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IN THIS SUMMARY
In At the Crossroads, Philip Coltoff examines how not-for-profit organizations can address today’s critical issues in ways that will help redefine their missions and expand their visions. Not-for-profits, because of their size, budgets, and number of employees, are considered the third sector in American life, joined by the for-profit free enterprise system and government. Due to recent social and economical crises, the not-for-profit industry is struggling to provide for its growing number of clients. Coltoff examines the full scope of issues that must be addressed for the not-for-profit industry to grow, meet its obligations, and secure its place in the American social system.
AT THE CROSSROADS Not-For-Profit Leadership Strategies for Executives and Boards AUTHORS: Philip Coltoff PUBLISHER: John Wiley & Sons, Inc. DATE OF PUBLICATION: 2010 188 pages
FEATURES OF THE BOOK At the Crossroads is a critical resource for every not-for-profit leader. Philip Coltoff shares the insights he has gained from nearly 25 years of leadership at The Children’s Aid Society of New York City.
THE BIG IDEA Philip Coltoff examines how not-for-profit organizations can address today’s critical issues in ways that will help redefine their missions and expand their visions.
INTRODUCTION In At the Crossroads, Philip Coltoff examines how not-for-profit organizations can address today’s critical issues in ways that will help redefine their missions and expand their visions. Not-for-profits, because of their size, budgets, and number of employees, are considered the third sector in American life, joined by the for-profit free enterprise system and government. Due to recent social and economical crises, the not-for-profit industry is struggling to provide for its growing number of clients.
GOVERNANCE AND ADMINISTRATION Administrative structure has always played a major role in not-for-profit organizations. However, many officials of not-for-profits are often uninformed as to the history of the not-for-profit sector and even their own agencies. They should be knowledgeable about the structure of the board of directors, board member selection processes, codes of conduct, and the legal and corporate history and mission of their organization.
GOVERNANCE AND ADMINISTRATION Sarbanes-Oxley and Accountability Many changes have occurred with respect to administrative accountability over the past five years, largely due to the Sarbanes-Oxley (SOX) law. SOX, which was largely directed toward publicly held for-profit corporations, raised the bar for oversight, transparency, and accountability in the not-for-profit sector as well. The effect of SOX was so immediate that an entire industry of consultants emerged to assist agencies in improving their accountability mechanisms.
GOVERNANCE AND ADMINISTRATION Organizational Culture The overarching climate of an institution is also crucial to successful governance and administration. Not-for-profits should establish a “culture of work” that starts with the CEO and board and is reinforced at all levels of the organization. An organization’s culture consists of many elements, including mission, history, tradition, values, rules, and regulations. The culture should go beyond the written word. It should be lived every day by every individual in the agency.
ROLES AND RESPONSIBILITIES The need for not-for-profit organizations has skyrocketed during the past several years. When the financial markets tanked, social agencies were squeezed between lesser resources and greater need. Organizations that depended on private contributions were hurt because people tend to donate less when they believe they are poorer. Even though many of these individuals were still quite wealthy, when the financial meltdown hit they immediately became focused on reduction. According to Coltoff, some not-for-profits have experienced as much as a 30 to 40 percent loss in contributions since the recent financial meltdown.
ROLES AND RESPONSIBILITIES Foundation and Government Grants Coltoff warns organizations not to depend on foundation and government grants in times of economic downturn. Faulty endowment or investment strategies by charitable agencies and foundations often contribute to a not-for-profit’s financial crisis. Most foundations invest their portfolios in the financial markets. As many have realized with greater clarity during this period, the results from such ventures can range from poor to catastrophic.
ROLES AND RESPONSIBILITIES Fundraising Unfortunately, the not-for-profit sector has no Federal Reserve Bank to come to its aid in times of economic crisis. Agencies must sustain their services in spite of this harsh reality. In times when foundation and government grants are failing, Coltoff suggests that agencies grow their fundraising.
ROLES AND RESPONSIBILITIES Working with the Board and Staff Board understanding of the financial crisis and the needs of the clients must be secured during difficult times. Key agency personnel should take the lead with respect to finding new sources of revenue. The board may need to use additional reserve or endowment funds or engage in responsible borrowing to meet the crisis. Agency executives should be aggressive and stay ahead of the curve when reaching out to private givers or governmental authorities.
ROLES AND RESPONSIBILITIES Society’s Safety Net In this national financial crisis, the not-for-profit sector serves as a safety net for millions of people. Beyond public assistance, food stamps, housing allowances, and childcare provisions, not-for-profit agencies offer a renewed sense that those who are least able to provide for themselves are not invisible. Coltoff points out that times of crisis often create new opportunities for growth. He encourages agencies to reassess and broaden their mission in order to comprehensively serve society’s present needs.
SERVING THE ENTIRE COMMUNITY The not-for-profit sector must uphold their responsibility to society by restoring and protecting the quality of life for all individuals in need. Often, the location and demographic that an agency serves affects their funding, which causes them to limit the scope of their mission. At times the funding may be so specific that it is neither flexible nor fungible.
SERVING THE ENTIRE COMMUNITY Broadening the Service Base In spite of limited funding sources, most agencies have redefined their missions to include a broader mandate. For example, the Boys Clubs of America chose to become the Boys and Girls Clubs of America, eliminating discrimination within their organization and expanding their mission. Coltoff urges not-for-profits to reorient their missions to cope with present societal needs in a more fundamental, integrated, and comprehensive way. Signs show that many organizations are moving in this direction.
SERVING THE ENTIRE COMMUNITY One-Stop Shopping Centers The social agency network is already considerably more comprehensive than it was in the past. In fact, it is so large that it is often referred to as the third sector with private industry and government being the first two. However, Coltoff states that there is still much room for improvement in the not-for-profit sector, especially when it comes to serving the entire community. In order for agencies to continue providing comprehensive services, “one-stop shopping” centers, such as community centers and settlement houses, should be more available nationwide.
THE PUBLIC IMAGE OF THE NOT-FOR-PROFIT In order for organizations to meet the needs of the entire community, they must build a strong reputation with the public and acquire proper funding . Public image plays a critical role in securing donations, public support, and community sanction for an agency. Community attention and recognition are extremely important for the effective operation of not-for-profits because they directly influence an agency’s funding, external relations, and overall growth as an organization. Unfortunately, most agencies have limited budgets and do not leave room for public relations, research and development (R&D), or outreach.
THE SOCIAL WORK PROFESSIONAL–MANAGER AND CEO Proper administrative and managerial skills are more important to CEOs of the social service sector than ever before. The origins of many not-for-profit organizations lie in the Elizabethan Poor Laws, which focused on services only for the “ deserving poor .” Many of today’s clients–substance abusers, domestic violence perpetrators and victims, school dropouts, and undocumented immigrants–would have been considered “undeserving poor” in the past.
PROGRAMS AND PRIORITIES Vision, innovation, strong leadership, and appropriate risk taking are key to an agency’s survival. Coltoff reminds leaders that many opportunities for expanding their agency’s mission can be found in times of crisis. He urges agency leaders to overcome the fear of change and move forward by expanding their vision.
PUBLIC POLICY AND GOVERNMENT RELATIONS Not-for-profit executives should also make sure their organization maintains a responsible, reliable, fiscally prudent, honest and transparent public image. Not-for-profits that engage with governmental agencies carry an additional burden because some may function as both a critic of governmental policy and a supporter of governmental initiatives. Organizations that receive government funds need to be responsible and accountable while still maintaining autonomy and independence.
PUBLIC POLICY AND GOVERNMENT RELATIONS Bridging the Gap between Independence and Advocacy Some organizations have chosen not to accept government funds for fear of losing the right to be critical of government policy. Many not-for-profit executives misunderstand the law and believe that if their organization is tax exempt it cannot be an advocate for a political cause. However, as long as an organization does not support specific candidates or politicize its position, it can serve as an advocate.
THE BOARD AND THE CEO The CEO and the top managers (the board) are the principal players in delivering on a not-for-profit organization’s purposes and promises. The governing board is the organization’s most important volunteer entity. Their main responsibility is to hire the CEO and evaluate the performances of everyone in the organization, including their own. The board must also understand the agency’s legal and moral responsibilities and establish the legal standing that allows for its tax-exempt status.
RAISING MONEY, MANAGING BUDGETS, BUILDING RELATIONSHIPS, AND THINKING AHEAD Raising money for today’s not-for-profits is a more complex process than in the past. Fundraising efforts should be actively connected to the program’s mission, vision, and services in order to be successful. Boards often need to hire a professional fundraiser, also called the “director of development.” The development director’s job combines development, public relations, public information, and website development. They should be an active member of the management team and report directly to the CEO.
SUCCESSION AND RETIREMENT In closing, Coltoff addresses the process of succession and retirement in the not-for-profit world. Organizations should remember that succession of leadership is an essential part of organizational planning and development. Succession planning involves a careful ongoing process of interviews, reference checking, consideration of personal characteristics, and assessing the candidate’s identification with the mission and function of the organization.
SUCCESSION AND RETIREMENT Coltoff reminds executives in the not-for-profit world to always take care of their own health. Many become so consumed with the job at hand that they neglect good health practices such as eating well, sleeping well, and engaging in social and cultural activities outside of work. Coltoff suggests that CEOs who make the effort to relax, take time off, and engage in family activities are better able to adjust to the new lifestyle after they step down.
SUCCESSION AND RETIREMENT He offers valuable advice for new leaders as well. Their expectations should be realistic and tailored to the time required to effectively understand the organization and its culture, reputation, and programmatic services. New leaders must give themselves time to learn how the organization works, and build a team of bright, able, creative, and challenging people whom they trust. Although they have a daunting job ahead of them, by following Coltoff’s advice, new executives in the social services world can master the complex art of not-for-profit leadership, inspire the people around them, and achieve major transformative change for society.
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