March 2008

March 2008: od180 eNews #25

Organizational Structure... Who Cares?

Dear Friends:

In the hearts and minds of most people who are leading small and midsize nonprofit organizations (NPOs), organizational structure is hardly a burning topic. Yet the structure of board and staff leadership in NPOs has enormous ramifications for just how efficient and effective that leadership is. This month, I offer a description of the organic, functional nature of NPOs that I believe provides helpful background to such questions as what committees a board needs to have and what positions should constitute a senior management staff. As always, I welcome your responses at davidnorgard@od180.com

Peace,
David

The Four-Dimensional Nature of Nonprofit Organizational Life

Over the years of my service in the nonprofit realm, I have gradually developed a theoretical construct of NPOs which has rung true by way of providing considerable practical value in multiple consulting situations. This construct leads handily to a working definition of what constitutes "organizational management" in the nonprofit context.

Within the framework of this construct, there are four essential functions in any NPO. Whether they are being fulfilled at any given moment may be (and often is) a valid and important question in its own right. However, it is my working assumption that no NPO can fulfill its stated mission indefinitely without paying some regular attention to all of them. They are: first, the program or programs; secondly, resource development; thirdly, organizational administration; and fourth and finally, organizational design.

Program

The program of any organization is its raison-d'etre. It is how the organization fulfills its stated mission, whether that be by displaying art to the public or preserving wilderness for its own sake or inoculating infants at low cost. Components of the program function include not only the delivery of services of whatever sort but also new program design and development and program evaluation.

In a study I recently did on executive search selection in small and midsize NPOs, 94% of the 100 organizations surveyed stated that program content expertise was a critical factor among their search criteria. Boards clearly want their chief executives to know about their programs. But do the boards themselves? Too often there is a disconnect between board meeting agendas and the overall agenda of the agency which can lead to major flaws in strategic planning down the road if left unaddressed.

Requirements for a Successful Campaign

Resource development involves all those interactions and communications which cultivate, solicit, maintain, and track the resources necessary (financial and otherwise) for fulfilling the stated mission. It is how the organization supports the program it undertakes and advances itself in order to pursue new program-related opportunities deemed to be strategically prudent.

While fund-raising tends to dominate the day-to-day attention of most NPO leaders, the function involves much more, including external communications, donor relations, marketing, public relations, community affairs, and volunteer relations. Indeed, it is these other elements of the function which make the fund-raising element successful in the long term. Yet the same survey mentioned above revealed that these other elements are often neglected in the executive search process. For instance, only 28% of respondents listed oversight of external communications as an important component of the chief executive's role. Similarly, it is commonplace for boards to look at financial figures frequently and numbers on e-mail and newsletter lists only rarely if not at all. (A comprehensive development assessment can be very helpful in this vein, which is one of the services od180 provides.)

Administration

By organizational administration I refer to all those activities which provide the organization with the capacity to operate as a legal, ethical, and efficient corporate entity. It is how the organization supports and enables the work of both the development and program functions. Based on this definition, the function consists of budget and finance, facilities and equipment, information technology, and personnel administration.

Again, too narrow a view of the function tends to lead to trouble. In this era, for instance, inadequate database systems can impede progress in institutional advancement greatly. Yet investment in such systems is still all too often lacking among smaller NPOs.

Organizational Design

Finally, though certainly not least, organizational design pertains to those activities through which an organization's leadership deliberates upon and then articulates the descriptive statements which will guide the organization into its preferred future. Commonly, such activities include defining and later refining mission, vision, and values statements.

Preparing and reforming articles of incorporation, corporate by-laws and similar documents also fit into this category as does long-range strategic planning. Without periodic self-reflection, organizations drift.