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ASU Lodestar Center Blog

Research and recommendations for effective, day-to-day nonprofit practice from ASU faculty, staff, students, and the nonprofit and philanthropic community.

Monday, May 8, 2017

Governing boards are the backbone of many nonprofit organizations. When a board is effectively fulfilling its responsibilities, an organization will be more efficient and more successful. According to a study of 202 organizations in the Los Angeles and Phoenix areas, organizations that reported higher board effectiveness also reported higher perceived organizational success (Brown, 2005). 

Despite the importance of governing boards in the success of an organization, nonprofits consistently struggle to create an effective and engaged board. While most nonprofit directors report being satisfied with their board, in a survey done by researchers Larcker, Donatiello, Meehan & Tayan, (2015), nearly all nonprofit participants also reported some sort of serious governance-related problem within the previous calendar year that has negatively affected their organization. Shockingly, two-thirds of organizations surveyed are not confident in the board’s experience level and half are unhappy with the board’s engagement level. 

Researchers Chait, Holland and Taylor (1991) identified six characteristics of strong board leadership:

  1. Contextual Dimension - The board understands the organization’s mission, goals and values. They make decisions based on their understanding of the organization.
  2. Educational Dimension - The board takes care in ensuring all stakeholders understand the boards role and…
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Thursday, April 27, 2017

“Huff, puff, puff” says “The Little Engine That Could...”

Do you remember reading this classic children's storybook as a kid? This story is a life lesson about a little engine that was lacking confidence in its ability to successfully climb up a steep hill. After all, the risks facing the little engine were unmanageable, or were they? The story relates how with fortified determination and relentless effort, “The Little Engine That Could” faced the risks head-on and accomplished this feat. It's a lesson for nonprofits not to give up on their passionate and committed pursuits in fulfilling their mission. The lesson of this classic children's story can also carry the heading of  “The Little Board Committee That Could...” for the sake of nonprofit leaders and managers. How can nonprofit board committees manage risks?

Each little board committee, similar to little engines, will undertake complex matters of its nonprofit. Applicants who accept a position on a nonprofit's general board will have been selected their skills, expertise, knowledge, and a passion for the mission of the nonprofit.  For example, a retiree may apply for a board position with a nonprofit that trains dogs to be service dogs to disabled persons. The application of this retiree shows that he has accounting and audit experience, along with some insight on insurable risk. The nonprofit would most likely ask him to accept a position on the board with the intention of placing…

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Tuesday, April 18, 2017

It is no secret that nonprofits struggle to make ends meet when it comes to costs that cannot be directly attributed to a specific program. These costs, referred to as “indirect” expenses, “general and administrative (G&A)” costs or “overhead,” include such outlays as salaries and employer related expenses, utilities, rent, computers, and information technology (IT). Many funders, including individual donors, are averse to funding these indirect costs, preferring to support direct program expenses: food for hungry people, medical care for the sick, and childcare for working parents. However, these services could not be delivered if it were not for the trucks that move the food, the computers used for patient records, and the electricity that powers lights and heating at the daycare center.

A study cited by Nobel (2015) showed that individual donors are averse to funding organizations with high overhead rates. “The higher the level of overhead associated with a donation to charity…the lower the percentage of participants who chose to donate to it.” Grantor agencies also eschew funding these necessary expenses. As reported by Knowlton (2016), “…only 7 percent of nonprofits report that foundations always cover the full cost of projects they fund.”

Building the infrastructure needed to properly support an organization as a whole is vital to the entity’s sustainability. In their 2007 Action Guide, Grantmakers for Effective…

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Monday, April 10, 2017

To borrow from the song: “Art is a many splendored thing.” Difficult to objectify and quantify. Art is also very subjective. Again borrowing: “One man’s trash is another man’s art.” So, what is the value of art?

Recently, I attended a conference on arts education. At the plenary panel discussion, a woman from the audience, an arts teacher, asked, plaintively, “Why do we have to justify the arts in school? Math doesn’t have to be justified. Science doesn’t.” No one on the panel had a decent answer for her. Her question stayed with me for a long time. I think we have been telling the wrong story. Or more accurately, we have been telling the story wrong.

Impact evaluation in the arts, and its broader use for leaders of any nonprofit, can drive results. Qualitative yet empirically-based impact evaluation bridges the gap left by other evaluative methods providing the context of mission fulfillment for a nonprofit organization. Armed with such data describing the value of the arts for its participants, arts leaders can change the perception that art is merely a luxury to show that, instead, it is a vital necessity to human beings. Only within the last decade has research on the efficacy of evaluating the effects of art on audiences been realized (Brown & Novak, 2013). 

Telling the wrong story

For the past forty or so years, to ‘prove’ the value of the arts, arts leaders, funders and…

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Monday, February 27, 2017

A critical issue in the nonprofit sector is staff turnover, often referred to as the nonprofit turnover treadmill. 

According to a survey by Landles-Cobb, Kramer, and Smith Milway (2015), the second most cited reason for staff turnover, behind low compensation, was lack of leadership development and growth opportunity. Experts say a lack of opportunities for young and ambitious workers to advance creates frustration and disillusionment with their career prospects. This problem is compounded by nonprofits’ lack of investment in manager training, leaving nonprofit organizations unprepared for the inevitable succession of leadership (Koenig, 2016). This low promotion rate did not vary by nonprofit size. Larger nonprofit organizations, which have more opportunities to promote from within, are not doing so. This lack of investment in the organization’s future leadership exacerbates the turnover treadmill at a time when nonprofits need experienced leaders more than ever (Landles-Cobb, Kramer, Smith Milway, 2015). 

Selden and Sowa (2015) found turnover in nonprofits to present a significant cost, a reduction in performance, and a threat to their long-term sustainability. When nonprofits fail to invest in their staff, one demonstrable negative impact is high voluntary turnover. Even when employees feel a strong connection to the mission, staff may not stay with that nonprofit if they feel their organization does not invest in their development as a…

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ASU Lodestar Center Blog