Archives for posts with tag: management

What’s wrong with restricted grants

November 30, 2014 //

I know a lot of people who’re starting up new nonprofits, and most don’t have any prior experience with fundraising. That was me!, back in 2007 when I took over the Wikimedia Foundation. And so, the purpose of this post is to share some of what I learned over the past eight years, both from my own experience and from talking with other EDs and with grantmakers. I’m focusing on restricted grants here because they’re the most obvious and common funding source for nonprofits, especially in their early stages of development.

Restricted grants can be great. Grantmaking institutions fund work that’s socially important, that’s coming out of organizations that may have no other access to funding, and that is often risky or experimental. They take chances on people and organizations with good ideas, who may not yet have a track record. That’s necessary and important.

But restricted grants also pose some specific problems for the organizations seeking them. This is well understood inside nonprofitland, but isn’t immediately obvious to people who’re new to it.

Here are the five main problems with restricted grants.

Restricted grants can be administratively burdensome. At the WMF, we actively sought out restricted grants for about two years, and afterwards accepted them only rarely. We had two rules of thumb: 1) We would only seek restricted grants from organizations we knew well and trusted to be good partners with us, and 2) We would only seek restricted grants from organizations that were roughly our size (by staff headcount) or smaller. Why? Because restricted grants can be a lot of work, particularly if the two organizations aren’t well aligned.

Big institutions have a big capacity to generate process: forms to fill out, procedures to follow, hoops to jump through. They have lots of staff time for meetings and calls and email exchanges. They operate at a slower pace than smaller orgs, and their processes are often inflexible. People who work at grantmaking institutions have a responsibility to be careful with their organization’s money, and want to feel like they’re adding value to the work the nonprofit is doing. Too often, this results in nonprofits feeling burdened by expensive process as they procure and report on grants: time that you want to spend achieving your mission, instead risks getting eaten up by grantmakers’ administrative requirements.

Restricted grants risk overwriting the nonprofit’s priorities with the grantmakers’ priorities. At the WMF, we didn’t accept grants for things we weren’t planning to do anyway. Every year we developed our plan, and then we would (sometimes, with funders we trusted) seek funding for specific components of it. With funders we trusted, we were happy to get their input on our priorities and our plans for executing them. But we weren’t interested in advancing grantmakers’ goals, except insofar as they overlapped with ours.

Too often, especially with young or small non-profits, I see the opposite.

If an organization is cash-strapped, all money looks good. But it’s not. Here’s a crude example. Let’s say the WMF knows it needs to focus its energy on mobile, and a funder is interested in creating physical spaces for Wikipedians to get together F2F for editing parties. In that context, agreeing with a funder to take money for the set-up of editing cafes would pose a distraction from the mobile work the WMF would need to be doing. An organization’s capacity and energies are always limited, and even grants that fully fund a new activity are necessarily drawing on executive and managerial attention, as well as the organization’s support functions (human resources, accounting, admin, legal, PR). If what a restricted grant funds isn’t a near-perfect fit with what the organization hopes to accomplish regardless of the funding, you risk your organization getting pulled off-track.

Restricted grants pull focus from core work. Most grantmakers want their money to accomplish something new. They’re inclined to see their grants as seed money, funding experiments and new activity. Most successful nonprofits though, have important core work that needs to get done. At the WMF for example that core work was the maintenance and continued availability of Wikipedia, the website, which meant stuff like hosting costs, costs of the Ops team, site security work and performance optimization, and lawyers to defend against censorship.

Because restricted grants are often aimed at funding new activity, nonprofits that depend on them are incentivized to continually launch new activities, and to abandon or only weakly support the ones that already exist. They develop a bias towards fragmentation, churn and divergence, at the expense of focus and excellence. An organization that funds itself solely or mainly through restricted grants risks starving its core.

Restricted grants pull the attention of the executive director. I am constantly recommending this excellent article by the nonprofit strategy consultancy Bridgespan, published in the Stanford Social Innovation Review. Its point is that the most effective and fastest-growing nonprofits focus their fundraising efforts on a single type of funder (e.g., crowdfunding, or foundations, or major donors). That’s counter-intuitive because most people reflexively assume that diversification=good: stable, low-risk, prudent. Those people, though, are wrong. What works for e.g. retirement savings, is not the same as what works for nonprofit revenue strategy.

Why? Because organizations need to focus: they can’t be good at everything, and that’s as true when it comes to fundraising as it is with everything else. It’s also true for the executive director. An executive director whose organization is dependent on restricted grants will find him or herself focused on grantmaking institutions, which generally means attending conferences, serving on juries and publicly positioning him or herself as a thought leader in the space in which they work. That’s not necessarily the best use of the ED’s time.

Restricted grants are typically more waterfall than agile. Here’s how grants typically work. The nonprofit writes up a proposal that presumes it understands what it wants to do and how it will do it. It includes a goal statement, a scope statement, usually some kind of theory of change, a set of deliverables, a budget, timeline, and measures of success. There is some back-and-forth with the funder, which may take a few weeks or many months, and once the proposal is approved, funding is released. By the time the project starts, it may be as much as an entire year since it was first conceived. As the plan is executed the organization will learn new things, and it’s often not clear how what’s been learned can or should affect the plan, or who has the ability to make or approve changes to it.

This is how we used to do software development and in a worst-case scenario it led to death march projects building products that nobody ended up wanting. That’s why we shifted from waterfall to agile: because you get a better, more-wanted product, faster and cheaper. It probably makes sense for grantmaking institutions to adapt their processes similarly, but I’m not aware of any who have yet done that. I don’t think it would be easy, or obvious, how to do it.

Upshot: If you’re a new nonprofit considering funding yourself via restricted grants, here’s my advice. Pick your funders carefully. Focus on ones whose goals have a large overlap with your own, and whose processes seem lightweight and smart. Aim to work with people who are willing to trust you, and who are careful with your time. Don’t look to foundations to set your priorities: figure out what you want to do, and then try to find a grantmaker who wants to support it.

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Categories Fundraising, Leadership, Nonprofits, Revenue

Why leadership development needs a revamp

September 21, 2014 //
10

For the past 15 years I’ve been a client for leadership development work both on my own behalf and on behalf of organizations I’ve led. I’ve used the industry a lot, and gotten tons of value out of it. That said, the world of work has been changing pretty dramatically, and I can’t honestly say I feel like leadership development is keeping pace.

When I first started getting leadership training, way back years ago, here are some of the messages I was given:

The boss should talk less and listen more. Bosses should practice empathy, and learn how to give calm, clear, actionable feedback rather than yelling or being punitive.

Not everything can be reduced to numbers and deliverables and milestones and targets: the human side matters too.

Bosses should practice some degree of self-disclosure and let themselves be vulnerable: that builds trust and healthy working relationships.

People should be encouraged to admit mistakes, to change their minds, and to constantly iterate towards better.

Bosses shouldn’t pretend to have all the answers: they should be receptive and open to the ideas of others regardless of their position in the formal hierarchy.

Transparency is generally good. If people don’t know what you’re thinking, they make up stuff that’s way worse than reality.

Those are good messages. They helped me think in a more explicit way about the practice of leadership, and gave me permission to be the kind of boss I’d like to think I’d have been anyway. But once you poke at them a little, it’s clear they’re built on weird assumptions.

I was a journalist in broadcast media, a totally non-command-and-control industry. I’d never even had a command-and-control boss. Roughly 50% of the people in senior roles in my organization were women, and women bosses are widely understood to be more inclusive and communicative than male ones. My then-organization was 85% unionized and the unions were pretty strong: when management wanted to exert its will, our most useful tools were influence and persuasion.

So why were our coaches and trainers putting so much energy into guiding us away from being autocratic jerks?

Eventually I concluded that the leadership development industry, built as it is on decades of studies and analysis and practice, probably generally has a bias to lag behind reality — meaning, it’s shaped not so much by what’s actually happening now, or might happen tomorrow, but by past experience. And therefore it implicitly, reflexively, assumes an old-school boss: a guy, maybe in his fifties, who’s smoking a cigar and barking out orders.

The trouble is that while that may have been the typical boss 50 years ago, with each passing day it’s less and less our reality. We just don’t work in command-and-control environments as much as we used to. And to the extent that leadership development is designed to fix the problems of autocratic jerks, it is limiting its ability to be useful for everybody else.

I live and work in the Bay Area, in media and tech. Everybody I know is experimenting with organizational design and leadership style, whether they’d say it explicitly or not. People are trying to figure out how flat their orgs can reasonably be, how to devolve power, how to maximize cohesion and buy-in and organizational agility. Gruff Shouty Boss is just not our failure mode.

Here’s the kind of thing people I know talk about.

  • How to, in decision-making, balance inclusivity against efficiency and speed.
  • How to balance an individual contributor’s sense of personal agency against the organization’s need for everyone to row (or bail) the boat together.
  • How to maintain leadership accountability while fostering broad ownership and responsibility throughout the organization.
  • How to have leadership be accessible to all levels of the organization, without drowning the execs or undermining middle management.
  • How to create a strong, shared work culture without accidentally turning into a monoculture that doesn’t tolerate people who don’t fit.
  • How to, in organizations that over-value harmony, ensure disagreements are openly expressed and worked through.
  • How to create an environment that enables the effectiveness of creative, talented people who have depression, ADD/ADHD and/or Asperger’s.
  • How to equip leaders from underrepresented groups to manage their imposter syndrome and to successfully handle subtle biases among their co-workers.
  • How to lead in a period of experimentation, when the boss can’t pretend to have all the answers.

These are the kinds of questions that leaders in the tech sector are facing today and, as software eats the world, they’ll increasingly be faced by leaders in every sector.

There are people working on figuring out this stuff — for example, I like Michael Lopp and Venkatesh Rao and Joel Spolsky, and I think boot camps and foo-type camps are useful too. But I feel like, in focusing on fixing the mistakes of the past, the LD/OD industry itself is erasing, rather than helping shape and define, new and emergent forms of leadership. That’s a huge missed opportunity.

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Categories Leadership

Why speaking for effect is a bad idea

September 4, 2010 //
6

I read a book recently called Authentic Conversations, which is essentially an argument for honesty at work. That may not sound too radical, but it actually is. I’ve managed people for more than a decade, and the book made me think about how much conventional management theory and training is designed to replace authenticity with calculation, and how damaging that can be.

The book opens with a great story, in which the publisher of a struggling newspaper is doing a newsroom walkaround. [1]

It’s tough times for newspapers, so his staff ask him lots of anxious questions — is the company okay, what’s he doing about the advertising slump, has he figured out the pension issue. He talks confidently about how things are going to be okay. There’s a plan. The board is optimistic. And so forth. The authors (who were with the publisher that day, presumably starting a consulting engagement), say he clearly felt he was doing good work – creating an atmosphere of calm and confidence, so that his staff could focus on doing their jobs well.

And I have to say, I have definitely been there. I’ve never lied to anyone who works for me, but I worked for a long time in a troubled industry, and I certainly expressed optimism more strongly than I felt it, many many many times, and for the same reason the poor publisher was probably doing it.

The twist to the story is that back in the guy’s office, the consultants rip into him and tell him what he did was horrible. They persuade him to call a special meeting and tell his staff he’d been lying — that the company is indeed in trouble, and that neither he nor anyone can give them the reassurance they want. And that he’s not their father, and isn’t responsible for their security or for their happiness.

The story ends triumphantly, with applause all around.

I’d be surprised if things actually played out that way, because I don’t think that people necessarily value truth that much. But I do think that even when people don’t want the truth, or aren’t comforted by it, they deserve it.

The authors go on to decry that they call “speaking for effect.” Which again struck me as pretty radical. As a young manager, I was trained –over and over again, explicitly and by modelled behaviour– to carefully manage my words and tone in order to create the response I wanted.

  • A mentor of mine was well-known for using silence to increase his authority. In big meetings, he’d be perfectly watchful, and would say nothing.  Throughout the meeting, the other participants would get more and more nervous, wondering what he was thinking. They’d start second-guessing themselves and poking holes in their own arguments. Eventually they’d start actively soliciting his opinion, and by the time he finally spoke, whatever he said carried enormous weight. [2]
  • Two friends of mine, who were also friends of each other and who ran competitive TV shows inside our organization, used to stage yelling matches in front of their newsroooms in which they’d argue over whose show warranted more resources from the shared services pool (like, edit suite time or PR support). They did it so their teams would feel valued and defended, and afterwards they’d go out for beer.
  • I had a boss who was famous for his terrible temper. He’d shout, hang up on people, send all-caps e-mails, and storm around the office slamming doors and throwing things. But his capacity for anger –and his reputation for it– was mostly calculated — he’d slam down the phone and start laughing.
  • A colleague was proud of her ability to shame her staff into doing better work. Her magic words, she told me, were “I am disappointed in you.” I once watched her role-play a performance assessment, and I found her acting ability pretty remarkable. She’d sigh, put down her pencil, make prolonged eye contact, and say something like “Jim. You’re really letting down the team.”
  • And then there’s a very common use of speaking for effect: the deliberate expression of trivial agreement. This is particularly done, I think, in big, old companies where responsibility is diffused and group buy-in is critical. In those contexts, expressing trivial agreement (“sounds interesting!”, “good point!”, “great feedback!”) is the small coin of the realm. If you do it well, it costs you nothing, wins you allies, and puts money in the favour bank.

I’m not trying to argue that all these tactics are necessarily bad. It’s obviously true that managers need to be in control of their emotions, and need to be conscious of their effects on others. Undisciplined and reckless bosses can cause all kinds of problems.

But I think a little calculation goes a long way. And I also think there’s a cost, which sometimes goes unnoticed.  People who are very studied, whose words and responses are calculated for effect more so than being spontaneous and natural — they’re behaving inauthentically.  To a degree, they’re treating other people as means to an end rather than as human beings, and their behaviour also suggests that their minds are totally made up: they are not actually open to new information, they’ve figured out the correct end state, and the only work that needs to be done is persuading you to go there. Which means they run the risk that the people around them will learn over time to distrust them. It also means they miss the opportunity to engage authentically — to have real conversations, to stretch themselves, to learn.

[1] I don’t have the book with me, so I may have butchered specifics a little. But the gist of the story’s accurate.
[2] Warning to women who might consider trying this tactic: it doesn’t work for women. Truly. I liked a lot of things about that guy, and I tried modelling my own behaviour on his for a while, but it didn’t take long to realize that a silent woman is perceived totally differently from a silent man. Suffice to say that a silent woman is easily mistaken for a person without authority, regardless of how much she may actually have. Too bad :-(

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Categories Leadership, Workplace Culture