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Posts Tagged ‘non-profit organization

Sustainability and outcomes

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Non-profit, focused on outcomes

Non-profit, focused on outcomes

Few days ago, I attended the General meeting of the non-profit association I am treasurer of. As each year since 3 years now, I presented the financial statements to the attendees, and the budget for this year. These two documents were approved, and employees were happy about the good results of the association even if we are crossing difficult time.

I was happy of course of this, but I remember people did not have always the same reaction. When I joined the board of directors 3 years ago, some people did not see positively a financial consultant joining a non-profit association. There were probably scared about some confusion with profit and non-profit. Such reaction was understandable, as the finance people are often seen as non-flexible people, only focused on profit and performances. Here is probably a confusion that could be done by employees of a non-profit, but by financial people too.

My first challenge was to be accepted by the people of the organization. My ambition to join this project was not to have power or to tell people how they have to do, but only to join an interesting social project as volunteer, and bring some competences in order to contribute to the success of the common project. My first thought was that I had to learn about the different activities of the organization, the interactions between the stakeholders of the different projects, in order to have a global picture of the association, to understand the work of each people and to be aware about the difficulties they were facing. This was a first condition for an efficient and harmonious collaboration. By showing interest to the work of each employee and volunteer, by asking some question to them about the different aspects of they job, I was showing my real and sincere interest in this project, and people began to trust me, as they noticed also that I did not interfere in their job. Each people his own competences.

There was clearly a need to professionalize the financial and administrative processes, in order to manage things on an efficient way, but also to provide credible financial information to the requesting subsiding authorities and potential partners. It was important to deliver a clear message about this need to get a structured financial process and to explain why. The accounting and the production of financial statement are not only legal obligations, but they represent also a financial management tool. This tool allows organization and her management team to have a clear picture of the financial situation on time, but also to have a “business” decision support. We know all that the business environment is not always a quiet story, but the non-profit environment is not quiet at all too, when your sources of financing are non-recurring sources, and that you are facing some regular crisis situations. In such situations, it is important to show that you have things on control, but also that you are able to define alternative strategies and to express what precisely your needs are, when you meet some potential donator or sponsors. People need to understand that financial tool is needed to ensure the sustainability of the project.

Here again, we speak about the confusion done by some people about things that are totally different. Indeed, what I mean here is that financial management does not mean profit. A non-profit organization does not focus on profit, but it is important to keep an eye on the balance between the expenses and the revenues, in order to preserve the owned capital. The goal is not to earn money, but to avoid to loose money. If it is the case, some decisions need to be taken in order to preserve the funds of the organization, but also to ensure the quality and the continuity of the activities and the provided services. It is not financial performance that is the focus in such environment, but the outcomes. If we try to reduce some operating and administrative expenses, it is not to save the integrality of the money, but to invest in more projects, responding to a demand and contributing to the goal of the association. The saved money will not be distributed to some shareholders, but will be reinvested in future project. This is a difficult part of the equation, to be able to have a long term vision with short term financial vision.

A long term vision is necessary, and projects have to be defined to materialize this vision. An appropriate strategy has to be implemented, in order to reach your defined goal. With these criteria, you focus on the sustainability of your project and the outcomes. These two factors contribute to social cohesion and personal satisfaction of people.

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Written by Eric Saint-Guillain

April 19, 2013 at 22:52

The “Working” board

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Board of directors of a non-profit organization

Few days ago, I was publishing a question on a LinkedIn forum about experience as volunteer. One of the people who answered to that question talked about his experience, by mentioning the fact that he was member of the “working” board of directors. He was meaning of course that he was not there because it is smart to have such title, but he was contributing effectively to the management and operations of the non-profit organization.

I really like this concept and the meaning of “working” board, because as member of the board of two different non-profit organizations, I noticed two kind of directors. There are directors who were probably invited to join the board by other directors who are friends, and they are very proud to acquire a title, but they have not specific competences of real management background. There are other directors who have a specific competence contributing effectively to the organization processes.

I already mentioned in a previous post the situation of a non-profit organization who received some years ago an important donation. The association was by the time wrongly advised by the bank and they lost a lot of money in their investment. But what I noticed also in their accounts during one year, was the fact there had important operational losses and that nobody reacted during the year about that. When they received the donation, they decided to hire people, but the budget was not in balance at all. What happened a day, is that there were obliged to fire people, and each member of the board rejected the responsibility of such disaster to the other member of the board. Such situations allow to conclude that these people were totally incompetent, and did not want to face their responsibilities and take difficult decisions when needed, to avoid to get in trouble with the other directors. Such disaster is the result of non-decision, as I was writing in a previous post.

Let us talk about the other type of directors. These people are joining the board of a non-profit organization because they have specific competences, and they can help to implement solutions and improve processes in the organization. Competences are really important and are an added value when the organizations have a important and critical size. As you know, the more a project is important, the more the risk to fail is high, and the more experienced people are needed. In an organization where you have around ten people on payroll and fifty volunteers, like the one I am director of, you are definitively in a small enterprise. Like in commercial companies, structure and management are essential and are the key factors of success. The goal of a non-profit organization is probably different than the one of a commercial organization, but management and strategy are essential in both case to reach the assigned goal and to sustain the activities.

This second category of directors is the most useful, specially when non-profit organization are subsidized with public money. They have to guarantee the good usage of the allocated funds in order to make a successful project and to reach the assigned goal, and will be able to do it. This is the mission of a “working” board.

Written by Eric Saint-Guillain

June 8, 2011 at 22:25

Non-profit organizations, an added value for the society.

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In our society where economy is an important component creating wealth, I often heard critics about the non-profit organizations and associations. People are wondering if the subsides these organizations are receiving are correctly used. In other words, people are wondering if the institutions which do not create economical wealth, are not a charge for the society, and if there are useful. It is of course a pertinent question and people have the right to know how the taxes there are paying are used. People have the feeling that the taxes they are paying are not correctly used, but does it mean that non-profit activities are useless for the society? It should be a quick and wrong conclusion.

Non-profit organizations and associations, in different sectors, cultural or social are playing an important role in the society. We can see different interesting aspects of this sector of activity, but there are also conditions that need to be filled and which are filled in a lot of cases, making that people can have the feeling that their money is correctly used. What are these conditions?

  • Selection of project and the benefit they will produce: there are several needs to be covered in the society, needs that the private sector is not covering because there is no link with their activity and because the final goal is not the profitability. A detailed presentation and activity plan, and determined goals need to be presented in order to see what are the positive effects on economical, social and local level. The allocation of subsides need to be voted by a committee including independent members.
  • Project management and competences: non-profit organizations and associations are non-profit enterprises. It means that they have to face several challenges and issues on financial, legal and organizational level. In order to reach the goals on an efficient way with the allocated funds, some skills and competences are needed. As investing time myself in non-profit associations, I often see some lacks in term of competences, which has a negative impact in term of sustainability.

  • Concrete results: The associations launching projects have to produce concrete results, to justify the allocated amounts. They have the obligation to show the return on invested amounts, not on an economical point of view, but on social, educational, environmental level, depending of the scope of the project.

  • Financial sustainability: The allocated funds have to be spent correctly and each association has to implement controlling process in order to maintain the finance in break even. By creating debts and not paying contractors or employees, you do not reach the social goal of such organization. This is in my mind the weakness of some associations. The goal of a non-profit organization is not to make profit, as the name is saying, but it does not mean that the financial management is useless. I often see projects failure due to lack of management, with negative consequences.

These are some conditions needed to ensure that subsides are usefully allocated to projects. The quality of a project can be measured by the provided benefits. These benefits can be found on different levels, and make that non-profit activities are complementary of the economy. What are the benefits?

  • A positive contribution for the society: the associations are covering a range of services to the society, services not ensured by the private sector. It goes from social or medical services for aged people, for people facing temporary difficulties, also services in the education giving an access to knowledge and culture for everybody.

  • Local employment: this sector is creating local employment. Employment is a important key of social integration.

  • Local economical benefits: these associations are using local services. There are in fact a vector of wealth redistribution, as the allocated subsides have to be spent. The money they are receiving do not remain blocked and sleeping on bank accounts. It has a positive impact on local economy.

  • Personal positive effects: Some non-profit organization and associations are working with volunteers. Some studies show that people having a volunteer activity are in a better psychological and physical health. As mentioned, age is a question of mind. It is not because you reach a certain age that you are unable to contribute to a project, that you are unable to have activities. The fact to contribute to the community, empower the feeling to be useful and the feeling of social integration. We can see also a positive effect and cost reduction for the social security. If people are going well, they need less medical services. Globally, and as already mentioned in other postings on this blog, people need to have a project, to face challenges. The gained successes are an important factor of self- trust and wellness. Such activities have to be recognized, and encouraged. People should be encouraged to do an activity with the rhythm it agreed to them.
  • Social and educational benefits for the community: some social activities, related to education, are contributing positively to a better social and public environment. For instance, structures taking care of the children during holidays or when they are coming back from school and when the parents are still at work. These structures where animators are helping them to do the schoolwork, or by organizing games or activities, avoid these children to stay in the street, abandoned to the boredom, and avoid them to go to delinquency.

By mentioning these points, I tried to show that non-profit organizations and associations have a positive function in the society, on social and economical level. They have to be seen as a complementary activity of the economical activity. Do not forget that the economy is providing taxable wealth and that of course, without a strong economical activity, the public and associative world can not work. It is a question of balance, where each actor has to play the game, by respecting rules and with transparency, where initiatives have to be encouraged and supported.

Written by Eric Saint-Guillain

March 28, 2011 at 07:19

The consequences of non-decision

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Influence of people in a meeting

Most of us, we had physical science courses at school, and we learned that inertia is also a power. We can observe this phenomenon not only in physical science, but in other contexts, and such phenomenon has time to time negative consequences. I was reading an article few years ago in a magazine explaining that some negative events are the consequences of wrong decision, and can be avoid. For example, in the tragedy of the “Challenger” space shuttle, engineers were aware about the leakage problems with the boosters and the linked risks, but they decided to take off the shuttle. We know what happened after. If the consequences are known, why do we take the wrong decision?

Most of the time, we have to face a problem, we analyze it and elaborate solutions to solve it. But this problem has to be debated with other partners. In this group of partners, there are people who have more influence than others, who can influence the others. And some of the people will finally accept the decision of the majority

I would like to tell an example of such phenomenon of inertia and the negative consequences of it. A non-profit organization received a donation amounted to 750 thousand euros from somebody who had no heirs, which was a really appreciable amount for this small organization. At that time, the board of directors decided to take advice from a bank and invest that money in quoted shares. They decided also to hire permanent employees in order to develop some projects and to promote the organization. The plan was to cover the needs of the organization with the expected interests revenues and realized gains of the invested capital. But this plan totally failed with the fall of financial market in the year 2002.

At the general assembly I was attending, I received a sample of the annual accounts. I was surprised to see an important loss in the accounts, but what surprised me was that the amount of all the revenues did not cover the salaries costs, and apparently, the board of directors did not take any appropriate measures of action plan to avoid such situation.

My first thought was that this board of director was not competent to ensure the assigned responsibilities. Some of them said that it was the fault of the bank if they lost so much money. We can not agree with such comment, as it is the treasurer or the financial director who is responsible to manage the finance aspects and to take the appropriate decisions. So, my first thought was not so bad, but by discussing with each directors, each of them told me that it was not their own decision to invest the received money in such financial product. I found this attitude very strange, but it showed the temper of these people. If such decision is taken, it is because everybody agree, or because some people does not want to decide and take the same opinion than the others, and because they want to stay pleasant in the eyes of the others. It is also the problem of shared responsibilities. If a group of people have to decide something and by this way have a shared responsibilities, some people will always say that if something fails, it is the fault of the other. Can we consider that such board of directors is competent?

The consequences of this situation is that some employees received their letter of dismissal. And some directors said that it was really a social tragedy, as it was the consequence of the non-decision of other people and not of them.

The question is the following: when we need to have a group of people to take a decision, are each member of the group independent and competent, or are they chosen, because we know that some of them will have the same opinion than the majority? If it is not the case, like in the described example above, we can see what are the consequences of non-decision, and that inertia is a power,…a negative power.

Written by Eric Saint-Guillain

November 17, 2010 at 23:39

Team spirit without common goal?

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Volunteer workers

As member of the board of a small non-profit organization, the board of directors had recently a discussion with the project manager about the difficulties to manage a team of employees and volunteers. He was explaining the daily conflicts and tensions he has to manage, which is not an easy task for different reasons.

To describe the context, we have to know that some employees are hired in a reintegration framework. These people lost they jobs in the past, they lost the workless allowances. It means that these people are socially weakened. This reintegration program help them to find again a place in the society, to trust themselves and to reintegration the job market. These people need to be managed with clear objectives and instructions. Within the organization, these employees have to work with volunteers, and as mentioned before, the collaboration is not always on the top.

On one side, we have employees who are linked to the organization by a work contract, with clearly defined duties and objectives. They know that if they are not respecting certain rules or defined duties in their work contract, they can be sanctioned. On the other side, we have volunteers who have no specific contractual link and duties, but only a moral commitment. The tensions who are appearing is that some volunteers are doing what they want to do, and not always what has to be done. They do not accept any remarks from the employees, and the employees have difficulties to accept remarks from volunteers “who have no specific obligations and who are there for their own satisfaction and not to sustain the common goal.”

By observing this situation, we think immediately to the necessity to define goals and objectives of the organization, and to describe how each person can operate and interact to make the assigned project feasible. By describing clear goals and assigned roles to the team members, employees as volunteers, we have to ask them first if they are subscribing to the project, if there is a matching between the needs of the project and their expectations. This is an essential condition to be filled by the hired employes, but also for the volunteers. I would say that this condition is more important for the volunteers who are only linked to the project by a moral commitment. They have to understand that they have to contribute to the project on a efficient way, to operate on a collaborative way with the employees. By doing like this, they are contributing to the achievement of the targets of the organization, but they are helping also the employees hired in this reintegration program to achieve goals, to trust themselves and to empower their social links.

This situation shows how it is important to clearly define and explain what are the objectives of a project and what are the objectives of each member of the project team. They have to perceive that each project has to be structured and organized, and that each member of the team has to play a specific role. The projects are taking place in an profit or non-organization, where structure, organization and team spirit are the essential key factors of success, and that there is no personal success without common success. Peter Drucker was used to say: “Management by objective works, if you know the objectives. Ninety percent of the time, you don’t.”

Picture source: http://www.benevolat01.org

Written by Eric Saint-Guillain

November 10, 2010 at 00:29