If you’re a nonprofit who has been wondering how to adjust your plans with so much uncertainty, you DEFINITELY want to listen to this interview.
Recently I decided that I couldn’t keep this incredible person to myself anymore, I just HAD to share Erik Anderson of the Healthy Nonprofit with you. When I first talked with him earlier this year, I realized that he had something that I lacked-namely, a deep understanding of organizational development and planning and how to create systems to help your nonprofit succeed.
His perspective is informed by a wide ranging background. Erik Anderson works with nonprofits all over the country-in West Texas, in Illinois, in Indiana, in Florida, and a lot of midwestern states. He specifically usually works with Boys and Girls clubs. He is a former Executive Director for a Boys and Girls Club. He also has two degrees in Urban Planning. He loves to plan, and he loves to help other people make plans.
Erik Anderson will be teaching you how to make contingency or scenario plans at the Nonprofit Leadership Summit. I’m particularly excited to hear his session, as Erik knows so many ways to plan that can benefit us now, with uncertainty in government funding affecting nearly every area of the nonprofit sector.
In this video I got so excited that I also showed off my HUGE biceps-so… stay tuned for that! hahaha. Plus some serious raise the roof action later on in the video-because I agree with him so wholeheartedly.
Watch this interview (or listen) and learn:
–What effects are you seeing on nonprofits right now?
–If you have a government contract or grant-what’s the problem?
–How are nonprofits coping with these changes?
–Are you seeing nonprofits adjusting their plans, and if so, how so?
–What can we do if our plans are no longer valid? If too much has changed? What’s the solution?
–What should nonprofits focus on?
–Why should we get swole for the revolution?
–What should we be focusing our fundraising on, NOW?
If you want to learn how to depend less on government funding, if you want to learn how to get a broader base of support, and if you want to learn how to PLAN for different scenarios that you might encounter in the next several years, then you DEFINITELY want to come to this session with Erik Anderson at the Nonprofit Leadership Summit.
And Erik Anderson is one of 10+ presenters at the Nonprofit Leadership Summit, all of whom want to help you thrive during this uncertain time.
Join us at the Nonprofit Leadership Summit this September to learn from Erik Anderson on how you can adjust your plans so no matter WHAT happens, you are able to respond wisely to anything life throws your way.
Here’s the transcript!
All right, everybody. Welcome to the latest interview. My name is Mazarine Treyz with Wild Woman Fundraising, and it is my honor and privilege to introduce Erik Anderson of the Healthy Nonprofit. Erik, could you tell everybody a little bit more about you?
EA: Yeah, sure. Sure, I’m happy to. So I have more than 20 years of experience in nonprofits, and I started right out of college. My first job was working at a boys and girls club as a unit director. So it was providing direct service to kids after school, to children who needed us most. I detoured out of the fundraising field and I went and ran a small little hometown newspaper in a small community in the middle of Central Illinois because I couldn’t feed myself or my family on a nonprofit’s salary, which you’ve written a lot about, Mazarine. Boy, you hit the nail on the head.
But I missed nonprofits so much that I came back. I moved back to the Chicago suburbs and I went to work for the Boy Scouts. I was a district executive in that capacity. I left there and came back to the Boys and Girls Club movement. I was an executive director in the town that I still live in, Elgin, Illinois. Go, Elgin. Yay! I did that for six years and I did a lot of fundraising. We were a small organization and when I left, we were getting bigger and we were running a capital campaign and we were building things. It was very exciting.
I ended up working at the national office next and I went to work as an internal consultant at Boys and Girls Clubs of America where I did a lot of fundraising work with local affiliates around the Midwest region and I also did a lot of organizational development work, right? So that involves questions of structure and people and culture and systems and processes and direction setting and planning and all that kind of stuff, as it relates to board development and resource development and just great organizational stuff.
In 2011, I spun off and I created my own consulting practice called the Healthy Nonprofit. So now I work with more than just Boys and Girls Clubs, even though they’re still a big, big part of my practice. But I work with a lot of organizations around capital campaigns, annual campaigns and resource development. Still a lot of organizational development work, staff structure, board and organizational structure, strategic planning and whatnot. I was just telling my executive coach the other day that my practice is kind of like going to a buffet.
I guess I love buffets because I always have such a hard time ordering off the menu and making choices. But I like to do a little bit of all sorts of things with nonprofit organizations. It’s truly a passion. Thanks for asking.
MT: Well, the thread that I see from everything that you said is that you’re really good at organizational coordination and planning.
EA: Okay, sure.
MT: That’s what I hear. But I feel very privileged to chat with you because usually I chat with people whose main focus is fundraising. What I see about you is that you have this whole broad spectrum of experience that helps people connect the dots on a leadership level to how they can be most effective throughout the organization.
EA: Sure, absolutely.
MT: That’s why it’s Healthy Nonprofit, right? Instead of…
EA: That’s right.
MT: So anyway, let’s get started with our interview. So our first question is, what effects are you seeing on nonprofits right now in this political and economic climate?
EA: So I’ve taken some notes, and you’re going to see me looking down at my notes a little bit because there’s just a lot of stuff I really wanted to cover. But with this first question, you know, there’s two big parts to your question. One is to do with the effects and then the other has to do with economic climate, and I think I first wanted to kind of talk a little bit about the economic climate because if you tune into any of those big news stations like CNN or MSNBC or FOX or whatever you like to listen to, that’s okay.
But on a lot of those stations, they talk about how we live in an interesting period of time because we don’t seem to be one cohesive country, right? I mean, we live in two Americas is what I’ve heard a lot of these political commentary people talk about. Putting the politics aside, I’m finding that we do indeed live in two different Americas from a nonprofit perspective. So your question is, what are you seeing right now? And it depends on where I am in the country.
So in the last 12 to 24 months, I’ve done work right here in my home state of Illinois which is a catastrophe when it comes to the state budget crisis. I’ve done a lot of work in Indiana and Iowa and South Dakota. I’ve spent indescribable amounts of time in West Texas, in New Mexico. I’ve done a little bit of work in Florida. So I’m covering the country and working with all sort of different nonprofits. Where you live in the country kind of depends on how you answer that question, and the economic recovery that happened after the great recession didn’t happen uniformly across the country. It happened in pockets.
I think I even saw in one of those news shows that the economic recovery that’s been driven is primarily focused on urban areas that are located along north south interstate corridors. I mean, don’t ask me how and why, because I’m not an economist. But I’m beginning to find that that is indeed true. If you live in an area that is dependent on an economic subsector like oil and gas, like in West Texas and New Mexico, Saudi Arabia hasn’t turned off the pump. So prices haven’t continued to go up. They’ve gone down, and so those areas, they’re feeling the pinch right now.
In Illinois, nonprofits who are greatly dependent on government funding, state funding, federal funding. They are just gasping for breath right now. Illinois hasn’t had a state budget in two years. We just passed it, only because the market bond raters told Illinois if you don’t finally do it now, we’re going to rate you as junk bond status which is going to cost you so much money. Crazy, it’s just crazy. However, even within those areas like West Texas and New Mexico and Illinois where the economy is not pretty, those organizations that have been investing in individual giving for years and years, they’re doing okay.
Those that have continued to rely on government funding are just struggling. It reminds me of Aesop’s story of the ant and the grasshopper, right? Where the grasshopper live for today, and didn’t store any food. The ant was very diligent and was storing away food. That’s kind of the story of those organizations that have been taking a lot of grant money from the government, specifically, and those who have been working hard on building relationships with individuals. Ant, grasshopper. And as they say in – what’s that show on HBO? You’re going to have to help me here because I don’t have a lot of time to watch TV.
It’s Game of Thrones. Is that it? Winter is coming I think is the big expression in that show. Winter is coming. Indeed, in some places like Illinois, winter is coming and hopefully you’ve been storing some food. With regards to economic climate, it’s strange. I don’t know if we can draw a lot of conclusions from trends. I mean, for example, GDP for our country is at about $18.5 trillion and it’s trending up. Unemployment right now nationwide is at about 4.3% and it is trending down. You think, well, these are great things, right? The stock market, since electing President Trump, has been trending up. It’s up 10% – 15% which would also seem to be good.
However, there’s a lot of economic angst out there that I’m sensing. The angst, I think, is just coming from uncertainty. That is like the great de-equalizer. Is that such a word? But it’s the thing that causes weird things to happen. Even when there’s good economic growth, mostly throughout the country, if there’s uncertainty and if there’s chaos, people do strange things. They start hoarding money. They stop making donations. We’re just living in very uncertain, chaotic times. I think we need to, as a nonprofit sector, make an adjustment.
So what I’m seeing is people are doing strange things. I’ll keep talking about those strange things as we go through your interview guide, as it relates to planning or philanthropy. It’s just too hard to generalize with regards to the effects. I hope that answers your question.
MT: Yeah, it does. I mean, we can’t actually blame nonprofits for wanting to get government contracts and grants because government used to take care of these services. Then they just sort of passed it off to nonprofits. So if people who are listening are depending on that, we’re not at all blaming you. But we are trying to say you need to have multiple streams of income coming in to be sustainable because who knows what’s going to happen at the federal level? Which trickles down to the state, city and county.
EA: That’s exactly right. Our missions call upon us to take advantage of any opportunity that will benefit our clients. So please don’t misunderstand what I’m saying. Those government grant opportunities were things that you needed to take advantage of. But if you have indeed been taking advantage of them and not planning for today, you’re going to have some challenges, which is okay. We can take care of those things today. We just need to focus on taking care of those things. Totally.
MT: So my notes are over here. So how are nonprofits coping with these changes that are happening?
EA: I’m seeing three big things, if I can just generalize. There’s probably many more things going on, but the three biggies that I’m seeing, and I’m personally involved, sleeves rolled up, working on the front line with many different nonprofits. One is there’s a lot of cuts happening out there, especially with government contracts. That is resulting in a reduction in services. That’s one thing that I’m seeing happening a lot, especially with the funding freeze going on and limited dollars available. Then even if it’s just not unavailable, the uncertainty of will it be available or won’t it be available, or I read about that in the newspaper. But they haven’t passed the budget. So it may make the budget. It may not make the budget.
The uncertainty is crazy. So it’s causing cuts. It’s causing belt tightening. It’s causing a reduction in services. That’s one thing I’m seeing. The second thing I’m seeing is what Dan Pallotta has characterized in his books and his TED Talk and all the fabulous things that Dan has done, but he refers to it as the nonprofit starvation cycle. So sometimes those cuts are not happening in the area of like we need to close this facility or reduce this service. It is we’re cutting into our organizational muscle, right? In order to not cut into mission focused activities like services or whatever our nonprofit mission calls us to do.
That will have not necessarily an immediate effect, but it will have a futuristic effect that could be very dangerous to the life of some nonprofits. I’m seeing a lot of that happening right now. We can’t afford the fundraising professional so let’s lay them off. Or oops, we’ve got to contract and get rid of the director of operations, and now rather than streamlining our organizational chart, we have more direct reports going to the CEO which are causing more chaos and less time to spend with donors and with board members. That has a rippling effect throughout the entire organization.
The third big thing I’m seeing happening is mergers. I’m currently working on one right now and I’m beginning to see them pop up with more and more and more frequency. Now, I know many people are allergic to the M word. It is a frightening word because some people equate merger with death, right? I’m going to go away. That’s not necessarily the case, and I think what’s happened is there was a lot of chatter about merger immediately after the great recession and people got really nervous about it. But the great recession ended, at least according to the commerce department and the Federal Reserve. It ended back in like 2009.
So do the math. That was eight years ago. So I think over this eight year period, there has been a getting used to this merger word and an understanding that merger doesn’t necessarily mean death. There’s actually a spectrum, right, of merger activities that ranges all the way from collaborations and joint ventures to managed service organizations, to oh, parent organizations, both [unintelligible 00:13:18], all the way to the far end of the right spectrum which is merger consolidation.
Merger doesn’t necessarily mean it’s a solution for all things, I mean, but something on the spectrum is worth looking at. I think there’s been an increased comfortability in the sector with that kind of thinking. I’m starting to see it more and more, especially in the last three or four years. I’m getting more and more involved in it. But those three things. Number one is in service reductions and budget cuts. Number two, it has been this focusing on cuts but with like the starvation cycle with cutting our capacity, cutting our operations, but not from a mission perspective. From an administrative perspective. The third is this merger spectrum. Those are the three big things I’m starting to see.
MT: Yes. I think more nonprofits should think about the M word, because so many of us, at least here in Portland where I live, are so concentrated on our own little fiefdoms that we can’t see the bigger picture for the people that we serve. It’s unfortunate. When I was working full time at a domestic violence shelter, that was one of the things that came up is that we were taking some government grant money that was given to other similar service area nonprofits in other parts of the state before. My boss wanted to hoard it for our organization.
What would have been far, far better would be to have us all merge and just provide a better continuum of services for the domestic violence survivors. But everybody has our little fiefdoms. I have another nonprofit here that helps transgender kids, and they’re one of the few in this country. The other organizations in town that are way bigger could easily fold their programs into what they do and it would not be mission creep.
But everybody’s got their little fiefdoms. It’s frustrating to watch. So I hope this trend does continue, even if it does mean the “death” of some nonprofits.
EA: Sure. Yeah, I think it’s important that we understand that we’re mission focused people. If consolidation of some way, shape, or form with other organizations means that we could provide better services or sustainable services to those that we serve, that’s really the first and only consideration.
MT: That should be it. That should be the number one thing. But instead, it’s ego and it’s I’m going to lose control or whatever.
EA: It can be. It can be.
MT: Sorry. My computer locked up. So are you seeing nonprofits adjusting their plans? If so, how so?
EA: Yes. So tricky question. When I looked at this question, I focused immediately on the word plans. I kind of jotted three notes here. Yes, I am seeing an adjustment in plans over the last, let’s say eight years, but especially in like the last 12 to 18 months that we’ve seen this political hiccup. The first thing I’ve seen a lot of nonprofits do is they’ve stopped planning. That’s been an adjustment. That doesn’t surprise me. I do a lot of planning. I got two degrees in planning. I didn’t mention that there in the intro.
When things become chaotic, it’s a natural human response, I think, to not want to plan. Because what if I do all this planning? I put time, energy, effort, money. I put volunteer hours into it. Everything changes in like 24 hours. I’m being facetious, but I mean, what if everything changes in six months? Then what? Isn’t that wasted time? So there’s a lot of organizations that have stopped planning or they’ve set their plan aside. They’ve said, well, this doesn’t feel right anymore. So we’re just going to hit the pause button and kind of live in real time, so to speak. I’m seeing a lot of that.
I find that dangerous, but I’m a planner. So I’m a bit biased.
MT: Me too. Me too.
EA: The solution here – and we can talk more about it in future questions, but the solution isn’t to stop planning or to stop living according to a plan that you put together 18 or 24 months ago because you don’t think that it’s applicable anymore. The solution is twofold. Number one is if you fear that your plan is not applicable or parts of it aren’t applicable, don’t treat it like dried cement. Plans are not meant to be set.
Go back and make some revisions. Make some adjustments. You’re not going to be punished. You’re not going to hell because you didn’t live according to the plan. Number two is if your plan is expiring, don’t put off planning. Just choose the right planning model. So there’s all sorts of different planning models that you can use. You can use a goals based or a vision based planning model. You can use an alignment planning model. You can use an issues planning model. You can use an organic planning model or a real time planning model, or our scenario planning model. Choose the right model for the right current state, the current state of the environment outside of your organization.
You’ll get better results and you’ll feel better about the exercise. You’ll be better prepared to meet the upcoming challenges. But to just not plan and say we’re going to kind of hang loose for a bit. It’s truly a recipe for disaster. But I’m seeing that happening a lot.
MT: Gosh, that’s so fascinating. Wow. Usually what I hear is nonprofits are just not planning, full stop. Then saying, why aren’t we hitting our goals? If we had them in the first place. So what would you suggest a nonprofit leader focus on in this time of change?
EA: There’s three biggies. The first thing, that I would think that most nonprofits need to focus on, not to go back to fundraising. But they need to focus on relationship building. They need to focus on stewardship, because regardless of whether times are good or times are bad, your donors are part of your family. So I’m thinking back to a very personal example. It was 2008. I had come from a long line of union electricians in Chicago.
My brother is, I think, fourth generation. Same local, IBEW Local 134. My brother lost his job. I mean, the construction industry kind of cratered. We didn’t know if there was going to be a tomorrow. I mean, the stock market was crashing. Godzilla was coming, right? There were layoffs all throughout the construction industry. I remember my brother called me. He was a little concerned but he was optimistic. As a family member, I said let me know how I can help. During times of chaos and times of upheaval and times of just uncertainty, we don’t turn our backs on each other. We come closer.
So Penelope Burke talks about donor centered fundraising and she says there’s three big things you’ve got to do. I would suggest these are three big things that you need to do in the area of stewardship. Number one, you need to continue to express gratitude. So these folks are part of your family and you should be grateful that they’re part of your family. They’re writing checks. They’re giving you time, energy, effort and advocacy. Thank them. Thank them often and thank them sincerely and genuinely and find different ways to do it in a personal way.
Second thing, you need to continue to show people that you are doing what you said you’re going to do with their money. You went to them and made a promise. You said hey, we need X, Y or Z because we want to do A, B, or C. Go show them that you’re doing A, B, and C. Thirdly, and most importantly, you need to show them that there’s magic happening because of their gift. There’s community impact. There’s outcome. Show them the results, the return on investment if you want to use a business term. Show them the good things that have happened because they have made an investment in your mission.
I would do those things. Additionally, during this time, plus the second big thing that I would do is I would start investing in capacity building. Grow your organization’s muscles. Fight against that nonprofit starvation cycle that Dan Pallotta talks so eloquently about in his books and TED Talks. What does that mean? It’s going to mean different things for all of you, for all the different organizations out there. For some of you, it means we’re going to try to build a system or a process where we’re going to talk more and better with our donors. For others of you, it’s going to be we’re going to develop a development office. We’ve always wanted to add a grant writer to the staff, or we’ve always wanted to add a special event person to the staff, or oh, we’re really special event heavy but we’ve always wanted to get into individual giving and annual campaigns.
True philanthropy like major gifts. Maybe we’re going to add the position or maybe we’re going to do some planning around how we’re going to do that once the sun comes out and shines again in the nonprofit community. Maybe we’ve always wanted to kind of broaden out our board. Invest in capacity building. Invest your time. Invest your resources. Invest your money. Build those muscles. Now is the time to build muscles. Exactly. Once the sun comes out again, you’ll have those muscles to go run that marathon and do all those amazing things that you have always wanted to do. So invest time now.
Then finally, the last thing is invest in planning. Those who don’t have a plan right now are planning to fail, as that old cliché kind of goes. Now is the time to invest in some planning. I think scenario planning, that particular model. I’m a little biased because that’s my session at your upcoming conference. But I think that’s a great model to kind of seize upon and do a little bit of planning on. What happens if this happens or that happens? What will be our response and what triggers should we look at? I’m very excited about my session coming up at your conference.
MT: I am too. I am too. No, contingency planning and scenario planning are things that are new to me. I’m looking forward to learning a lot from you and I feel like for a lot of us, this goes way deeper and I think more effective than your average fundraising plan, especially in times of change which is now. Who knows what’s going to happen in six months?
EA: If you knew what would happen in six months, you should bottle that and sell it because you’d be a millionaire. My crystal ball broke a long time ago.
MT: My magic eight ball is just saying reply hazy, try again.
EA: Totally true.
MT: So what I’m hearing you say is that we need to – hold on. Get swole for the revolution. That’s what I’m hearing you say.
EA: That’s it, exactly.
MT: Get strong, everybody.
EA: Exactly.
MT: I’m going to go back to my questions here so that I can get back. So my other question for you was like so, what should we be focusing on? But you kind of said, you know. You had like the three things we should focus on. If I asked you what should we be focusing our fundraising on, and you said stewardship. Is there anything else you suggest people focus on during this time of uncertainty with government funding?
EA: Yeah. I’m an old fashioned individual giving guy. I love individual giving and the different strategies. There are so many different strategies in the individual giving toolbox. I think assessing where you’re at with your resource development program right now, and figuring out where you’re strong and where maybe you can make some changes. Then figuring out what changes are we capable of tackling now.
I know that’s very simple but I would totally do that. You can never go wrong with individual giving. It’s the place that if you’re going to over invest, over invest there. So stewardship, growing relationships, solidifying old relationships, trying to find new relationships, cultivation, stewardship with an emphasis on stewardship because cultivation can get expensive. If you’re going to add some new solicitation strategies, make sure that you’re focusing on growing your individual giving program.
MT: Yes. That’s really smart and we’re going to be talking about how to do that at the summit as well. We’re going to have two sessions on monthly giving, which is a wonderful gateway to major gifts. We also have Jeff Schreifels talking about how to get your board to do major gifts for you. So that will be good because he’s an expert in major gifts. But I love that you’re helping us have this container of here’s what the why behind we should do all of these different things.
EA: Sure, absolutely.
MT: So then what will you be teaching more in depth about at the Nonprofit Leadership Summit in September?
EA: Yeah, sure. So you were very kind to ask me. Thank you once again for the opportunity. I’ve got a lot of different passions when it comes to nonprofits and how to help nonprofits became healthier and helping those healthy nonprofits become even healthier. But planning is a real, true passion of mine. Again, I didn’t study hard for six years and get two degrees at a great university. Go fighting [unintelligible 00:27:23], University of Illinois Champagne-Urbana, because I just thought it was something I wanted to do. I mean, I love planning. It’s woven through my DNA.
So the opportunity to talk about planning and specifically contingency planning and scenario planning. I found that to be too tempting of an offer. So thank you for extending it. During these tough times, it’s just so totally appropriate. So I’ll specifically be talking about how does one go about putting together multiple plans in a way that’s not overwhelming? I know that when I’ve talked about scenario planning and contingency planning with organizations that have a culture of planning, they immediately think of and they envision this strategic plan that they have, which is multiple pages. It’s mission, vision, goals. It’s strategies. It’s implementation action steps. It’s 75. It’s 100 pages. It’s a bound document and you want me to create two and three and four of those? That’s crazy.
No. No, no. I won’t give away secrets. But we’re going to talk a little bit about how to keep this real and to keep it simple and to just kind of mentally run down various possibilities for a future state and to frame out in general, if this happens, what are some of those goals and strategies that we think we’re going to seize upon? What triggers are we going to be looking for in our current environment that will let us know, oh, execute on plan B or execute on plan C, D, or no, stay the course on plan A. We’ll be talking about that during your conference. I was planning on being a little inappropriate today, and I guess I still am.
But as I was thinking about Plan B, I started googling around. I thought, well, maybe I can come up with some pithy historical example of where plan B was the better plan. I can weave that into this interview that Mazarine is doing with me. As I’m googling around, all I kept finding was information on Plan B, the contraceptive, right? I started thinking to myself, Plan B. Plan B. How do I weave Plan B the contraceptive into this? I thought, no, you’re going to offend people, Erik.
But then I couldn’t stop myself. I said, maybe the tagline to my training should be Plan B: It’s Not Just for Unwanted Pregnancy. But it can also be a great nonprofit strategy to survive unwanted presidencies. Then I thought, oh, all those red state nonprofits that are attending Mazarine’s. Oh. Then I thought, oh, what the hell. It’s clever. I’m going to use it. So there you go. Sorry.
MT: I love it.
EA: You can edit that out. Hopefully electronically you can edit it out. I won’t use it at the conference, but this is kind of a precursor to the conference and I thought we could end with a funny haha. Plan B.
MT: I think it’s going to be a fun session. I definitely think it will be. I know planning can be dry, but we’re going to make it juicy.
EA: Juicy?
MT: Yeah.
EA: Awesome sauce.
MT: Exactly. Sauce is juicy too. So that is an excellent point to I think end on. But I definitely see different ways to add Plan B into all this stuff. So I want to say thank you so much, Erik, for being interviewed today. I think this was really informative for me personally. I hope it is for people listening and watching. If people want to get in touch with you, how would they do that?
EA: They can email me. My email address is my first name. It’s erik@thehealthynonprofit.com. So just send me an email. You can give me a shoutout and say, woohoo, I can’t wait to hear from you. Or you can send me an email and ask, hey, what more are you planning on covering? If not this, add it. I’m totally open to input and feedback. So please, email me.
MT: Wow. Everybody, I hope that you avalanche into his inbox and hire him for any planning needs that you have. Just come to the conference and listen to what he has to say and then do that. Just pig pile on Erik because I think he can really help you succeed. So thank you so much, Erik.
EA: Thank you very much for the time. Thanks, Mazarine.
MT: All right. Bye, everybody.