technology and information technology protocols. You can run into trouble. So again, investments have a double edged sword there. Great. But they can result in a loss of trust too if you’re not managing it properly and you compromise people’s information.

[00:16:41.40] spk_0:
Um, and also, you know, you mentioned living wage but investing in people so that people stay with your organization.

[00:16:48.75] spk_1:
All

[00:16:49.07] spk_0:
right. And that that starts with a living wage that also impacts to on technology. Uh, you know, time away professional development. You know, these are, these are investments in staff that people see and appreciate and make longevity with your organization more likely than you know, than than to to jump ship every six months.

[00:17:11.75] spk_1:
And that builds trust to write, I’m much more comfortable working with you if you’ve been with the charity for 10 years, Tony than if you were hired three months ago and there’s always a different person I’m talking to as a donor.

[00:17:31.13] spk_0:
Absolutely. Yeah. All right. You have some insights into what we as a community or hopefully even individual nonprofits can can start to think about take to their C. E. O. S. Take to their boards. This is always where you Excel gene.

[00:18:33.73] spk_1:
Well in the first steps are kind of simple. Um you know, it’s be compliant yourself, make sure your own houses in order. Um so we can sort of raise all of the issues with where you can lose trust with organizations. Um but even though 99.9% of the organizations are well intentioned, I can’t say that 99.9% of the organizations are compliant. Um so working to make sure you’re compliant Working to make sure that the tone is set at the top with the strong board of directors that is actually providing direction and oversight and not just simply helping you, you know, with fundraising and otherwise just rubber stamping the decisions of the leaders. I think it really is important that the tone be set at the top of the organization through the board of directors. A

[00:18:34.26] spk_0:
tone say say more about the tone.

[00:19:11.50] spk_1:
So the tone of placing the importance of a trusting relationship with our beneficiaries with our employees with our other stakeholders. I think that’s really important and that should be reflected in policies. So it’s not good enough to say, you know, this is what we believe in. So the, you know, one of the hot topics today is a board sets a diversity equity and inclusion policy. But if that policy just sits on the shelf and that’s the end of the discussion of it. And there are no actual changes or action plans attached to that that’s gonna maybe harm the organization more than help it. So the tone at the top means a board that is doing its role in moving that organization forward and focusing um not only on doing good work and, you know, metrics for for programmatic success, but on building trust within and outside of the organization.

[00:20:07.00] spk_0:
And that that Ceo board chair uh Ceo executive committee, if the board has an executive committee relationship is key to this. I mean, they they all whether it’s two people or the Ceo and a committee, you know, need to be uh you know, committed to the same, not only the same mission, but the same uh strategy for getting there. You know, the same commitment to the things that you’re talking about, this needs to be a a unified

[00:20:08.30] spk_1:
working

[00:20:09.10] spk_0:
group at the top between the Ceo and the board leadership.

[00:21:55.36] spk_1:
Yeah, it’s absolutely critical tony I agree. There is, however, sort of another dimension to this which adds complexity and that’s kind of the feeling amongst particularly younger generations. Again, and why there’s a little bit of distrust is too much power focused on the top of an organization without sort of distributing leadership and and the right to participate in this. You know, the bigger decisions of the organization being dispersed throughout the organization and getting input from beneficiaries about um you know, how the organization should evolve or um move forward in further its purpose if we’re not really thinking about getting other voices in it, and particularly if our boards are not very diverse, um that’s gonna engender more distrust as well um with with an organization and this leadership. So while what’s happening at the top level and the relationship between the Ceo and the chair of the board is critically important, it is really important to also make sure that leadership, authority and power is being dispersed down through the organization and that the board actually can listen to directly um input from some of the staff. Um and we shouldn’t create like a wall between board and staff completely. You know, that there’s a little bit of um new thinking on that because the old old ways is like the board should not micromanage right. We should not interfere with staff decisions, which is partly true, but it doesn’t mean that we create a complete block. So the board members don’t see the staff members and the staff don’t see the board and they just don’t know each other. So, um there is a sort of a balance there that needs to be taken.

[00:22:20.82] spk_0:
Can we, can we say a little more about that in terms of examples of how this could be done? Like you’re you’re talking about staff, but also the beneficiaries of the programmatic work. Uh is this um like, I mean, certainly beneficiaries could be members of the board or or is it more an advisory committee, but then to your point, you know, you don’t want it to just be a committee that the board doesn’t listen to. The ceo doesn’t listen to. You know, how can we uh actually execute on on some of this in terms of staff and beneficiaries?

[00:24:23.71] spk_1:
So there are a lot of different ways that it might be done and there’s no one right way for, you know, for all organizations, but getting other voices involved can be done in, you know, um through committees as you suggested, but they can’t just be advisory. If you’re really gonna disperse power, you have to give them some power even if they’re not made up of only board members and some people call any committee that is not composed of only board members, they call them at advisory committees. And because of the name, they think that they can only give advice to the board, but they don’t have any management authority. But that’s not true. You can give these other committees management authority, the way you can give a Ceo or CFO management authority, the board can delegate authority down to these other committees. These non board committees as well. So that may be one way of getting power dispersed through the organization, that that committee might be made up of some employees, some beneficiaries and maybe there is a pipeline so that some of the other people that you’d like to put onto a board, but you might not know very well, you might not have enough experience in certain things that you’d like to have them develop more knowledge of the organization and the work before they possibly a strong candidate for joining the board, but that could be a vehicle or an on ramp to being a board um board member as well. And again, creating a more diverse and stronger board with diverse perspectives and understandings of what the organization does and who it impacts. So I think there are definitely ways and we’ve seen this in other models as well. Some that have worked with some organizations and same models not working with other organizations. Hill Ocracy is sort of one example of that. What

[00:24:24.13] spk_0:
is that drug in jail? What? Hill Ocracy.

[00:25:53.62] spk_1:
Hill Ocracy is a form of management where there are still remnants of hierarchy, but a lot of decision making is made in kind of circles and circles might be employed, they might be employees and others and circles have certain autonomy over their body of decision making. So you might have a circle based on HR issues. So it’s not just one person with the final say, it’s this circle or a group in the law, we would just call it another committee. But um in hypocrisy there all circles and and this was used by some high profile for profit companies and some nonprofits, some had success with it, Some didn’t. So um there are other models out there as well, not one size will fit all, but again, there’s an administrative cost to trying to implement new models, um, but new models or maybe the way that we want to go and their movement organizations all over the place that are impacting how nonprofits and for profits are to be governed and managed. And we should be listening to some of these forces that are out there because they will gradually shape what we’re doing. You can see this by some younger people not sticking with employment as long as they were the great resignation and stuff. If you feel powerless within an organization or if you don’t feel the organization is representing what you want, your employer to be doing, they may not stay and having a little bit of say in what the organization is doing, even if it’s just the starting points because you can’t jump from point a to, you know, to the ideal point in one step, it’s gonna take a long, a long time to get there. But just to seeing that progress may be assigned to somebody to to say, I’m gonna stick around here and and find out

[00:26:35.35] spk_0:
alright creating vehicles for right people’s voices to be heard. Um, and you’re right, it’s, it’s incremental, but just the, just the showing of some progress, some initiative to uh, opening up the leadership, opening

[00:26:38.15] spk_1:
up

[00:26:41.97] spk_0:
strategic decision making, could be, it could be uh, you know, valuable to, to folks right? And encourage them to, to stay versus looking for someplace that’s more inclusive. Yeah.

[00:26:53.98] spk_1:
You know, if your Ceo doesn’t trust the board or if your employees don’t trust the ceo, how are you going to expect donors and your beneficiaries to trust the organization? So it really trust has to be built throughout the organization.

[00:28:41.45] spk_0:
It’s time for a break. Fourth dimension technologies. Are you seeing technology as the investment that it is not as an expense, but an investment in your sustainability, your staff productivity, your staff happiness, um, satisfaction, an investment in your donor relations through your crm database. Uh, it’s an investment in your organization’s work and its future. That’s what technology that’s where your technology ought to be thought of. And fourth dimension four D. For short can help you make those investments wisely so that you’re not squandering on something you don’t really need. Like maybe your backup is sufficient, but you need the multi factor authentication installed, etcetera. So you know, they can help you think through smart technology investments. That’s it four D. And you know where the listener landing pages to check them out. It’s at tony dot M A slash four D. Which by the way is just like three D. But they go one dimension deeper. Let’s return to in non profits. Do we trust? What else do you see Gene as as things we can we can think about besides this sort of distributed, I’m calling it distributed leadership or maybe you call it distributed leadership. Yeah.

[00:29:32.73] spk_1:
So other things. Maybe some simple tips guard private data. We talked a little bit about it before with technology. If you’ve got data that you’re promising that will be kept confidential. Make sure you’re guarding that. Be careful about automating and depersonalizing interactions with technology as well. Like we could have a sort of a voicemail for everybody and you know, hit one if you want to do this. It too. If you want to do this and completely not let any donor speak to any individual without, you know, spending an hour on the phone that may not be, uh, seen as something that would build trust. So we have to be careful of our uses of technology there as well in our communications. Um, if you’re going to say something, um, don’t talk the talk. If you’re not going to walk the walk, right? So don’t make promises that you’re not going to keep

[00:29:41.70] spk_0:
that for an example of that is A D. I. Policy,

[00:29:45.44] spk_1:
right? Exactly

[00:29:46.80] spk_0:
written and never, never executed or remains written once and never evolves.

[00:31:13.44] spk_1:
And if you have a campaign to engage in a particular, uh, you know, program and you don’t raise enough money. And so that program never runs, you better be explaining this to your donors. Um, why that happened. And the possibility that that might happen when you start fundraising for it. So don’t just say, you know, after the fact when they complain that said, well we didn’t raise enough. So we used your money for other things that’s not going to engender trust. Um remember your mission and your beneficiaries don’t exist in a vacuum, right? Um, so it’s not just about your organization. And if you your numbers go up, um whatever metrics that you use financial performance or number of beneficiaries served whatever they are, you shouldn’t look at it as a silo. You should be looking at the entire ecosystem in which you are participating. And that would be, you know, open up things like environmentalism like you might not think environmental, your organization’s not environmental organization, but if climate change continues and creates hardships that, you know, scientists are predicting, predicting you probably will have an impact on your mission and your beneficiaries. And so to sort of think, just, you know, outside of that, that silo you want to be thinking about what your impact of your decisions will be, not only on your organization and beneficiaries, but on your allied organizations, on the broader community and what will that do to trust as well. So,

[00:32:03.91] spk_0:
a lot of these ideas, a lot of what you’re saying could be, you know, germinating in an advisory committee, you know, how could we look differently at at our contribution to climate change and what climate change means to us in the future for our for our for our people and for our work, but also what could we be doing right now, You know, even if we’re not an environmental organization siloed as you’re saying, you know, we still have an environmental impact. So what what contribution to to minimize climate change or reverse climate change can we make as well as planning for the for the future? Uh you know, that that those kinds of conversations can come out of these um advisory committees that is that are comprised of staff and and beneficiaries. I mean, these are the folks that live the mission day to day.

[00:32:36.09] spk_1:
Yeah, I love that idea to tony Sometimes the board may not have um or feel that they have the bandwidth to sort of discuss these sort of broader issues. Um and they’re a little bit more focused. So having the help um the advisory committee on an issue like like climate change for a non environmental organization or an organization whose mission is not focused on the environment. I think that would be great.

[00:32:45.06] spk_0:
Yeah. And I want to reiterate your point that which I’ve never thought of, advisory committees can be granted policy making authority and and and change within the organization. So whatever that looks like, you know, you can bestow that that authority

[00:33:05.16] spk_1:
Absolutely, and you can give them a budget to even sort of to putting

[00:33:11.20] spk_0:
money behind it. But that that yeah, money talks. That’s a that’s a big step granting them a budget granting them some granting them authority to make change that’s empowering and an advisory committee. All right.

[00:34:01.14] spk_1:
I think, you know, one area of trust that we haven’t spoken yet, but maybe, um why I as a lawyer and talking about these things and you’re not getting it from another consultant, is that the laws can also impact trust and non profits have to decide whether they want to set a position on certain laws. And um, some of the things that I’m thinking about is the deductibility of charitable contributions. So, we’ve had an above the line contribution where non itemizers could deduct as well because of Covid. Um, but that was just temporary. Um, and now there’s sort of a push for, well, we should make a charitable contribution deductible to all taxpayers, and not just about the 10% of taxpayers who itemize, who tend to be, you know, have a little bit more wealth, or some, in some cases a lot more than those who don’t itemize.

[00:34:17.90] spk_0:
Is it that small? The proportion of taxpayers who itemize is around 10%,,

[00:34:22.34] spk_1:
10-13%, is what I’m hearing.

[00:34:24.86] spk_0:
Okay,

[00:35:52.18] spk_1:
So, um, again, you know, part of trust and distrust has to do with concentrations of power and wealth, right? And when the 1% or the .1% control so much policy control the leadership of pivotal organizations in all sectors, and in government, um, there’s going to be a distrusted institutions. Again, that, you know, one third of people distrust big institutions. Um, and, you know, that concentration of wealth and power is, is the reason why. Um so laws that sort of enforce that. So if we just give you no deductible, make make tax benefits to, to richer people who can deduct, who can itemize their deductions and not to others that may feel really unfair to the public. And another reason for distrust. So, will your organization’s, even though tax policy is probably almost no organization’s mission, it has an impact. Um, and so it may be something that organizations want to take a look at. And there are organizations like independent sector of the National Council on nonprofits and others who the Tax Policy center that that can explain this a little bit. But you you may want to take a look and see if you want to put a position on it. And one of the things that I also think, um engender distrust is when the media miss reports, the law in one area where the mis reported it is a lot of media say, charities can’t lobby and that’s just not true. Um, so charities can lobby on things like, you know, the the above the line deduction. Um, and and on other things as well, and there are just certain limits that apply, but they’re often generous, So learn a little bit more and we can build a stronger sector?

[00:36:21.84] spk_0:
Well, you and I have talked about the the lobbying limits on previous shows, is it is it safe to say that the law hasn’t changed over the past? I don’t know, 23 years maybe, since you and I have talked about this.

[00:36:34.17] spk_1:
Okay,

[00:37:06.11] spk_0:
So, so at Tony-Martignetti.com, you can search gene Takagi, you’ll find many episodes that he’s on and one or one or two are about the uh, the lobbying limits, I think, I think the last time may have been 2020 when the pre election. So we may well, with the, with the election in late The election in late 2020, so we may have done something like in mid-2020 or so on the lobbying, uh, exemption or Well, that’s not that’s not that’s not the right phrase. What the limits of lobbying and you make the you just said, you know, they are, they are generous in some cases. It’s not it’s not that it has to be a de minimus proportion of your budget or something.

[00:37:24.83] spk_1:
Yeah, the

[00:37:26.87] spk_0:
yeah,

[00:37:27.68] spk_1:
the losses insubstantial which scares the majority of charities away from doing any of it, but it turns out it can be fairly generous limits to engaging in lobbying.

[00:38:01.79] spk_0:
Okay. Um, and the point that you made before that, I was going to say something about that too. Well, sorry, what did you say? Right before you were talking about the uh, the permissibility of some lobbying activities. You made a point? Yes, thank you. The last thing we want is for Donating to charity to be perceived as, uh, as an elitist activity. That only the only the top now you’re saying whatever 10 or 13% of the population can, can give because they’re the only ones who get the advantage because they’re the only, they’re the ones who itemize their deductions. The last thing we want is for donating to charities to be perceived as an elitist activity.

[00:39:13.92] spk_1:
Yeah, absolutely. tony and with, you know, with our current tax policy, how it works. Um, then I don’t want to get too complicated with that. We are seeing a shrinking middle class. I don’t think there’s anything denying that people, most people have less discretionary income. So if we look at the fundraising statistics now, the giving statistics, we see that, um, even if giving goes up Giving from kind of the middle class and smaller donors has shrunk, um, and, and quite significantly, and it’s, it’s the people, um, that have put in huge contributions that have made up for that. So the Mackenzie Scott, you know, with, I think $13 billion dollars over the last few years, they’re making up for that. But that can change the way nonprofits run if, if it’s all about, again, elite, wealthy, powerful individuals who make the big contributions that then have the ear of the boards of these organizations that then talk about policy and they create policy or, or advocate for policies that keep that dynamic in existence. So it is problematic.

[00:40:52.59] spk_0:
It’s time for Tony Take two. My latest video on linkedin is this is not planned giving uh it’s short under two minutes. I give you an example of what is not planned giving and remind you what planned giving is, how simple planned giving is when it’s done right, when you start with simple gifts by will. But I’ve got kind of a lighthearted back way of looking at it through what planned giving isn’t in the opening. So latest video on linkedin, you’ll find me on linkedin. My name is tony-martignetti by the way that has escaped you. And uh it’s my latest video there That is Tony’s take two. We’ve got boo koo but loads more time for in nonprofits. Do we trust with Gene Takagi? Look at this dark potential that people look at at the United States as alright, the wealthy control government because of dark money and and the Citizens United decision, the Supreme Court uh wealthy control business because only wealthy people start and or run run businesses and grow them and only only white males have the access to capital to start businesses. And then and then the perception that um the wealthy control the nonprofit

[00:41:13.41] spk_1:
sector, you

[00:41:21.27] spk_0:
know, and the wealthy control of media, you know, this is all this is all very uh a very detrimental, very dark cynical way of looking at the at the country, but I’m not I’m not sure that where that’s far away from

[00:42:10.55] spk_1:
it. Yeah, I agree. tony And I think past generations, you know, including ours, you know, we’ve always kind of done better than our parents. Our parents were lucky enough to put us in that position. But the younger generations now economically um and maybe, you know health wise and mental health wise, they may not be doing as well as their parents overall and they’re questioning kind of the system because of that. Um and we maybe didn’t question it because our generation did better than our parents um in those terms. But now there is just legitimate questioning of do we need to change these policies and these dynamics and these power structures and um you know, organizations have a say in this and and use your voice, get get people to vote. Maybe that’ll be my my one of my big messages vote

[00:43:27.00] spk_0:
voting is fundamental to although, you know, in a lot of states that’s being eroded you becoming more difficult, although in a lot of states it’s easier to um you know, another thing that comes to mind when, you know, you’re talking about the generations below the the the boomers not doing as well as the one before them. Um The FDA just yesterday recommended mental health screening at regular uh regular doctor visits, like an annual annual health health checkup for everybody under 65 And and they had been considering this policy that this recommendation is just a recommendation to the medical community from from for years before the pandemic. This is not, this is not pandemic-related recommendation. They had been considering this for years before the pandemic that there’s a lot of stress and anxiety among the population under 65 and 65 is basically the baby boomer cut off within a couple of years.

[00:43:59.55] spk_1:
And then, you know, as you noted, this was even before Covid that they’ve been advocating for this and now with Covid and the mental health issues that are sort of go along with not just the disease, but the isolation that many are experiencing and long Covid, which is sort of an underappreciated under recognized problem and disabilities maybe creating more disability, disabled americans than anything. Um, since you know, the World War two, I think would be the last one. It’s just, it’s mind blowing

[00:44:01.44] spk_0:
and I and I and all this does contribute to a decline in trust in all institutions and nonprofit. The nonprofit community is a major institution in the country. So you know, that’s, that’s how this is all related

[00:44:15.09] spk_1:
to what you

[00:44:21.48] spk_0:
and I are talking about. I want to make that connection explicit that anxiety among the population creates anxiety for nonprofits and, and and distrust and disbelief in nonprofit work. Whether that’s justified or not perception is reality.

[00:44:36.71] spk_1:
Yeah, I agree. tony

[00:44:40.74] spk_0:
All right. I don’t know. So we had, we had said one of the things we’re gonna talk about is what happens, what happens if this continues? I mean, I already painted a pretty dark cynical scenario. Um, is there anything more you want to say around? You know, what, what the implications are if the community doesn’t start to help itself?

[00:46:25.73] spk_1:
Well, maybe on a more micro looking basis, it just means for a charity, they’re gonna experience diminished fundraising. Not everybody gets Mackenzie scott, Jeff Bezos money. Right. Most of them are relying upon a pool of donors, um, many of which are aging, um, and may age out of their donor pool. Um, and shrinking again, middle class, shrinking, discretionary income for many people, meaning West donations. Um, we might see more direct giving to individuals as people are saying, well, I don’t trust charities overall. I’d rather just give to my friends who say, you know, somebody is in need as crowdfunding fight sites just continue to, to grow in importance and also in in power as well. Um, and that’s just gonna be to the detriment of, you know, beneficiaries of our charity. So again, in the micro level, we make less money, people trust us less. Our employee retention is less. Um, our donor pool is shrinking and we can help less people even as the need for our services increases. So that’s kind of the dark side look of it. Um, we can try to be the nonprofit that stands out and you know, is the trustworthy non profit from, from a public perception standpoint. Um, that’s good. But again, don’t see yourself in a silo lift yourself up with all the boats in the water and, and really try to strengthen the nonprofit sector where you can, and, and advocating on some of the laws that make things more fair, I think is a good start there

[00:46:41.97] spk_0:
advocating maybe there’s a way of partnering

[00:46:45.00] spk_1:
with other

[00:46:55.64] spk_0:
organizations, not, not in all in all things. I don’t mean a legal formal partnership, but you know, if, if there’s, if there’s a way of working together for an event or, or some kind of advocacy,

[00:47:03.61] spk_1:
you

[00:47:11.44] spk_0:
know, we’ve had shows on the values of that and how to do that. Um, so that everybody, you know it, so that it’s, it’s not seen as a, as a zero sum within your, within your community that if if if someone else, some other organizations benefiting, then you’re losing. You know, that’s not the way to look at,

[00:47:25.67] spk_1:
at,

[00:47:26.47] spk_0:
at the world and and that not nonprofit support. We we all could be or a couple of couple of organizations together could be rising together.

[00:47:37.64] spk_1:
Yeah, I’ll add that the independent sector survey, the Edelman Data Intelligence survey that we mentioned at the start of the show also has some tips on building up trust within the sector. So it’s not all of dark outlook. It’s just encouraging people that the importance of this is very, very high. Um, so let’s go out and actually make things happen? So that, that dark outlook doesn’t happen

[00:48:05.70] spk_0:
within independent sector. Gene, what’s the, what’s the name of the you’re saying? Edelman data?

[00:48:11.03] spk_1:
Yeah, I think they contracted out with Edelman E D E L M A. And Data and intelligence and their third annual reports. This is an annual report is available on the independent sector website.

[00:48:26.66] spk_0:
Okay, thank you. Edelman E D E L M A N,

[00:48:30.68] spk_1:
correct.

[00:48:49.24] spk_0:
Okay. Okay. Uh, you mentioned the five oh one C four’s a little bit, but there have been a couple in the news very recently, most recently the uh, Patagonia companies, uh, sort of evolution into a uh, a new nonprofit, a new a new five oh one C four. non profit the hold fast collective.

[00:51:57.05] spk_1:
Yeah. So the founder of Patagonia and his family member, they were the principal owners of Patagonia and they decided to give up ownership of the company, but you know, they gave it not to a charity, but to a 501 C four organization. Um, it’s called the social welfare organization and for listeners who aren’t maybe familiar with it, you probably are familiar with many five oh one C four organizations themselves, like the N. R. A. Planned parenthood, the A. C. L. U. Sierra Club. So these are advocacy organizations that have kind of charitable like purposes. Um, but our can engage in unlimited lobbying and can engage in election nearing or political campaign intervention? Supporting political candidates and political parties, as long as that’s not their primary activity or purpose. So this is sort of the source or one of the big sources of where dark money comes in tony that you mentioned with the Citizens United Decision before donor that wants to support a candidate but stay hidden from public view about their support of the Can rather than giving directly to the candidate, could give to a 501 C four organization and the C Four organization can get their money’s into the candidate. And the donor that is disclosed is the C Four organization, not the donor to the C Four organization. So that’s how you can create dark money. And with the Patagonia case, it’s very clear who the donor was. So we don’t expect that to be the dark money that we’re as leery of, but it’s still, you know, a huge gift which, you know, for somebody who believes in in in the environmental movement I think is a great gift. But news media miss reporting it or some news media are mis reporting it as kind of something that doesn’t get a tax benefit because a donor doesn’t get an income tax deduction for giving to a five oh one C Four organization the way they do if they give to a charity. Um but there are other tax exemptions that apply like a gift tax exemption or in a state tax exemption. So this gift is overall saving. Um uh mr Schwinn nerd um the owner and his family probably somewhere in the realm of $800 million in taxes. Um So it is not completely a no tax benefit transaction. Again this is not to disparage them for taking advantage of a system that allows for these gifts Um to go with with some tax benefits, but it’s not just the income tax deduction that matters in in donations there for for very wealthy people like billionaires. Um the gift and estate tax exemptions which can be 40%, right? So it can be very very high higher than income tax they matter. Um and so that’s something to be aware of that. Um this is a very wealthy person who gave up much of the ownership share, I guess all of his ownership shares to this 501 C4 organization, except really importantly 2% of the gift. Overall gift was given to a trust that’s not a nonprofit.

[00:52:14.55] spk_0:
Yeah those voting, those are the 2% of the voting that are the voting shares,

[00:52:58.58] spk_1:
right? So because they’re in control of that trust with with some close advisers um they have not given control out of Patagonia, right? They still can control Patagonia. Um And again they’re taking advantage of existing law what what it allows but it allows billionaires to not give up control of their company, get an $800 million tax benefit for giving or you know $3 billion Uh to a 501 C4 organization that could spend nearly half of it on endorsing political candidates. Um So it’s kind of an interesting tax system that that allows for that.

[00:53:18.19] spk_0:
And if if you consider that, you know supportive of uh of a liberal progressive cause because the whole fast collective the the new C4 is is devoted to uh the ill effects of climate change, you know, reversing climate change, impacting climate change. Uh So if you consider that of a left cause, then there’s an example on the right side with uh mr barr seed and the marble Freedom Trust. Another five oh one C four.

[00:53:44.39] spk_1:
Yeah. And that sea forces led by Leonard Leo who maybe the person most responsible for the changing of our Supreme Court and therefore the decisions on things like abortion might be largely attributed to mr Leo,

[00:53:56.21] spk_0:
fundraiser and activist and very well connected guy in conservative circles.

[00:56:20.34] spk_1:
Yeah. And used to be Executive vice president of the Federalist Society whose mission was to change the composition of the Supreme Court. So um I I don’t think that’s controversial and that’s just what their goal was. And they were very effective at achieving that goal. But this $1.6 billion kind of same thing. There there are some tax benefits that go along with it. There’s no income tax deduction. Um and mr uh c passed away. I think this was given after his death. But another big contribution to an organization led by somebody who has immense influence and now a huge war chest that can be used for political activities. Again, the primary activity cannot be political campaign intervention. Um, but some people believe, or many people believe that means 49% of the funds can be used for political campaign intervention. And that’s kind of the source of dark money. Although again in this case we do know where the donor came from. Um, so it’s not dark in that way in terms of hidden donors, but it’s still donations that didn’t go directly to the political candidate. It went through five oh one C four first, get the tax benefits for that, which his heirs, I guess would appreciate. Um, uh, and the impact of that again, is that? Well, in both cases, very wealthy people are able to keep control with people who they trust or their family members of their money to be used for political purposes. They can’t use it for themselves to, you know, to buy huge houses and boats, but they can use it for things that were very important to them. But that means for people like us and most of your listeners, tony is like, what influence do we have compared to that individual who gave billions of dollars to influence political elections. Um, and you know, what, you know, can we change our Supreme Court sort of composition the way that they’re able to do, probably not by ourselves. So it again is, is the reason why people go, hey, these are nonprofits that they’re using to do this. I don’t trust non profits, this is what they’re used for. And charities kind of get lumped in because the ordinary, you know, people, the lay person doesn’t know the difference between a five oh one C three and five A one C four organization.

[00:56:36.19] spk_0:
Yeah, and that’s right. And it’s it’s if it’s mentioned in a in in press coverage, you know, it’s mentioned in passing that it it’s it’s an organization that’s distinguished from from uh charities. But you know, it’s like, it’s like a sentence or two. You know, it’s it’s never it’s never a focal point. So your point is correct that people just lump them all together

[00:57:00.57] spk_1:
and flows through nonprofits and that’s why we shouldn’t trust nonprofit.

[00:57:04.97] spk_0:
So the wealthy control government and they control politics and they control business and media and and nonprofits.

[00:57:18.46] spk_1:
Yeah, that’s that’s what we, We’re finding more and more is the case, but we’re trying to change policies and change minds about this so that we can see that the impact of the 99.9% out there is actually even bigger than the impact that we mentioned about a few individuals. Um, it just has to be organized. Um, and non profits are way to do that.

[00:58:21.68] spk_0:
Well, that’s a, that’s a pretty good way to close. Probably we should have closed with what our community can do. But you know, you’re suffering the lackluster host. So uh you can rewind to that section and then uh fast forward and you can end with that if you want to. Um, but but jean, you know, always thank you, you know, sort of reality, but also wisdom and inspiration. And and not only um ethereal pedagogical inspiration, but you know, ideas that we can we can we can act on. So thank you. Thank you.

[00:58:24.63] spk_1:
Thank you Tony. And your closing statement is actually always the greatest ending. So, I’m looking forward to hearing it.

[00:59:39.16] spk_0:
Okay, All right, thank you jean. Next week. Let’s see what develops and why do I even say uh, next week if I don’t know what’s coming up next week, but we’re here we are. We’re talking about trust and part of that is transparency. So I’m being transparent that I don’t know what next week’s show is gonna be, I know what the 1 to 2 weeks from now is gonna be. We’re gonna have beth cancer and Allison fine talking about their new book, but I can’t promise that for next week because well, that would be a lie and that’s going to reach the trust because they’re not on next week. Next week. Uh, it’s up in the air, but trust me, it’ll be just that’s conclusory. Just trust me now, I hope you trust non profit radio I’ll find something good if you missed any part of this week’s show, I Beseech you find it at tony-martignetti dot com responses by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot c o and by fourth dimension technologies I. T. Infra in a box, the affordable tech solution for nonprofits. tony-dot-M.A.-slash-Pursuant four

[00:59:48.37] spk_1:
D. Just

[01:00:03.54] spk_0:
Like three D. But they go one dimension deeper. A creative producer is Claire Meyerhoff to show social media is by Susan Chavez. Mark Silverman is our web guy and this music is by scott stein, Thank you for that. Affirmation Scotty B with me next week for nonprofit radio big nonprofit ideas for the other 95%. Here it is, Jean, go out and be great.

Nonprofit Radio for September 6, 2022: Sustainable Fundraising

 

Larry Johnson: Sustainable Fundraising

Larry Johnson is author of the book, “The Eight Principles of Sustainable Fundraising.” He walks us through several of them, including “Donors are the Drivers™,” “Leadership Leads™” and “Divide & Grow™.”

 

 

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[00:01:51.84] spk_0:
and welcome to tony-martignetti non profit radio big non profit ideas for the other 95%. I’m your aptly named host of your favorite abdominal podcast. Oh, I’m glad you’re with me, I’d suffer with infra occlusion if I had to bite down on the idea that you missed this week’s show, sustainable fundraising. Larry johnson is author of the book The Eight Principles of sustainable fundraising. He walks us through several of them, including donors, are the drivers, leadership leads and divide and grow. I’m Tony’s take to make it about your mission. We’re sponsored by turn to communications. Pr and content for nonprofits. Your story is their mission turn hyphen two dot c o and by fourth dimension technologies I. T. Infra in a box the affordable tech solution for nonprofits. tony-dot-M.A.-slash-Pursuant or d just like three D. But they go one dimension deeper here is sustainable fundraising. It’s a pleasure to welcome Larry johnson to non profit radio He is founder of the Eight Principles and author of the award winning book the eight principles of sustainable fundraising. He’s an internationally recognized coach trainer and thought leader in fund development and philanthropy. The principles are at the eight principles dot com and larry is on linkedin. Larry johnson, Welcome to the show.

[00:01:54.56] spk_1:
Well Tony, it’s indeed a pleasure. I’m looking forward to this.

[00:02:14.05] spk_0:
Thank you very much. I am as well. It’s a pleasure to have you, Let’s talk about the eight principles. What were you thinking when you uh rarefied fundraising into into eight Cognizable bites for folks.

[00:03:22.38] spk_1:
Well um you know, I’ve been in this business what 30 plus years now, yikes anyway. One thing I’ve noticed throughout my career is that people tend to focus on the process or the tools and not really the underlying principles or unchanging sort of laws that are operating in the background. And, but if you look at organizations that are truly transformative in the way they raise money and the way they engage their donors in the way they continue to grow every year. Even if they don’t, they ever heard of the eight principles, you could take and look at their organization and see them observing all eight of them. And so when I went to write the book, the idea was to create a book that was sophisticated, yet simple and that could be applied both at the technical levels and at the board level that here, this is what’s going on. And if you understand it, then you’ll be able to assemble a program that makes sense for your organization because not every organization is the same. The constituencies aren’t the same. And so it’s really, it’s foolish to try to make everything work everywhere because it won’t. Uh, and that’s one of the reasons why so many organizations are pushing uphill.

[00:03:32.41] spk_0:
So, you see these as a, as a foundation for all sustainable fundraising.

[00:03:33.99] spk_1:
Yeah. And the reason why is they’re all based on human nature. Um, and, uh, I mean, we’re actually gonna be going into into, into ASIA, into India later this year and they’re just as applicable there as they are here because they’re based on human nature.

[00:04:24.33] spk_0:
Okay, well, we’re gonna, we’re gonna hit three of them that I feel are areas that we haven’t had many guests or any guests talk about. And then, you know, if, if there’s still time we’ll go back and hit a couple. But uh, you know, for listeners, I want, I want it to be stuff that we haven’t talked about very much with with other guests. So your number one of the eight principles of sustainable fundraising is donors are the drivers. What’s going on here?

[00:05:33.58] spk_1:
Well, um, donors A. K. A. Investors. I like the word investors. Um, they are driving the philanthropic enterprise without them. There is no philanthropy. There is no fundraising. But the irony here is they’re not driving it with their money. There’s the key, um, people are obsessed about the money. Well, yes, money is involved, but it’s not really the focus. And especially at the focus of, of donors, investors. They’re looking for something different. But then it’s also not really, their focus is really not the mission of the organization either. Um, it is, again, tangential, what donors are looking for is the fulfillment of their own dreams and aspirations. That’s what they’re really looking for and the organization that can provide that they’re the ones that will elicit the transformative and ongoing support of these people. Um, and so they are indeed driving the enterprise. And there’s a lot of, a lot of my friends out there in the wealth management world, tell me that for lack of engagement by nonprofits, there’s probably at least a billion dollars sitting out there un engaged. And, uh, and that, that doesn’t mean it’s tied up in a donor advised fund or any sort of instrument there. It’s just sitting out there because it’s never been engaged.

[00:05:48.98] spk_0:
I mean, there could be more than that. That that’s a very speculative,

[00:05:51.90] spk_1:
right? It is, it is

[00:05:56.19] spk_0:
Estimate, I mean, it could be $10 billion. I mean, I know nonprofits could be more engaging with donors. So I’m not, I’m not quibbling that it’s not a billion. It could be 10 times that,

[00:06:03.96] spk_1:
yes, it could be absolutely, absolutely. But the keys, they’re driving the enterprise, but they’re not driving it with their money,

[00:06:19.09] spk_0:
right? You’re saying their aspirations and their dreams say more about how you see nonprofits fulfilling donor aspirations and dreams.

[00:06:46.11] spk_1:
Well, tony if I were approaching you as a, as an executive of a nonprofit or a fundraiser, a board member or anybody else and you were a potential investor. Um, I would first try to figure out what it is that you that really gave you fulfillment what it is you’re really looking for. And we’re talking about very serious transcendent fulfillment, not immediate short term and, you know, especially with today’s technological tools that are available, you know, in the old days, you just ask people and that still works. Um, but you can figure out pretty quickly, you know, what is it that’s driving these people, what is it they’re not missing because what you’re giving them is something they cannot buy. You see, they can’t buy that. Um, and let me tell you a little story

[00:07:21.93] spk_0:
before your story, hold, we’ll get we’ll do your story. I love stories, not putting the kibosh on the story, but hold off what they can’t buy. They can’t buy the fulfillment that nonprofits can provide, that

[00:09:26.91] spk_1:
they can’t buy that. So, if the if the nonprofit is going to offer this to them, you know, and then they will more than gladly give them an exchange. You see, let me let me let me illustrate this. There is a there is a for profit market vertical that understands this intrinsically and in fact, their entire um market proposition. Their whole sales proposition is if you use their product, you will become personally fulfilled sex appeal, you know, self worth all in one package. And most of us use those products and I, and I usually say, so what is it to a group? And maybe one person will get it right, It’s the cosmetics industry, Alright, that’s exactly their sales proposition you use our product, you’re going to be beautiful, self fulfilled sex appeal, the whole thing. So, and the story is okay to illustrate that I went into a department store, it’s been four or five years ago now and I went into the cup of the men’s cologne fragrance counter, whatever you wanna call it. And there was a young clerk there, young man and I walked up and I knew what I wanted, you know, and he says, um, can I help you sir? Well, if you know me, you know that I love to ask questions just to see what kind of response I’m gonna get. And right in front of me on the counter was this, you know, men’s health? One of these men’s magazines opened to a full page cosmetics at full page. And the ad was very simple. It was a um it was a photograph, full page photograph. And it was this this uh this gigolo with this, with this blonde in a white bikini on a yacht, in the Aegean. And then the, an image of the product was superimposed onto the photograph very prominently. And it’s, you’ve probably even seen it. It’s a very well known brand. So I said to the young man, I said, well, so tell me pointing to the ad, if I buy this, do I get hurt? Well, he looked at me like he didn’t, he was just he was he couldn’t quite

[00:09:31.60] spk_0:
was a man,

[00:09:33.80] spk_1:
it was a gigolo with the, with the blonde.

[00:09:36.78] spk_0:
Oh,

[00:09:38.32] spk_1:
okay, so you know, the the idea is you’re you’re transmuting yourself there on the yacht with this blonde, that’s the whole thing. Okay,

[00:09:46.19] spk_0:
Yeah. The guy at the Clark county has to offer you?

[00:10:19.58] spk_1:
Well, first of all, he couldn’t quite process what I just said because it was so damn obvious. That’s why. And then, so then I said so, but that’s the implication, isn’t it? And he said, yes, it is. That’s what I’m telling you. And you see, and you see, so they’re making billions of dollars selling a counterfeit. And what I tell nonprofits is you have the real thing because people want to be involved in something that’s bigger than themselves. They want to feel they’re part of something bigger than themselves. And if you can provide that they will be with you over and over and over again. You try to browbeat them with with moral ISMs or statistics or other things. You know, people just kind of tune you out. They may give you a hush and go away gift. Like here, take some money, go away. But you’re not gonna get the kind of transformational engagement that you can, if you really understand that you want to tap into that person’s desire to do something bigger than what they can do.

[00:11:11.01] spk_0:
Let’s see what are some ways that, that we can, we can do this. How can we, I guess I guess I’m asking you in our, in our marketing, which may just be conversations, I don’t, I don’t mean necessarily in our print marketing or digital. But in our conversations even, you know, how can we rise to this principle of fulfilling dreams and aspirations for donors?

[00:12:17.47] spk_1:
Well, the first thing is you have to figure out what the dreams are. You have to know what they are. And that takes some time. Um, it takes some effort. It’s not impossible. And you know, I worked for one of the major consulting firms for over seven years and I did a lot of campaign feasibility studies a lot, uh, could do them in my sleep. And one thing I discovered about those is even though they consisted of anywhere from 40 to 50 individual interviews, um, if the initial interviews were chosen correctly, if we could get the right balance in the first half dozen or even maybe nine, um, I knew how it was gonna turn out in the end. I can tell you this is what’s gonna happen at the end and that comes from doing it from the experience. So, but the client of course one of the 50 interviews and that’s what the client got. All right. But I could because I remember getting a call from my boss once after the after the first three or four days. How’s it going larry? I said, well, it’s going to be X, Y. Z. Okay, fine. And I spent the balance of the time during the interview. So a lot of it is, you know, I’m an old school guy. Be

[00:12:27.18] spk_0:
careful there. I hope you didn’t, I hope hope after those first eight or nine interviews you didn’t engage in confirmation bias and then you just you just attempted. You and your all your subsequent interviews. You, you skewed your conversations to confirm what you had already told or you already fixed in your mind even was gonna happen. You didn’t let that happen. Did you know, confirmation bias?

[00:12:43.26] spk_1:
No, I’m an engineer by training.

[00:12:47.04] spk_0:
Okay. You’re

[00:12:48.01] spk_1:
looking at the data at the end.

[00:12:49.76] spk_0:
All right.

[00:13:40.22] spk_1:
You’re you’re looking at, okay, this, this is all the answers to the questions how they all stack up, but you can get a pretty good idea of how it’s going. If you’re listening carefully, you begin to see patterns emerge. And there are there is the odd ball one that you, at the end, you get a few interviews that that throw everything out of whack that happens. But typically you don’t have my point in saying that is you don’t have to, you don’t have to go out and interview 300 people. You really don’t have to do that. Um, you know, you interview a good segment of your population and the key is to be listening uh, and ask open ended questions. And if you guarantee them anonymity and confidentiality, they’ll tell you anything, you want to know, people really want to do that. So that’s that’s an old school guy. And so that’s what I would do uh to get some ideas as to what are the messages And there aren’t, they don’t have to be that many, maybe three or

[00:13:42.97] spk_0:
four that

[00:13:59.89] spk_1:
resonate with the people who support us because I know we’re not talking about principle for, but principle four is learning plan learn who would naturally support you because not everybody will okay, learn who that is, who big picture and, and then then make plans on how to reach out to those people because they’ll be reachable different ways. So you go back to donors. Other drivers, figure out what those touch points are, you know what and there and they’ll be there and they may be a little bit different than what your mission is, but it doesn’t mean it’s, uh, it’s contradictory, it’s just, it’s just a collaborative or a line.

[00:14:36.07] spk_0:
Okay, let’s move to, uh, principle number three. Of the eight principles of sustainable fundraising leadership leads, leading by example, Talk about this one. Why is this so critical? What are, what are leaders not doing that? They ought to be doing?

[00:14:42.99] spk_1:
Well, let me go back and say one thing about, is the drivers that I’m going to go into this.

[00:14:47.90] spk_0:
Alright, alright.

[00:15:30.90] spk_1:
There are levels of donors are the drivers, remember if donors are driving the car, they’re in the driver’s seat, they got their hands on the steering wheel. Um, if that donor is a really good match for you and you’ve done your work, you’re gonna be in the passenger seat, you’re gonna be in the navigator seat up front. Uh, if there’s sort of a match, you’ll be in the back seat, you’ll still be there, but you’re not gonna get the kind of attention that the, that the navigator would get or if you’re barely hanging on, you’re gonna be in the trunk, okay? And so you get whatever’s left over, you open the trunk after two hours and you’re still breathing okay, fine. That’s their levels of that. Not every donor is going to be that 100% sweet spot. Uh, and I’m not suggesting that you limit yourself to that. But if you’re focused on that, you’re gonna pick up everyone that would remotely be in that, that, that universe.

[00:17:12.88] spk_0:
It’s time for a break. Turn to communications, like so many other things in life. Getting in the media depends on relationships. You’ve got to be known by folks who work in the media to be heard by folks who work in the media to get their attention. It’s so much easier when you know somebody, it’s so much easier when you want to be heard when you have an existing relationship before you’re out for the ask, right? You draw the fundraising analogy first meeting. Do you ask somebody for a gift, highly unlikely you build up a relationship, you get to that point. Media is the same way. You have much, much better odds if you have an existing relationship when you make your ask based on the news hook or something happening at your organization that, that is no, is newsworthy? Whatever it is, it’s the existing relationship turn to knows how to set those up for you, how to build them and grow them. So you get heard at the time you make the ask turn to communications, your story is their mission turn hyphen two dot C o. Now back to sustainable fundraising.

[00:17:17.97] spk_1:
Leadership. Leadership

[00:17:19.68] spk_0:
leads. Yes. What, what, what, what can we be doing better here?

[00:18:57.77] spk_1:
Well, let’s look at what that means. Leading by example, you look at any organization, whether it’s a commercial enterprise, whether it’s a civic association, whether it’s a political party, whether it’s a nonprofit social, whatever it is. Um, leaders are expected to assume certain responsibilities. I mean, they’re obviously the fiduciary ones, uh, and the other issues that are related to that, but it’s, they set the pace for the example. What’s the quality of the leadership by these people morally upstanding? Do they represent the essence of the organization? Um, you know, are they representative of those who are investors to the organization? That’s a big key. Uh, and I’ll give you an example about that. Um, I was working with a social service organization that covered about 45 counties and they were concerned, they weren’t getting any support out of this one county. And I said, well, who on your boards from that county. Well, no one I said, well, there’s your problem right there. You’re not tapped into the networks there. So they corrected that. Um, but then the other key is they only have in a nonprofit setting leaders, I. E. The governing board and certainly their their employee, the executive. And I think that needs to be stressed is that the executive is an employee of the board. Sometimes you get these weird sort of relationships and how they relate to one another. Um, but the key there is that they only have three things they should be focused on. Number one setting policy for the organization, number two advocating for it. Hey, if they’re not, if they’re not a fan, why are they on the board? And three, they should be there charged with making sure they’re sufficient resources with the delivery of the mission and in a non profit that almost always includes some philanthropy or some fundraising. I mean, there are other sources of revenue,

[00:19:17.15] spk_0:
but fundraising

[00:20:57.82] spk_1:
is a part of it. So wherever the leaders lead you, that’s where your people on the outside are gonna take their cues. So if for instance, I’m a big believer and I make no bones about this. Is that every board member and I’ve been a nonprofit board member needs to be financially committed. And now, what does that mean? Well, some people use it to say there’s a board minimum or we have this or that or whatever. You know, I really don’t, I don’t really like those because I prefer something I call equal sacrifice, not equal amount because everyone around that table is gonna, their pockets are gonna have different depths to them. And you know, for someone, $1000 could be quite a sacrifice. And for someone else, hey, they’ll spend that at Sun Valley down the road for me and one weekend easy. So it just depends on who you are and and where you come from. And because I’m a big believer in that board should be representative of the constituencies they they support or that they reach out to. So, so but they all have to be and that includes person that should be personal funds, not corporate funds. I think, you know, people use people, you know, people who are corporate appointees. Um they not, they may not be useless, but they tend to be very weak board members because they’re told by their boss to go and be a part of that. They want to have a representation. Um, it’s not really that effective. Neither is the board member who’s on 12 other boards and you’re getting them simply because they have a recognizable name names don’t bring in support. They really don’t. But but leadership leader, they will lead you irregardless of whether they’re leading you in the right place at the wrong place. They will lead others, they will get that message, but here’s another piece of it is people before

[00:21:07.03] spk_0:
you move onto the next piece. The equal sacrifice. I like that. Uh equal sacrifice instead of equal amount. Sounds sounds like the stretch gift. You know, everyone should be stretching to to what is a stretch for them.

[00:21:20.64] spk_1:
Yeah, it should be uh,

[00:21:24.66] spk_0:
I think

[00:22:36.94] spk_1:
stretch but doable and then the way you achieve that and what I, what I counsel clients to do is something called peer solicitation and that’s not what it’s known in the current and the current. That’s not the current version of that. Pierre solicitation is where boards, there’s a small group of the boards that that takes and evaluates people in terms of their bill And then people are asked face to face for a specific amount for their annual gift at the beginning of the fiscal year. Uh they can pay it in cash, they can make a pledge, they can make payments whatever they want to do, but it’s got to be satisfied by the end of the fiscal year. And then you take all those, all those, all those evaluation amounts, you add them up, take about 20 or 30% discount on that total. And that’s your, that’s your group goal because you want the board to feel as though they’ve accomplished something. I don’t like goals that are so high that it’s almost impossible to reach goals should be floors, not ceilings because the idea is to create that momentum. And if you do it up front and you can say, hey, you know, our, our goal for our board this year was $65,000 and we raised 72 5. Great, Wonderful. That’s terrific. Think about how that plays in the public square. Think about what that says to the people who are on that board and and all their friends and people they know, wow, Hey, you know, they must really believe in that, that that organization is going places. Let me let me learn more about it.

[00:22:48.96] spk_0:
And alright, well, and you achieve that by taking the, the what you expect the aggregate to be for the year and you’re discounting it.

[00:23:04.21] spk_1:
Yeah, yeah. But, but it’s reasonable. It’s something that’s based on what, you know, the individual. All

[00:23:04.48] spk_0:
right, what else about leadership leading?

[00:25:02.28] spk_1:
Well, another thing is, you know, I said, fundraising is a big part of it and people, they always start groaning well, you know, um, You know, I’m not good at asking for money. That’s just not for me, I don’t feel awkward, I feel awkward. Well, what I tell people is board involvement in fundraising only about 5% of its actually asking. Alright, that’s the very minor part of it, a big, big part of it is the board to be able to number one properly resource a fundraising program knowing it costs money to raise money. And then also when they, when the reports are made and when the analysis is done for the board to be sophisticated enough to ask the right questions of the fundraiser and the executive, you know, you know, one of the, you know, the number that usually, or often let’s put it that way comes up, you know, at a board meeting is, well, what did you raise in the last quarter or six months or whatever it was? That is a totally meaningless number from a fundraising perspective, that’s an accounting number. That’s a cash number. That’s the result of your fundraising. That doesn’t predict anything. Even the brokers say past performance is not an indicator of future performance. They get that in real fast. So, but there are other variables that are identifiable in a program that will, if the board is aware of these and presented and educated, they’ll be able to evaluate, they’ll be able to see, okay, you know, our retention rates really low. We need to work on that our average giving rate is stagnant. You know, we’re here here here and you see board members are not stupid people, You know, they can assess this, but they’re not given this opportunity. I think there was a study, Oh, it’s been several years ago now where I, I shocked that 75% of the board members they surveyed wanted some sort of formal understanding of fundraising or training and only about 20% were ever offered anything like that. And that’s, and so these are these people are volunteers Tony this isn’t their full time job. So it’s not their stick to go in and kind of relationship is really, really aggressive to go and figure it out on your own.

[00:26:28.74] spk_0:
It’s time for a break. Fourth dimension technologies. They have the free offer. It’s still going exclusively for nonprofit radio listeners. You know, you’ll get the complimentary 24 7 monitoring of your I. T. Assets and they’ll do it for three months, 90 days monitoring your servers, network, cloud performance, your backup performance All 24, 7 of course, if there are any issues during the period, they’re going to let you know immediately and then at the end of the three months you’re gonna get their report, telling you how you’re doing. It’s all complimentary. It’s on the listener landing page. It’s at tony-dot-M.A.-slash-Pursuant D just like three D. But they go on to mention deeper, Let’s return to sustainable fundraising. Let’s talk some more about what board members can do around fundraising besides soliciting. And I understand re sourcing you said re sourcing the development function, properly asking the right questions, focusing on the meaningful metrics, not the vanity metrics. Uh, let’s talk something about individual board member activity aside from soliciting. So, you know, making introductions, hosting small events, things like, you know what your ideas around those that individual board members can do around fundraising.

[00:28:03.88] spk_1:
Well what I tell you what I tell organizations when they’re looking to evaluate their board or improve it or whatever I say, you know, the, you know, boards are, excuse me. Boards should be organic groups, meaning they’re responsible to each other, they’re not responsible certainly to their employee. The executive and the boards that do best are the ones that are, are organic. And the way you get that is that first of all, the idea of equal giving excuses of equal participation and that kind of commitment. But another way you do that is to things you make sure that you have a variety of skills on your board. You don’t need six accountants and nine attorneys. You know, you need to spread that around a little bit and then the other pieces, if you look at the constituencies from which you expect to raise money and however you want to identify those, you should have at least one board member that represents those constituents. Each of those constituencies because they’re the person that has the network that you’re looking to to, to to build and then that that individual’s job, one of their jobs is advocacy, is making sure that their network knows who you are as an organization and the great work you’re doing, that. You’re willing to introduce your friends and relatives to this organization, you know, and if a board member isn’t willing to do that, I question their commitment. Why are you on the sport? I mean, if you don’t really feel good enough to tell your friends and relatives and business partners that this is a good thing, why you know what you’re doing that.

[00:29:47.58] spk_0:
I was on a board years ago by the way. Larry. If you need to take a sip of water, please go ahead. I’ll, uh, I’ll make my question. Uh, uh, Loquacious to give you a chance to take a, take a drink and a breath. Um, I was on a board many years ago. Uh, and one of the board members was, was kind of embarrassed to ask for money. He didn’t, he didn’t feel that the organization really merited the support of his friends he was giving personally, But I think that’s because we all have an obligation. But he, he was, he was kind of embarrassed actually. He felt that, yeah, that the organization just was not, wouldn’t be meaningful to his, his colleagues in his, this happened to be an attorney in his, in his law firm wouldn’t be meaningful to them. They wouldn’t be interested without, without ever having talked to him about it. Very, you know, very unfortunate. Um, yeah, it’s just a terrible, unfortunate, sad mindset. You know, why are you on the board? If you don’t think your friends, even your colleagues forget friends, Your professional colleagues are going to have any interest that you serve on the board. I mean, that’s your biggest hook or at least that’s your first hook. Maybe it’s not your biggest hook. That’s your first hook. I spend time with this organization. I go to their performances. I go to the meetings. I’m on the, I’m on a couple of committees. You know, that’s your, that’s your entree and then what good that the, that the community that the organization does, the education program in the elementary schools, the performances, etcetera. But he just had the vastly wrong and very unfortunate mindset.

[00:30:12.95] spk_1:
Well, you see that mindset goes beyond board members and what’s happening there is the person is not comfortable. And so they’ve feel authorized to take the agency away from the other person. They’re making the decision for

[00:30:18.50] spk_0:
them. That’s

[00:30:19.63] spk_1:
what they’re doing. And, and I, it’s like when, you know, you’re doing an awareness meeting or an event

[00:30:24.78] spk_0:
well, and they’re also, they’re also just making everything easier on themselves.

[00:30:28.84] spk_1:
Of course they,

[00:30:29.81] spk_0:
well, my, my, my, my fellow, uh, partners aren’t gonna be interested. So I’m not going to approach them.

[00:31:23.95] spk_1:
So, but it’s the whole idea of awkwardness and you, but they don’t realize they’re taking agency away from these people. They’re not giving them the opportunity to make the decision on. That’s really what they’re doing. Now. There is the flip of this. I’ll tell you a story. Um, I was working with a client up and catch them, which is Sun Valley. I live out in Idaho and Sun Valley is a very wealthy community. It’s not very big, but there’s a lot of, a lot of money there And we were doing an annual fund where this one individual had made a cash gift to $250,000. And so he was assigned to do another to go and solicit one of his board members and this man’s name. Others call him John offered the guy that the other board member will, will you take 50? And where upon the board members said, Bill, don’t embarrass yourself with that. I want the 2 50 that I put put in. I mean, there’s, I mean, I wouldn’t necessarily advise that, but he obviously knew the man well,

[00:31:42.07] spk_0:
right. Talking about peer to peer. Yeah, if you can, if you can get friends, I was gonna say putting pressure on, let’s just say soliciting, uh, if you can get friends like that soliciting each other, Nobody’s gonna walk away disappointed.

[00:31:52.60] spk_1:
No, No. I just love what he said was, don’t embarrass? You

[00:31:58.61] spk_0:
Don’t embarrass yourself 50,000. Yeah, Yeah. That’s, that’s a, that’s a great lesson in peer to peer board board soliciting keep the keep the professionals away and let’s just get the 22 good friends having lunch together. One of them has an agenda to talk to the other about his or her board. Giving all right,

[00:32:17.59] spk_1:
Anything

[00:32:18.22] spk_0:
else you want? I I got admonished on because donors of the drivers, I left that too early. So anything else you want to share on leadership leads before, before we move ahead.

[00:32:33.32] spk_1:
Um, I don’t think so. I just say that, oh, when you in, when you insist, when, when you insist on equal sacrifice, here’s what happens. You get a group of people, of individuals that become accountable to each other.

[00:32:46.92] spk_0:
There’s

[00:32:57.13] spk_1:
the key and they begin to function as a group, not as a collection of individuals. And that’s where the trail, that’s where two plus two equals five, you see is because that synergy of a group functioning as a group, not as a group of it, not as a collection of individuals. And that doesn’t happen very often. But when it does, it really really energizes an organization. You see it make great strides very quickly,

[00:33:20.21] spk_0:
shared sacrifice. If we’re all sacrificing equally. And I don’t mean dollar wise, I mean, I mean, capacity wise, we’re all sacrificing for the good of this organization. Yeah. That’s going to create a cohesion.

[00:33:27.51] spk_1:
That’s what you that’s what you’re looking for. Is that kind of, you know, we’re all in this together. Um and we’re gonna make it we’re gonna make it successful

[00:33:36.03] spk_0:
partnership in sacrifice.

[00:33:38.32] spk_1:
That’s right. That’s exactly what it is. And as I said, it becomes an organic group. It’s not it’s no longer just a collection of individuals.

[00:33:55.30] spk_0:
Good enough. Okay, Let’s talk about principle number six, divide and grow. What’s this? What’s this about?

[00:35:20.41] spk_1:
Well, a divide and grow. Um The shorthand version of that is treat different donors differently. Alright. So that um what you’re essentially doing here is you realize that your donors are not all the same, they’re not all the same age that they don’t have the same situation in life or as the Germans would say, where they are in their lifespan, um, their interests, all of the, they’re all different to some degree. They come from different backgrounds, different places. So that the organization that can allow for these, and that creates a pathway for donors to come closer to you emotionally over time and see, I’m a big believer in really focusing on high retention rates, not cache entry rates. Those organizations are the ones who achieve this transformative giving over time. Uh, and that’s so that when you divide your constituency into these air into these levels of, you know, you know, ages and, and where they are in life and income level and all these kinds of things that, that define, you know, what the person is going to be like when they come to you and you treat them that way. And, and you, you can, of course with today’s technology, even the very smallest organization can do this kind of thing. Uh, it doesn’t, you know, in the old days, you know, three or three or five cards and an army of researchers and, and people making phone calls and you can still do that. But the point is, you don’t have to, but you know, I’ve known this for a long time. But then there was research published about five years ago, I think it was Russell James, I’m sure, you know, russell

[00:35:33.09] spk_0:
Russell Professor Russell James texas Tech University.

[00:36:46.40] spk_1:
Yeah, So and what they discovered was when donors are given a pathway that brings them closer emotionally. And I stress that word, the emotional connection with the organization over time To the point where they make a gift out of an asset, not income. And it doesn’t have to be a large one can be maybe a couple $1000. I mean really it doesn’t have to be huge when that happens. And you can get a core group of people, maybe only 10 or 15% of your donor base that has done that the entire fundraising program in terms of income, just skyrockets. And the reason why is you have a core group of people that are so emotionally committed to you. They come hell or high water they’re gonna, they’re gonna be there for you no matter what happens, you see, and that’s what you’re looking for. Is that core group of people that are so emotionally committed to you and they may not be your top givers financially, but they will drive everything else. That’s the key. Um, and that’s why although I’ve done most of my work in capital fundraising and major gift fundraising in all the conventional terms, I I even sort of steer away from the term major giving anymore because that’s an internal term. It’s reflected on ability. Um, and I really, really focus on emotional commitment because I think the rest will come. And of course in your area, the deferred giving area, that’s those are asset gifts, you know, usually by definition.

[00:37:01.29] spk_0:
Yeah, right. You were talking about giving from assets, but

[00:37:16.11] spk_1:
I mean, I had a fun gift be satisfied by the liquidation of a small, a small money market. 10 grand. Okay. I mean, yeah,

[00:37:51.83] spk_0:
sure. That can happen. Um, yeah, the ultimate, you know, the for a lot of folks that their ultimate gift has to come in their estate plan because either they can’t or they believe that they can’t make their ultimate gift while they’re still living. So they put it in their estate plan and there there’s there’s a plan to get in a nutshell. Alright, So, yeah, so, all right. So you want us to, you know, dividing and growing, you want these, you talk about mutual, mutually beneficial relationships.

[00:39:22.17] spk_1:
Yes, these are, these are not one way relationship. These are mutually beneficial relationships. Um, you know, you know, I have something called the, if you read my book or my other stuff, I have something called a donor pipeline pipeline signs kind of commercial and kind of cold, but what it really is, it shows how donors come to you and they come to you through three or four different sources and then over time, how you get to know them and move them closer to you and then you can attach certain kinds of fundraising methods and relationships and things that they do over time and then a capital campaign, which is a very specific, relatively short term way to raise a lot of money for a specific so set of, of things or ideas then what that, how that serves in all this is to kind of goose what I’ll call goose the whole system because it raises everybody’s awareness of what’s going on. And then, you know, for those who understand that the real or that I would think the more significant payoff Quote of of a capital campaign is not the money raised in the immediate, uh, for the immediate, in case it’s how you’ve positioned your, your donor base to continue to give at higher levels over what, 10 or 15 years. And universities, they figured this out 30, 40 years ago when they invented what they called the continual campaign, the continuous campaign. And so, you know, before that, you know, you and I probably have to remember that these universities would hire, you know, couple score of, you know, field officers and run the campaign then fire everybody. And five years later they do the whole thing all over again. That’s a very inefficient way of raising money. And so they realized, oh, we can do this differently. And so that’s, you know, but you can do it even as a small organization.

[00:39:45.82] spk_0:
Yeah. Keep those relationships going rather than trying to renew them every five or seven years on your on your campaign cycle. Yeah. That seems antiquated. Alright.

[00:40:00.38] spk_1:
Yes,

[00:41:36.64] spk_0:
it was, Yeah. My early days. It’s time for Tony’s take two. Make it about your mission. Your work. That’s what you have in common with your supporters. Whether we’re talking about volunteers, donors, other types of supporters, they love your work. You do the work. The mission is what you have in common. So you know, as we’re approaching rapidly, the all important fourth quarter, keep the mission in mind as you’re crafting messages, whatever digital print the mission is what moves your supporters. That’s what they love about you. That’s what they give their money, their time to make it about your mission. It’s special to them. Sort of keep it special in your mind. Don’t let it become routine and mundane and, and un interesting to you or you think what’s interesting to you is not going to be interesting to other folks. Not so not so they love your mission. Your mission is what you have in common with those who are loving you who are supporting you. Make it about the mission. That is Tony’s take two. We’ve got boo koo, but loads more time for sustainable fundraising with larry johnson instead of doing just three of the 8, 3/8. Let’s, let’s talk about four of them. We have, we have a little more time left and then we’ll just tease, you know, all eight of them. But I would like to talk and you’ve, you’ve talked around this one and you’ve alluded to it. Number seven renew and refresh. You know, keeping a high renewal rate, high retention rate. Let’s, let’s just flush that one out as, as our, as our fourth one renew and refresh.

[00:43:27.63] spk_1:
Well, it’s, it’s said, it’s said in that order on purpose, your first goal is to renew the investors you currently have, that’s your first priority. And your second priority is to refresh your base because people die. People change their interest. People go into a different stage of life. I mean will go into bankruptcies or they lose their all sorts of reasons why people will stop giving to you and many, most of them legitimate reasons. You know, you haven’t necessarily quote pissed them off or anything. So that, so that renewing should be your number one priority with your donor pool. Unfortunately it’s not for most people. I can’t believe, I can’t tell you the number of development officers I’ve heard tell me, well, I’d like to renew more, but my executive just wants to get more new donors into the fold. And that just seems to be the, I mean, I’m like, I don’t understand where that comes from quite frankly. I mean, but I mean who am I to say? But anyway, renewing first And the, and there’s, you know, and renewing donors is actually easier now than it was when I was just in this business. And yet it seems that there’s more turning going on than it was when I was first in this business, I think there are a couple of things that are driving that first of demographics we’re dealing with, we’re dealing with younger generations in the boomers whose patience and attention levels, attention spans are quite a bit shorter and their reasons for giving are different. They’re much more impact driven than those in our age range.

[00:43:33.34] spk_0:
This is interesting. Larry, let me, let me let me stop here. Do we know that retention rates, which are, which are quite low, uh, around 20,

[00:43:43.98] spk_1:
pathetic

[00:43:45.38] spk_0:
Part. Yeah. Our retention rates lower than they were 20 years ago.

[00:43:56.38] spk_1:
I think they are. I mean, I would have to check the numbers, but in terms of my experience, excuse me, there seems to be less churn, have

[00:43:59.62] spk_0:
a drink, have a drink while I uh, say that Larry’s having a little sip of water from his yellow yellow water bottle. Very pretty.

[00:44:47.75] spk_1:
Uh, there’s, there’s, there seems to be more turn that may simply because there’s more younger donors. I mean, people send, there’s sort of this false calculus out there that millennials aren’t philanthropic. Well, they are, they’re a very high percent of them give, but they give it a different way than baby boomers do like you and I, but yes, the renewal rate is pathetic. And what I, the, the, the analogy I use is that, you know, I think the, I think, I think it’s like the the first year renewal rates always hovered in the high thirties 30% somewhere in there, the ones I’ve seen. But if you look at the consumer products, Uh, renewal rates, they’re 95 and 96%. So what I say to people is people are more loyal to their toothpaste and they are their charity. This

[00:44:57.24] spk_0:
is a very good example actually.

[00:45:06.18] spk_1:
Mean P and G. Has that figured out tony They got it figured out. So why is it if they can figure it out for something as mundane as toothpaste. Alright. Uh, why is it that nonprofits can’t employ there again? They’re selling the real thing. They’re not selling a pony thing. It’s real. It’s hard. You know, why is it? They can’t get there. Well, because they’re not investing the time and effort to make it happen. It’s just not on their radar screen. Um, that’s, that’s what I’ve seen. And maybe

[00:45:27.48] spk_0:
your advice around increasing retention.

[00:45:49.66] spk_1:
Well, it has to be an organizational mandate number one. We are going to set these goals and they’re gonna go up. I mean, there has to be the board executive. Okay, This is gonna happen. All right. We’re not happy with this. Okay. Number one, we’ve got to make a change and then you go back and you just deconstruct every single piece of what you’re doing and you look at, okay, Is this adding to or or or or taking away from the ability to renew

[00:45:55.38] spk_0:
looking at the donor journey?

[00:45:57.40] spk_1:
Yes, yeah, just

[00:46:10.66] spk_0:
listeners, we recently had um uh, I guess talking about the, the welcome journey, your email welcome journey just within the past month or six weeks or so, So you know, that’s welcoming brand new donors, you do that over the first week to 10 days, so that’s part of what you’re talking about. That’s

[00:46:19.99] spk_1:
just absolutely, that’s

[00:46:21.07] spk_0:
the initial phase of what you’re talking about, that. But the whole journey, let

[00:46:24.43] spk_1:
me give an example of the initial phase why it’s so very important. Um you maybe you’re, I know, I know you’re old enough, I don’t remember a woman with the name of Pearl Mesta.

[00:46:33.82] spk_0:
No

[00:46:35.29] spk_1:
esto was the heiress to the Mesta Machine fortune in Pittsburgh, and they’re the ones that produced a lot of the heavy artillery and guns during World War two.

[00:46:43.25] spk_0:
I went to school at Carnegie Mellon. Uh

[00:46:45.69] spk_1:
there you go. I

[00:46:46.82] spk_0:
knew, so I know. Andrew Carnegie Did you ever

[00:46:50.17] spk_1:
machine in Homestead? It’s still there.

[00:46:52.45] spk_0:
Okay, I know Homestead Homestead works used to be, it was a big Steeltown Homestead. Okay. Mr Works. Alright.

[00:47:33.73] spk_1:
So anyway, Pearl Mesta uh in the 90 the sixties, uh, you know, was the grand dame of Washington social life. Okay. Everybody wanted to be invited to one of Pearl’s parties. Okay, whether you’re Republican democrat, it didn’t, it was the place to be boy and if you don’t wanna pearls list, you’re at the top and everyone came and it was a very congenial group? Well at one point someone asked her pearl, you know, what is it that makes your party? So everyone just can’t wait to get there. And here’s what she said. It’s all about the hellos and the goodbyes.

[00:47:38.65] spk_0:
Mm think

[00:47:43.30] spk_1:
about that. You know how

[00:47:43.71] spk_0:
welcome you feel, coming, coming and going

[00:48:00.93] spk_1:
right, right. And and she saw that as her job when someone crossed her threshold who may not know more than two people in the whole room, okay to make them feel at home and welcome. And that takes

[00:48:02.66] spk_0:
purpose

[00:48:03.63] spk_1:
to welcome them. Call them by name and you know, take care of their coats or whatever it is that you need to do and then introduce them to someone

[00:48:11.00] spk_0:
introduced right and

[00:48:28.66] spk_1:
get them started and break the ice for them. That’s what she did. And then when it was time for someone to leave, she didn’t let them sneak out the front door, the side door. Oh, tony thank you so much for coming. I can’t wait till I can have you here in my home again. See the difference, but that’s the hostess is as an active role then, you know, she’s not over there huddled in the corner with all of her friends,

[00:48:37.18] spk_0:
you

[00:48:37.35] spk_1:
know, and and there’s the difference and I’ve seen this in awareness meetings when I was in universities where you got the administrators all hovered over in the corner talking to themselves. you know, what the hell is this about? Get out there and talk to these other people?

[00:50:10.31] spk_0:
Yeah, I hope. Yeah, I used to see that when we had in person meetings, you know, too many, too many development folks or even it doesn’t, they don’t, it’s not even just the fundraisers, it’s, you know, too many insiders talking to each other because they’re all comfortable with it instead of talking to the donors who they don’t know or maybe just, you know, casually. No, but you know, I’m breaking the ice with those folks and making them feel welcome. Yeah, I hate to see those clusters of employees. Again, not only fundraisers, you know, anybody for any, anybody doing program work, anybody representing the organization at a public event, you shouldn’t be huddled with your fellow employees, you should be out talking to the public, telling them what you do. You it may be mundane to you, but it’s not mundane to them. They, you know, quoting from glengarry glen ross. They don’t step foot on the lot. If they don’t want to pay. If they don’t want to buy, they don’t step foot on the lot. They’re not ready to buy from the, from the alec baldwin, you know, booming iconic speech folks don’t set foot on the lot if they’re not ready to buy, they haven’t come to spend time with your organization, if they don’t want to learn about it. So whether you’re a fundraiser or you’re not, if you don’t have an outward facing job, then, you know, if you don’t want to talk to the public, then don’t come to the event. This is, this is an awareness raising. You

[00:50:15.95] spk_1:
know, just

[00:50:28.82] spk_0:
come to the employee holiday party and then you can huddle with all your fellow employees, but coming to a public event, talk to the public, get away from the folks, you know very well because you work with them and, and get out talking to folks you don’t know, tell them about what you do

[00:50:33.01] spk_1:
when I Years ago.

[00:50:35.31] spk_0:
That was a bit of a,

[00:50:36.67] spk_1:
it was not

[00:50:37.38] spk_0:
sure. I’m sorry. But

[00:50:38.83] spk_1:
you shouldn’t be

[00:50:40.50] spk_0:
years

[00:50:41.34] spk_1:
ago when I was running the major,

[00:50:44.06] spk_0:
when

[00:51:09.56] spk_1:
I was running the good major program at Suny Buffalo. I was very, we were very much mindful of, you know, and this is politically incorrect today. But we were in the Chiefs and indians A’s okay. How many, how many people do we have? We gotta make sure we balance this thing out and, and I, and I made I made it very clear to, to fundraising staff that were there. You know, here’s your assignment. You are not here to suck up free food and booze. Thank you very much. That’s not your role here. In fact, if you get anything to eat or drink at all. That’s, that’s lucky on your part. Okay. That’s not what your

[00:51:15.30] spk_0:
extreme. I like to feed food, I like to see that folks are said and, and uh, you know, plus you can meet people over the buffet table. Oh

[00:51:24.62] spk_1:
yeah, I mean I, I said that, I mean I expect people to enjoy themselves. Uh and I, and I think it’s important that,

[00:51:30.78] spk_0:
but, but there’s a reason that you’re there.

[00:51:32.71] spk_1:
Yeah, you’re not there just to suck up free food. I

[00:51:35.88] spk_0:
used to go to these events with the name, list of pack,

[00:51:38.85] spk_1:
list

[00:51:39.22] spk_0:
of pockets. I’m getting too excited. I used to go to these events like this with a list of names in my pocket, on a piece of paper folded in half. So it would fit in my breast jacket pocket. And these are the folks that I want to talk to who said they’re coming and from time to time I would excuse myself, go in the hall, look at the

[00:51:57.37] spk_1:
list,

[00:52:18.29] spk_0:
check with the front, the registration desk to make sure that these, you know, I can’t find somebody. Did they come or that they didn’t come so I can’t talk to them. But I would check the list, go and talk to folks you should be going with and, and for some of these folks, you know, there were, there were reasons I wanted to talk to them. Some of them, it was just a refresh and renew. But some, you know, I had a specific agenda item to talk to them about. You know, these these events are not, you know, to your point, you’re lucky if you eat and drink, they’re not social, these are work events.

[00:52:29.27] spk_1:
That’s right. You’re not

[00:52:30.01] spk_0:
gonna be, you’re gonna be working in advancing relationships.

[00:52:32.61] spk_1:
You’re not, you’re not just schmoozing, You’re working.

[00:52:36.47] spk_0:
Uh,

[00:52:53.03] spk_1:
this is purposeful. Um, well, and I used to, and I used to have the officers that attended, I used to have them submit the names to me of all the people they have meaningful conversations with. You know, how did we cover the floor? You know, it was left out. Um, that was key cause this, this was a very, of course, if it’s a sit down event, it’s all about strategic seating. Of

[00:52:58.37] spk_0:
course, yes, Yes. Don’t put the employees together. Put the right donors with the right potential donors. Put the right staff with the right donors. Yes. Be very intentional. Very purposeful

[00:53:10.75] spk_1:
or donors who have personal differences. You don’t see them together.

[00:53:16.96] spk_0:
Yes. Um, if it’s not a sit down event or if it’s the cocktail hour, you see somebody standing alone or sitting alone, over in a chair or a sofa, go up and introduce yourself.

[00:53:25.67] spk_1:
Don’t

[00:53:34.44] spk_0:
let people sit by themselves alone and stand alone in the cocktail hour. You know, they’re looking for somebody to come up to them, do it again. If you don’t want to do that kind of work, then just go to the employer employee holiday party.

[00:53:40.85] spk_1:
You

[00:53:41.90] spk_0:
know, you might not have an outward facing job. but if you’re going to an outward facing event representing the organization, then you need to be outward facing and not huddled with your fellow employees.

[00:53:51.68] spk_1:
So

[00:53:52.67] spk_0:
going back

[00:54:24.09] spk_1:
to the premise here of renew, that should be the number one driver in terms of the donor pool focus on renewal and building that relationship over time. Uh, it’s, you know, you know, in terms of, you know, I’m an engineer, I’m a business guy, you know, I’m interested in return on investment. How much does it cost? You know, and it is a cost. It’s much less expensive in dollars and cents to maintain a relationship to get a very large gift than it is to constantly be trying to bring new people into the fold as you know, No,

[00:54:25.71] spk_0:
that’s donor acquisition costs a lot more than donor.

[00:54:28.83] spk_1:
Yeah, it’s so much more expensive

[00:54:32.09] spk_0:
multiples.

[00:55:10.77] spk_1:
And so then from a financial point of view, it’s makes sense. Everything, It just makes sense. But you, but you’re really working on this relationship over time and then you do have an acquisition program that, that drops people in at various levels when they come in, but that’s where the focus should be every and so people aren’t doing that. As I said, the first step is to go back and deconstruct the entire program and begin to rebuild it with renewal as the number one focus. And then, and of course that’s gonna really, um, give some executives heartburn because they’re so dependent on these small first time gifts to make, to make a budget, you know, which is, you know, that’s an exercise in futility. But it happens all the time because that will absolutely give them heartburn. But what’s gonna happen here? What’s gonna happen there? But

[00:55:20.51] spk_0:
over time you’ll have a more sustainable fundraising revenue when you retain your donors and grow them

[00:55:27.41] spk_1:
well, not only sustainable, but a lot more money. Pure and simple. And I would go so far as to suggest that you could probably do this in a way that it wouldn’t even affect your current income levels. I think you get enough replacement from your acquisition in your renewal’s

[00:56:22.00] spk_0:
maybe maybe. But even if you don’t, it’s still worth, it’s still worth investing in the long term retention or renewal and growth of your existing donors. All right. That was # seven renew and refresh. Alright, so Larry, give us the rundown. Uh, are you able to recite them? Okay. Okay. Okay. So we’re gonna go through the eight. We, we touched on 4/8. So we did half the other half are at the eight principles dot com. Larry, please just run down your, your eight principles of sustainable fundraising.

[01:00:11.58] spk_1:
The a principles are principal one donors are the drivers donors dr philanthropy, but they drive it with their dreams, not their money principle. To begin at the beginning, you need to be able to know your mission and be able to communicate it in a way and in language and in areas and places where your prospective investors will receive it and understand it. Clearly three leadership leads, Your leadership leads, sets the tone for everything else and they will lead. Everybody else will follow their lead, whatever whether that’s good or bad principle for learning plan. You need to first learn who would naturally support you because not everyone will even philanthropic people, Not everyone will and then construct a plan or a program. And how do you reach those people? Where are they? What do they read? What do they do? Who are their friends? All this sort of thing. Principle five. Work from the inside out. Begin with those people closest to you, both in terms of, of affinity and to your mission but also closeness to your organization. That’s why I’m a big believer in doing board campaigns, annual campaigns and doing employee campaigns because it’s you begin and you move out in concentric circles, it’s like building that network. Principle six divide and grow simply treat different donors differently And you’re constructing a pathway that over time will bring your donors closer to you emotionally. Principles seven renew and refresh. Your first focus should be to renew your current investors, the other people who have already voted with their money. You know, they’ve already told you, hey, we support you and oftentimes they’re ignored or simply given you know, whatever. Quick, quick Thank you and then Principal eight integrate, evaluate, integrate, invest, integrate and evaluate. I get that. Right. Okay. So you, you tricked me up. Okay. First of all you have to invest in your program. It costs money to raise money. But this is the role of the board to understand what these general guidelines are in terms of what it takes to raise money over what length of time, you know, how much of investment do we have to make for it begin to pay off over time? Um, integrate. Now this can be, this can be a problem with small organizations or large organizations. And integration is simply understanding that you need to make sure that you, as you communicate as you solicit as you focus on your donor constituency. It needs to come across as a uniform message to the receiver. And what I mean by that is in the case of a big university. You, we have all these different appeals and their college and their this and plan giving and major giving and all this sort of thing. And you know, if, if those things aren’t coordinated the effect on the donor, it, it’s like they’re coming at them. They don’t know, you know, and we’ve all had the horror stories of that sort of thing. Um, you know, one in particular was, I was running again this back at Sunni and a major gift officer called me up. They were in California and they said, I just had a very interesting experience. And I said, what’s that? He said when I was in there visiting the couple, the doorbell rang and it was a plan giving officer. Well in the university’s wisdom, you know, our two organizations were silo where you see the result that God and so and then on the other end of the spectrum, another kind of offender of this kind of thing are the independent schools where they are soliciting parents left and right for every little ding dong thing on the face of the earth and people get worn out with that really quickly. And so you know, when I worked with independent schools, I say, hey, we need to budget as much as this is possible and have a uniform appeal to these donors and organizations schools that have done that the donor satisfaction goes up and they raise a lot more money. Okay,

[01:00:26.41] spk_0:
that’s integrate. So invest, integrate and evaluate,

[01:00:38.64] spk_1:
evaluate. You know, how many times have I heard? What we’ve always done it that way. What do you mean? You’ve always done it that way. That’s prescription for death in most places. And so every year there ought to be an evaluation of the plan evaluation. How do we perform, what do we do well, what we do not do well, what do we need to change? What do we need to tweet? What

[01:00:48.80] spk_0:
are the important, what are the real meaningful metrics?

[01:00:55.09] spk_1:
That’s right. And then how do we make those better larry

[01:00:55.64] spk_0:
johnson. The Eight Principles, You find the principles at the Eight Principles dot com. His book is the Eight principles of sustainable fundraising. You’ll find larry on linkedin Larry, thank you very, very much for sharing.

[01:01:08.53] spk_1:
Oh, it’s my pleasure, tony This was a lot of fun,

[01:02:18.43] spk_0:
I’m glad. Thank you. Thank you very much for being with me. Next week planned giving with eastern donors. I learned a lot in this one. If you missed any part of this week’s show, I beseech you find it at tony-martignetti dot com were sponsored by Turn to communications. Pr and content for nonprofits. Your story is their mission turned life into dot C. O. And by fourth dimension technologies i Tion for in a box, they’re affordable tech solution for nonprofits at tony-dot-M.A.-slash-Pursuant for d just like three D But as you know, they go one dimension deeper and they’ve got the free offer. Our creative producer is Claire Meyerhoff. The shows, social media is by Susan Chavez. Marc Silverman is our web guy. And this music is by scott Stein, thank you for that. Affirmation Scottie with me next week for nonprofit radio big non profit ideas for the other 95% go out and be great

Nonprofit Radio for March 22, 2021: Build Your Best Better Board

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[00:01:39.64] spk_0:
Hello and welcome to tony-martignetti non profit radio big non profit ideas for the other 95%. I’m your aptly named host of your favorite abdominal podcast, and I’m glad you’re with me. I’d come down with dyskinesia if you gave me a taste of the idea that you missed this week’s show. Build your best Better board. Jeanne Takagi returns. He’s got strategies to help you build the diverse, effective, thoughtful, appropriately sized, well trained board you deserve. He’s our legal contributor and managing attorney of Neo, the nonprofit and exempt organizations law group tony State, too. Podcast pleasantries and planned giving accelerator. We’re sponsored by turn to communications, PR and content for nonprofits. Your story is their mission. Turn hyphen two dot c o. It’s my pleasure to welcome back, as it always is. Jeanne Takagi. These are legal contributor, managing attorney of Neo, the nonprofit and Exempt Organizations Law Group in San Francisco. He edits the enormously popular nonprofit law blog dot com and is a part time lecturer at Columbia University. The firm is that neo law group dot com, and he’s at G Attack Gene, welcome back to the show.

[00:01:41.84] spk_1:
Thanks, Tony. It’s great to be back. How are you?

[00:01:59.94] spk_0:
I’m doing well. Thank you. It’s always a pleasure. Many, many years. It’s a pleasure. Each time you’re you are teaching us what’s important, what we need to keep centered. What’s, uh where are ships Should all be facing in the same direction. So what direction is that? You keep us. Keep us on the straight path. I appreciate it. I know our listeners due to thank you.

[00:02:06.34] spk_1:
Thank you, Tony.

[00:02:23.84] spk_0:
Let’s get started with your building. Your best. Better board. We’re not We’re not gonna We’re not going to settle on nonprofit radio for your lackluster better board. We want your best, Better board. And I think the place to start is with board roles. So what are we expecting our board members to do?

[00:02:52.74] spk_1:
Yeah, I love this conversation, tony. It’s actually one of my favorites. And yeah, it was probably Gosh, it was early on, I think when we first talked a little bit about boards getting sort of distracted from doing the financial oversight and forgetting to do some of the other things that boards are supposed to do. Um, and, you know, part of what we talked about could have been, like 78 years ago was like, Hey, somebody should be over overseeing. You know, whether the program’s doing Are they having an impact or not? Are they really furthering your mission in the way that you want them to?

[00:03:11.94] spk_0:
You know, I have to remind you you and I did a mock board meeting one time, and either you threw me off the border. I walked out. I forget

[00:03:15.22] spk_1:
which

[00:03:30.04] spk_0:
back in the old studio was many years ago. I don’t know what we’re talking about. Something board related, obviously. But, uh, yeah, either I got booted off or I walked out and quit. I forget, uh, we’re trying to avoid that. We’re trying to avoid that in our best better board,

[00:03:32.54] spk_1:
but we’re definitely going to try to approach any of these things with extreme tact

[00:03:37.84] spk_0:
I lack, which I often lack. I probably walked out. I probably quit or something.

[00:06:01.14] spk_1:
Yeah, just just overall, the same financial diligence is great. So take a look at the financials, make sure you understand them and make sure that the organization is able to pay off its debts that they become do that you’re not sort of bleeding money and just managing your financial assets. But non profits exist more than to produce a financial bottom line, of course. So you know in the for profit world boards and probably got a different duty, maybe a little bit more. I mean, everybody has to act in the best interests of the corporation, right? That’s a fiduciary duty. But what is the best interests of the corporation for for profit? Oftentimes it’s associated, at least in large part the benefit of its owners or shareholders. But in the non profit, there are no shareholders or owners, right? It’s for the benefit of advancing the mission. And that’s what the board has got to remember, that it’s got to be purpose driven. It’s got to be, um, acting in furtherance of the mission ahead of everything else. Um, and the one caveat I’ll add to that which we may have talked a little bit about before, as well is you’ve got to add values to that statement, so their values probably baked into your mission statement but also baked into the organizational culture. So if our mission is to feed people who are experiencing homelessness or a lack of income, resources or we’re not just going to throw food out in a trough, right? You know that might be the best way or the most effective way to get as many people fed as possible. But that would be completely inconsistent with anybody’s values. Or so values and mission sort of go hand in hand, and focusing on that is really important. So not just financial oversight, the programmatic oversight the role of the board has got to look forward to. You’ve got to set the path with those values and mission for the organization’s future, not just looking behind you, but looking ahead, um, and so guiding the organization with those thoughts, acting as ambassadors, getting the feedback from the environment about what challenges and what opportunities may be out there. Those are all things the board can bring back to the executive and to the staff, sort of to help them do their best.

[00:06:44.34] spk_0:
And these are all very, uh, lofty. And and, um, I don’t want to say pedagogical, because that makes it sound like they’re not grounded, but But these are these are very we haven’t even talked about. You know how many board meetings you have to attend in a year. And how many subcommittees you have to serve on? You know, we haven’t gotten to that yet. You know, we’re talking about the the ambition, but it has to be centered. It’s It’s like you said. It’s the mission and values of the organization. I mean, if someone doesn’t respect those, then you’re not gonna get your best better board. You’re going to get a crappy person. Maybe it gives a lot of money, but ultimately, the ships are not sailing in the same direction with all the board members on each one.

[00:06:50.14] spk_1:
Yeah, I think that’s right. And I loved your introduction about having the best Better board. Not this lackluster,

[00:07:13.34] spk_0:
lackluster better. But yeah, that’s for other podcasts, not on the radio. We don’t tolerate lackluster mediocrity, mediocre better boards that we want to. We want the best Better board. All right, so So it really it really does start with loft and ambition around around Mission and values.

[00:07:15.74] spk_1:
I definitely think so.

[00:07:29.44] spk_0:
Yeah. Okay. Okay. So now let’s drill down. I mean, in terms of what we’re expecting the board to do, you have to be up front with what these expectations are and that that happens in recruitment, right? Not not in their first board meeting. You should be explaining the expectations while you’re talking to somebody about joining the board. Not after they have joined.

[00:07:41.54] spk_1:
Absolutely. And too often. I see tony and I don’t know if you’ve experienced this as well, but somebody tries to recruit you onto the board and they go, It’s really not that much work, you know. It’s easy. Um, well, that’s going to get you a lackluster and maybe not even a better board. So,

[00:07:59.57] spk_0:
um,

[00:08:45.54] spk_1:
yeah, so it really is about setting expectations of Hey, you really believe in this mission and you have the same values that we’re trying to move forward with. Let’s do something great with this organization. Let’s make a great impact here. This is These are the kind of things that we expect of our board. This is how often we meet. You know, this is, um, what we expected each board member in terms of attendance and in terms of maybe making a meaningful contribution. I don’t like set amounts because that can hurt diversity and inclusive inclusion. But a meaningful donation to to the organization it could be in time if not in money or in other ways. But the expectations, I think, need to be spelled out in front before you actually invite somebody onto the board.

[00:09:00.24] spk_0:
And when you’re spelling them out, I mean, do you Do you like to see a writing a document with, you know, Please take this home with you and consider consider, as we’re having our conversations about about you being on the board, consider all these things like you give them a document to read or just a conversation.

[00:09:24.64] spk_1:
I think both tony. So I I you know, it may depend upon the organization how formal they get, but if you do actually have a recruiting sort of policy or procedure or recruiting committee in place, I like to put some things down in writing just to make sure that we’re all on the same page and letting people know what the organization’s expectations are and how often boards meet. And if there is a meaningful contribution, expectations all of those things up front. So if somebody is not interested, they can right away say, you know, this isn’t for me, you know, I like what you do. But it’s not for me and another person who might say I’m really interested in doing all of those things. You know? I’d love to be a part of your board,

[00:10:11.94] spk_0:
All right? So be upfront about expectations. There’s no point in in concealing the work and the requirements, only to have the person blindsided when it comes time around, when it comes time for each board member to make their annual contribution. And and And they didn’t know that it was supposed to be a meaningful gift or they didn’t know there was a board giving requirement of any sort. You know, when it comes time to assign committee. So I didn’t know I was gonna be on a committee. I thought I just came to board member board meetings four times a year. Now we have committee meetings to I didn’t know about that, and then you set yourself up for a disaster.

[00:10:46.54] spk_1:
Yeah, I think that’s right. And if you if you start to um, the danger of it is is you don’t want to just sort of create this list of these are the things you have to do for the organization to run. You’ve got to always again relate it back to the mission and values. This is why we love to contribute as board members to the organization. Because this is what impact we can have. And this is the direction we see ourselves going to be able to have even greater impact. So you just keep reinforcing that message to get your best board members.

[00:10:55.74] spk_0:
You let me ask you a question. Are you Are you, uh Are you by any chance, playing with a pen or or anything?

[00:11:02.14] spk_1:
I am not rocking back and forth on my chair.

[00:11:06.44] spk_0:
And I know there’s, like, a little clicking, and I’m not. I know you’re not. I know you’re not typing like you’re not writing a document while we’re talking

[00:11:13.94] spk_1:
about you’re

[00:11:14.15] spk_0:
writing a client agreement or something.

[00:11:16.51] spk_1:
Typical things you expect from a lawyer, right?

[00:11:32.14] spk_0:
Yeah. You double bill your time, right. You get $800 an hour billed to clients at $400 an hour. You’re sitting in one’s office. You’re doing the work for the other. No. Okay. No, you’re not. Your hands are free, okay? I don’t know. There’s, like, little the mice are clicking or

[00:11:33.26] spk_1:
something. Maybe I’m rocking in my chair. I will try to hold back my enthusiasm.

[00:12:18.04] spk_0:
Okay, Alright. It doesn’t It doesn’t sound like that. Okay, Well, listeners, I can’t identify the sound of the but I’ll call it out because I’m not going to keep it quiet because we all hear it, so we’ll talk about it. Well, I don’t know what it is. This little tapping, clicking my mouse sound. Let’s talk about diversity. This should be a value. You and I have talked about this. We’ve had heartfelt conversations a couple of times about white male power and using that power and sharing power. And so let’s talk about diversity as a value for your board. How does that play into what we’re talking about? Your your best. Better board?

[00:14:50.74] spk_1:
Sure. You know, for the organizations who have responded to sort of this increasing understanding and awareness that diversity is an issue in various aspects, not just on board composition, but in the way our infrastructure as a country and even as the world is designed where, um, people who are in positions of power, no matter what race or gender or whatever, whatever they are tend to create systems that keep themselves in power. And so diversity has this great benefit of saying, Let’s take other lenses and look at what we’re doing. And look at the world that we’re in, um, for nonprofits, especially the world that’s directly impacting what we’re trying to do out there for. The people were trying to do it for what is impacting it, who is being affected the most, Um, and if that’s important to to organizations and their leaders, then I think they’ve really got to embrace diversity, not just by saying it, but by actually putting action steps into what they’re doing, Whether that’s going to be building it into true board diversity with inclusion. So not making people feel, you know, like they’re they’re just a simple tokens of taking a better picture but really being able to contribute to the power of the organization to address things that other people may not have seen. So, you know, I may identify with people who I relate to, but I may have very little understanding your perspective of people who are different from me who congregate in different circles who have different ideas. Um, and we have to think about all of those things, especially for serving a classic. Beneficiaries that are board members may be far away from. So if we have a board that’s more privileged, and we are helping a lot of people who don’t have some of the privileges that the board may have in terms of representation, how will we ever see the world through their lens? How will they understand? How will we understand where services are doing from their eyes? So trying to to get that diversity in an inclusive matter for purposes of increasing equity, I think, is a value that non profit should strive for.

[00:16:11.94] spk_0:
It’s time for a break turn to communications relationships. They’ve got the relationships with the media outlets so that when you need to be in the news, when there’s a news item that you need to comment on, your voice needs to be heard. Turn to has the relationships to get you heard. It’s not cold calling. They have the existing relationships. They give it like gifts. You get a lot of gifts from cold calls. Do you get any gifts from cold calls? You get your best gifts from cold calls. If you’re doing cold call fundraising. No, you don’t. Of course, it’s the same with media. The relationships are in place. So when you want to be heard, turn to picks up the phones and leverages those relationships That way you’re gonna get heard. Turn to communications. Turn hyphen. Two dot c o. Now back to build your best. Better board. Diversity has to be centered. Um, but And you wanted to go deeper than just like the board should reflect the community or the board should reflect those we serve. You mean you’re looking for something deeper than just reflecting an environment?

[00:18:17.04] spk_1:
I think so. So it is reflecting different perspectives as well. So I think traditionally, we thought of it as a skills based diversity. Like we need a lawyer. We need an accountant. We need a financial manager, a fundraiser on our board. And then we became all a little bit more woke and we said, Hey, we need racial diversity in our organizations. Um, but we didn’t say why that was or many of us didn’t say, why do we need racial diversity in our organizations? Is it simply to make it look like we embrace diversity and we take the better picture? Or is it because we want a true understanding from somebody else with a different lens and perspective? Who could tell us if there are gaps in our services for their communities? If there are gaps in the laws that are creating inequities that affect our mission as well? So the more we get these other perspectives, whether it be from a racial diversity angle from a disability angle, which I think is increasingly a really important thing to look at as we are facing an older population where disabilities are highly, you know, they make up a great percentage of our organizations and they’re kind of sort of the the unseen Group in many ways, um, we’re just getting started on addressing some of those concerns. But, um, the way we serve people can really miss many of those that are impacted, that that would be true beneficiaries of our service if they could access our services. But if we don’t make it accessible to them, then we just missed them, and that may be completely unintentional. But if we don’t have people who can identify and spot those things because they live it, um that would be, you know, short a shortfall in leadership. And that’s where we have to sort of address, Um, taking a look with a much broader lens and not just in our boards, but in our programming, in our staffing and just getting more awareness and bringing more lenses to what we’re doing.

[00:18:55.54] spk_0:
Let’s talk about bringing someone new to the board because we’re gonna be recruiting our new board members that are going to be part of our best better board. So now if we’ve recruited the right people, we need to socialize them to the organization. It’s more than I think. It’s more than just formal training. You know, the the organization has a culture. The board has a culture. Hopefully, they’re healthy. Let’s assume, but let’s take that. Let’s assume that these are healthy. Culture is not. Not. Cultures were trying to reverse, uh, you know, like intolerance or something. But healthy cultures. There’s a formal training and an informal training.

[00:20:26.74] spk_1:
I absolutely agree with you, so you know orientations can start even at recruitment. But once you decide that you want to elect somebody onto the board and they want to be part of the board and you elect them. I think it really is important now for them to be ingrained in what the organizations and the board culture is, what the priorities are getting a better sense of what the programs are. I’ll confess. I’ve been part of boards where I may not have a very good understanding of some of the programs. I get lost in some of, you know, again, the financial reports and maybe one program officer. You know, a year shows up and describes their program well, that that’s not really giving me a full sense of what the organization is doing. So more of that, um, is really going to be beneficial. Um, it will also help in sort of preventing there from being this wall between who the board is and who the staff and who are. The people that are actually implementing the program are other than the executive director, so boards often just meet with the executive director. But in an orientation or training, I think more deeply getting ingrained and that’s a board staff retreat. Joint retreats are good things. Board buddies and maybe a board staff buddy system could also

[00:20:31.34] spk_0:
is that like is that a mentoring board board buddy?

[00:20:53.34] spk_1:
Yeah, I think it could be partly mentoring, but I think the relationship really extends both ways, right? We can get more information from an outsider’s perspective to help the organization, and when they have fresh eyes, they may see different things. So instead of just saying, I know more than you, I’m going to mentor you. We can be buddies and learn from each other.

[00:20:56.64] spk_0:
And then you mentioned staff buddies, too.

[00:21:21.34] spk_1:
Yeah, I I don’t think it’s a bad idea for boards again to get more involved with their staff. We don’t want to micromanage. So there is this fine line there. But just getting an understanding from the staff about what they see in the organization, I think is important other than the executive director who may be the one who attends every board meeting. But if we just see one other staff member once a year, that really isn’t giving a sense of what is going on and what the organizational culture is. We might know what the board culture is, but do we really know what the organizational culture is?

[00:22:10.34] spk_0:
If it’s a staff buddy, it’s not only micromanagement, from the board member down. But then you also have to be conscious of the staff member trying to leverage a relationship with a board member like trying to do something or avoid doing something that the CEO may want or their vice president that they report to may want or something. You know, uh, that just it has to be managed. That’s all. Just You have to be conscious of the possibility of somebody exploiting and a relationship with the board members saying things that are inappropriate. The board members.

[00:22:52.14] spk_1:
I think this has to be designed with a consultant who really understands the area because you’re absolutely right. Tony. Yeah, if you if you aren’t careful, what you’re doing is you’re creating people going behind the executives back to make complaints to board members. And that’s not what the purpose is. So it might be controlled by saying, Hey, the board staff buddy thing is a meeting of the board and staff person in a joint group in a group where we’re all meeting in different corners of the room and just talking about certain specific topics so it can be regulated a little bit more carefully with rules of the game spelled out in advance. This is not a place to complain about employment issues. This is Yeah.

[00:23:04.34] spk_0:
Um, what do you like for board terms? What do you have? Advice? Two years? Three years? Should How many? How many years or how many terms should board members be allowed to continue on?

[00:24:00.64] spk_1:
Um, there’s there’s not, you know, one specific answer. I hate the lawyers. Answer. It depends. It does. But let me just say in a large number of cases, I like the 2 to 3 year term, both balancing a little bit of need for continuity and giving a fair expectation to a new board member of that. This is not just going to be a one year thing and you’re out. Um uh, and I like to have board terms to make sure that the board doesn’t become very insular and its thinking and in its diversity by keeping board members on perpetually until they’re ready to resign. It also makes it hard to ever remove a board member if people think that they have a right to serve on the board forever. So I kind of like board members not to be on board for, like maybe five or six years. Um, having said that, there are times

[00:24:02.67] spk_0:
when to not be on for five or six years

[00:24:04.99] spk_1:
to beyond that

[00:24:08.44] spk_0:
beyond. For five, like maybe two, 23 year terms, two year terms or 23 year terms of the most

[00:24:41.64] spk_1:
something. Something like that. Now, a lot of exceptions to that, if you have, if you had trouble building aboard and you have some great champions on the board. But those have been kind of the long term people who really know and really invested, and everybody else has been sort of lackluster. Um, I don’t think you should kick off your strongest board members, so you have to really think about that before you implement it. It is sort of an idealistic goal to have those term limits and, um, 2 to 3 year terms. But in other situations, I would say one size doesn’t fit. Also, take a look at your own board composition first before you make those type of decisions.

[00:25:19.94] spk_0:
What about in terms of socializing to the board, having social events for the board? Occasionally, Maybe it’s a dinner after a meeting. Um, I wouldn’t have cocktails before a meeting. But you could have cocktails after a meeting, you know, trying to get the board to get to know the members, to know each other outside the board. What else do you do? You go skiing, you go snowmobiling. You know, you’re a Fisher fisherman. You know things like that.

[00:25:26.34] spk_1:
Yeah, I love that idea. I’ve even had cocktails before boarding. So,

[00:25:31.63] spk_0:
uh, all right,

[00:26:10.84] spk_1:
but yes, um, for board members to trust each other and to be open to each other’s ideas and respect each other, the more you know each other, the more likelihood that that’s all going to happen and that you’re going to actually build the board culture rather than have people who don’t know each other who are trying to get out of the meeting, to watch a basketball game or be home with their family and sort of sit and say, This is my duty. For the next hour, I’m going to sit here, take notes and listen and try to do my job. But think of it just as a job. It’s going to be less productive. I think that if you come in and say I love these people that are kind of get to work with. And we’re trying to build something great so we can make change in the world or in our community. And so I really like coming to these events and getting a sense of it. Sometimes there’s, you know, those ice breaker things you know, for five or 10 minutes in front of a meeting that can be hit or miss and oftentimes a

[00:26:33.10] spk_0:
miss. How many people can you talk to in 10 minutes?

[00:26:35.46] spk_1:
Yeah, and that’s another reason why you shouldn’t have too big a board as well. If you have 50 people at a to our board meeting, how many people are going to get to

[00:26:51.84] spk_0:
talk, right? That’s yeah, So I know that I know your answer is there’s no hard and fast answer for this one. But since you just let into it, share your advice on on board size,

[00:28:13.54] spk_1:
Yes. So my maybe not so helpful advice is not too few and not too many, um, that if we dive down a little deeper, you need, um or you’d like to have as many board members as you can utilize to help you govern the organization and help the organization and the board do its best job. So if that number is eight, or if that number is 15, that’s, you know that may be your ideal board size. It’s more important to me to get the right people on the board, um, rather than the right number. But if you can, if you have less than five and you’re a mature organization, I start to worry that you’re gonna lack that diversity in many different perspectives. Um, and if you’ve got more than 20 I have a feeling that a lot of board members feel like their contributions are not being heard because they don’t have an opportunity to sort of verbally contribute, especially if there are few dominant board members at meetings and in a two hour meeting, even 20 people are going to have a chance to say how much about how many issues it will be very few. So to really think about that, and you want to encourage board members to attend every board meeting, not just sort of half of the board meetings or think that they can take a free ride because you’ve got enough people to do that job. I’ll just help on a committee. You don’t want them to feel that way. You want them to feel very invested.

[00:28:31.24] spk_0:
So you feel like an expectation is you attend every board meeting either physically or virtually.

[00:28:33.84] spk_1:
I think that’s the expectation. And if people are missing, you know, one out of 41 out of five meetings, one out of 10 meetings, you know that might be acceptable for special circumstances. But you don’t want it to be a habit. I think you want to aspire to have everybody attend all of them.

[00:28:58.64] spk_0:
Okay, Um, what do you What do you feel like talking about board wise that we haven’t talked about yet? Let’s not go to how to get rid of a board member yet that’s that’s toward the end. What’s your what’s on your mind around your best? Better board?

[00:30:44.94] spk_1:
Well, we talked about kind of the expectations of what the board should do, but they think each director’s gotta ask that question of themselves as well. And maybe that’s part of the board. Recruitment and orientation package is kind of a list of however many 10 things that board members should aspire to do themselves, uh, to be part of this board and attend all meetings. We talked about that, but what else should they do? They should review financials regularly, so if they’re getting a financial before each meeting, they should review them. They should know that they are expected to ask questions that might be at the board meeting or that might be before the board meeting. But if they’re getting information aboard package in advance, which they should get, um, about the matters that are going to be up for discussion at the board, they should know that they should review it first. And if they have any questions, they should share it with the group. Um, and that doesn’t happen enough, in my opinion, that there are these questions and everybody saves it for the board meeting, and then they run out of time to discuss all the issues that they want to. So just having it kind of on an email sort of mass email, the board package comes out on email, and people can ask questions about it so that everybody gets an advanced preview of what some of the issues are before you go into that board meeting and then start to discuss things a little bit more detail. Some of those things might need a little research to be answered to. The executive might have to talk to an accountant or a lawyer or someone else and say, Let’s find out what the answer is and you know that does away with that issue even before the meeting, if you can share that information. So that’s another thing to just think about.

[00:31:35.04] spk_0:
What about managing the board? Uh, some. Some larger organizations have a board liaison where that’s probably not most of our listeners with someone who’s devoted to the board. I think that’s more like university style, big university style. But there doesn’t have to be a lot of staff support for the board. I mean, not only the you mentioned getting the board packages to them at least a week. I’d say in advance, maybe a week or 10 days in advance, something like that. But it goes beyond that. Board members have questions. Have these questions that you’re suggesting they ask in advance of meetings? Um, committee work has to be supported. How do we How do we make sure that we’re giving the board members the support that they need.

[00:33:00.24] spk_1:
Yeah, and it’s a great balance. Is it? Well, it’s a great question, but it is a tough one to answer because of the balance that you have to think of. You want the board to be informed so that they can be of help to the organization. But you don’t want the board to put on so many demands upon the staff that they’re really hurting the staff’s ability to do the work of the organization, the programmatic work that’s needed. So there is a little bit of balance there. I know many staff members and executives hate kind of preparing the board for the board meeting because it may take so much work. Sometimes it’s because they’re trying to justify what they are doing to the board, because the board may come in with a little bit of a negative skew about, you know, prove to us that you’re doing good work of some kind. That may be the perception that the staff is getting. I don’t think any boards are overtly saying that, but I feel that staff can come into it a little bit defensively in preparation of board materials rather than this is an ally of ours. This should be the strongest ally that we have this board group. Let’s give them information and questions for them so that they can help us do our job better. Um, and that takes time. But how many staff are involved with the executive? Certainly is meeting with them. That probably goes without saying if there is a financial person there other than the executive, that person should probably have frequent contact.

[00:35:45.54] spk_0:
It’s time for Tony’s take to the podcast. Pleasantries. They gotta go out. That’s what we start with. Plan giving accelerator that’s coming. The podcast. Pleasantries. Uh, I’m enjoying the nostalgia of sending these again. I’ve missed it. I guess I I ignored it for a while. My my mistake. I’m sorry about that. Pleasantries to you, our podcast listener. Well, you individually. But there’s more than just one of you out there. There’s over 13,000 of you out there. So, to the podcast, listeners pleasantries. You know, I’m grateful. I am. I’m glad you’re with us. I’m glad you’re learning that non profit radio helps you helps your organization open conversations, take action steps, open discussions with the board. Your CEO, your vice president, Whoever it is, you bring stuff too. I’m glad it helps you do all that. And I hope there’s the action steps to I’m sure there are. There is. I’m sure there are the action steps. I’m sure there are. Thanks for being with us. Thanks for being with me. Pleasantries to our podcast listeners. Each of you plan giving accelerator that is the online membership community that I created to help you get your plan giving program started and growing. It’s a membership that you join for a year, and I teach you month by month lesson by lesson, Step by step. Everything you need to get your planned giving program started and growing. If you’re not doing planned giving and you would like to be, is it on your to do list? Have you, like so many folks? Say to me, Had this on your mind for a couple of years. You can get it done. You can get it started to get the initial thing started, and that’s done and then the program continues. I mean, the program doesn’t finish after a year. You continue your playing giving program indefinitely, of course, but you’ll get plan giving off your to do list. You get the going done. Your started 2021. The next class starts April 1st, all the info on how to pick my brain and have me teach you planned giving starting up step by step. Is that planned? Giving accelerator dot com. Okay, that is Tony’s Take two. We’ve got Boo Koo, but loads more time for build your best better board with Jean Takagi.

[00:36:41.93] spk_1:
I didn’t mean to downplay the role of somebody from programming coming in speaking to the board once in a while, I think I wanted to say that that was insufficient for the board to know what’s going on programmatically. But having people come in a little bit more regularly, or at least providing materials to the board more regularly about the program’s impact, you know, and that could be through stories as well. I’m kind of like in fundraising make the board engaged with what the organization is doing programmatically and invested in doing more to help the organization do better with its programs, either serve more people are doing in a better way. You want to create that connection so that the board rallies around you and actually helps you rather than just again just providing oversight and saying We want to make sure everything is lawful. Give us all this information to make, you know, make sure that we can do that. You want to do get more from your board.

[00:37:26.53] spk_0:
I like the idea of regular presentations at board meetings from from program staff. Maybe the 1st 15 minutes of a board meeting every time is from some different employee. Maybe maybe it’s not a unique pro, maybe not different programs every time. But I like the idea of devoting some board time each each meeting to to programs to what our work is, but but not being acquainted by the CEO. But having someone who’s on the ground doing the work answering, I think that would be a real fertile ground for questions to from the board and provides ongoing training.

[00:37:28.53] spk_1:
I think so, too, and maybe even somebody who is a beneficiary of the services

[00:37:32.89] spk_0:
beneficiary to yes

[00:37:51.23] spk_1:
to say Hey, you know you get a chance to speak to the board to because we want to know what you feel about our programs and our organization and how you’ve been treated. So, um, I think those things are good, and I I again think, tony, that will just energize aboard to want to do more if they feel more connected to what the organization is actually doing and not just reading about it and listening to the executive tell them about it.

[00:38:15.32] spk_0:
What about that important CEO board chair relationship that should be very collegial? It should be supportive. What what’s your advice around for? The CEO is probably mostly CEOs listening, although we do have board members listening. But probably we have more CEOs than we do board chairs. So what’s your advice there for them? Although

[00:39:07.82] spk_1:
I’ll say that probably a fair number of CEOs have actually acted in the capacity of a board chair as well and other organizations, so they may understand some of the roles from both sides. I think my advice is what you have just said, as well as to have this collegial relationship and develop one where there’s one of trust where the CEO is not afraid to go to the board and say, I’ve got some bad news. Um, I’m looking for some guidance on this. If the CEO is always about, um, my pay or my job security can be affected by telling bad news to the board chair. So I’m going to try to, uh,

[00:39:09.52] spk_0:
show hide it, make it sound, not as bad as it is not. Be completely honest, etcetera.

[00:39:26.32] spk_1:
Yeah, I think of what you know. For profit, boards of directors may say to their shareholders in public companies, Right, like you want to pose the best view of that organization as possible. I don’t think that’s a healthy relationship for nonprofit board to have its executive,

[00:39:37.42] spk_0:
and and that should be frequent communication to I mean, shouldn’t shouldn’t the CEO feel comfortable picking up the phone and seeking the advice of the board chair?

[00:40:20.31] spk_1:
I think so. And if it’s not the board chair, I I think it’s okay at times. So your board culture is going to have to allow for this, but for them to pick up the phone and talk to another board member, So I’m when I serve on the board. I’m sometimes the only lawyer on the board. I want the CEO to be able to talk to me. I’m not going to be their legal counsel, But I might have a point of view. Or I might spot an issue if they feel like, Hey, is this something we need to talk to our lawyer about? Maybe our board chair wouldn’t be able to answer that question. But maybe I would as a board member. So, yeah, I like the CEO of being able to reach out to multiple board members for for different issues. Yeah,

[00:40:48.21] spk_0:
all right. Should we should we talk about terminating board members the topic before before their time is, Do so Let’s say, you know, a three year term and they’ve been on for a year, and they’re obstreperous, lackluster, unkind. They don’t belong. Let’s just for whatever reason, they don’t belong.

[00:43:09.10] spk_1:
Sure. What do we do? Yeah, it’s a real tough one, right. So, um, sometimes you have to look at it holistically. So oftentimes I get a call and that situation will arise. But it will turn out that that board members also the biggest donor to the organization right now you’ve got to think a little more diplomatically and strategically about how to do this. Um um So again, not one size fits all But one method that some organizations have used has been to say, Let’s talk with this board member and try to find the best role for them in the organization and see if we can move them off the board but into this other role, whether it be advisory, um, or whether it be in an, uh in an honorary position for being, you know, uh, something emeritus. So give them a fancy title. Ask them to show up at fundraising events, um uh, or to to speak to two foundations when you go out with them to do a pitch, maybe that’s where their strength is. And maybe there’s enough there of their passion for the mission and for the organization and what it does. While they don’t have passion for doing the work of a director in a strategic and diplomatic way, they may still have passion for the mission of the organization. And let’s try to take advantage of that, um, and use it in a way where nobody will use sort of the Asian mentality of nobody loses face right, like so everybody gets to keep their dignity and look good. But let’s try to take advantage of not having that person be disruptive on the board anymore. And if that person isn’t giving you much of a contribution in any way, then once in a while removal is an unpleasant but sometimes necessary option. And boards may have to decide that again. Uh, they’re going to ask somebody where they’re actually going to vote to tell somebody, um, that their services as a director are no longer needed, Um, but that has to also be done diplomatically. You have to be careful of alleging reasons for doing that because that could get you involved in a defamation lawsuit from that person if they’re upset with it and litigious so carefully.

[00:43:20.20] spk_0:
So this should be something that’s in the bylaws, then removal of a board member. Yeah, you need to have a documented process.

[00:44:17.09] spk_1:
I think that’s right, tony. A lot of, um, boards have eliminated that from the bylaws because you see that as a negative. But then they would default to the code, right, and they’re not going to usually look up what the code says about removal. It has to be done in a certain way, and in some cases it can get a little bit complicated. If you have a voting membership structure like for certain charities, they might have members who actually elect their board members. It’s more common in trade associations and homeowners associations things like that. But some charities have voting members, and removal, then becomes a lot more complicated. But having it having the procedure in your bylaws at least gives you kind of like the encyclopedia. Look at how to do this properly without feeling like it’s going to be too hard. We can’t do it and just live with it.

[00:44:26.89] spk_0:
I’m not familiar with this model you just described because you and you said it’s some five oh one C threes have elected board members. So

[00:44:28.78] spk_1:
yeah,

[00:44:29.71] spk_0:
so it has. The board has voted members on and can only remove them,

[00:45:22.59] spk_1:
actually the opposite way. So members elect the board members, so the members are responsible for electing and potentially removing board members. So you might think of that more in terms of like a union or a professional association or homeowners association, where all the homeowners elect the board. If they don’t like the board, they’ll remove them and put somebody else on to that board. So some charities are also structured that way. And that was to sort of been seen as a more democratic process of ensuring that the board stays responsive to what the members think. The mission is supposed to be, um, for smaller organizations. I generally don’t recommend it because it’s more costly. It’s much more difficult to manage and administer. Um, but nevertheless, I would say about 5 to 10% of the charities that we run into small charities we run into are structured that way.

[00:45:32.49] spk_0:
Not ideal, though, but they’re trying to be democratic. And

[00:45:36.99] spk_1:
that’s right.

[00:46:19.48] spk_0:
Okay, I see. All right. Well, that Yeah, that conversation to to hope that opening that conversation with the director to be removed is is hard. Maybe maybe the maybe the board member themselves themselves, uh, maybe the person. Maybe they can’t find the right pronoun. Maybe that person isn’t happy in the role either. That’s a possibility. It could be. You know, you could sort of open the conversation with it. Seems like, you know, this isn’t as you were suggesting, and I’m kind of putting a few things together. It seems like this isn’t quite the right role for you. You don’t seem happy as a board member. Uh, you know, you could open the conversation that way in trying to find something else to offer

[00:46:43.88] spk_1:
them. I think that’s a great way often to frame that that situation. I actually wrote an article for the nonprofit Quarterly. I think called something like 10 Reasons Why a director made gracefully want to resign from their organization, um, board. And so, yeah, framing it from their perspective and what they’re not getting is probably a good way to start it.

[00:46:59.58] spk_0:
I thought of something else before we wrap up. What do you think about junior boards, you know, maybe have an advisory role? There’s sort of a training improving ground for future board members, whatever you call it, might. It might just be the advisory board or something. But what do you think of that? That having, uh, that in your organization,

[00:47:26.78] spk_1:
I think you’ve done well. It works. Um, really Well, it raises potential future board members and gives you an introduction to the organization. Rather than bringing somebody straight into the board. They have a chance to be part of whatever you want to call it an advisory committee or, uh, the junior board. I would be careful with the name, depending upon who you’re planning to put on it.

[00:47:30.99] spk_0:
So junior board is not so good. All right.

[00:47:33.37] spk_1:
Unless it’s for, you know, unless you’re putting minors on it for advisory positions. Okay. Okay.

[00:47:44.08] spk_0:
But advisory, an advisory board advisory committee. And and it gets to be seen as a stepping stone for some folks to the board membership.

[00:48:04.17] spk_1:
Yeah, and to offer thought leadership from different perspectives. Um, so I think that’s good. But if you’re trying to increase diversity through an advisory border, Junior. But I would say Be very careful to make it not look like it is of less importance. And that’s why these people were put on that.

[00:48:54.37] spk_0:
Oh, yeah, right. Right. So all your yes, all your all the folks of color and other underrepresented groups are on the advisory board. Yeah, that’s well, that’s a sham. Alright, That’s right. Exactly. That’s inhumane. Alright. Yeah, I’m surprised you thought of that, Gene. You’re well. You see the good and the bad. All right, you’ve It’s not that you thought of it. You’ve seen it. You’ve seen it. I guess it’s It’s out there somewhere. All right. Thank you, Jeanne. Outstanding. Outstanding advice. Jeanne Takagi, our legal contributor. You’ll find them at nonprofit law blog dot com. You can find him at Columbia University if you’re a member of their student body in, uh, what is it? The nonprofit nonprofit management program at Columbia?

[00:49:01.07] spk_1:
Yep.

[00:49:07.17] spk_0:
Okay, so you’ll find him there. You also find him at neo law group dot com and you’ll find him at G T A K at G Tech. Thank you very much, Gene.

[00:49:12.87] spk_1:
Thanks, tony. Been a pleasure.

[00:50:05.17] spk_0:
My pleasure. As always. Thanks. Next week, I’m asking you to trust me. If you missed any part of this week’s show, I beseech you find it at tony-martignetti dot com. We’re sponsored by turn to communications, PR and content for nonprofits. Your story is their mission. Turn hyphen. Two dot c o. Creative producer is Claire Meyerhoff Shows Social Media is by Susan Chavez. Mark Silverman is our web guy, and this music is by Scott Stein. Thank you for that affirmation. Scotty, you’re with me next week for nonprofit radio. Big non profit ideas for the other 95% Go out and be great. Mhm