Nancy Schoephoester

Nonprofits need plans too

When you hear the term "nonprofit" organization, do you envision people who do good things for the community but don’t make money? Well, you’d be half right. Fortunately Alaska has many talented nonprofit professionals who do vital work in the community. We depend on them for our social services, performing arts, environmental projects, health care and education. But you’d also be half wrong. Nonprofit organizations can and do "make money." They have to. That money is not a profit, but it’s an important part of their cash picture and essential to keeping the organizations healthy, strong and able to deliver their services. Nonprofits can’t rely solely on grants and donations to meet all their money needs. In fact, groups like the symphony, opera and museum have been making money through ticket sales for as long as they’ve been around. They couldn’t survive without it. For others, though, the step into what’s known as "earned income" is an alien one, and one that can be intimidating. A good way to reduce the fear of venturing into unknown territory is to have a map. And when that adventure involves making money, the map should be a business plan. Most nonprofit professionals and board members have considerable experience in strategic planning -- conducting research, analyzing strengths and weaknesses and forming goals and objectives for guidance in fulfilling their missions. But a business plan -- that’s something else. Yet all nonprofits really need one. Unlike the strategic plan that articulates the broad vision of what the organization wants to accomplish, the business plan provides a clear, detailed road map for use by management every day. For instance, if an organization charges for anything -- from the price of a ticket to a fee for services, from selling goods to serving food in a cafe -- it’s vital to assure that the pricing is appropriate, both for the value of the goods or services delivered and for the cost of delivering them. That requires doing a realistic assessment of costs and developing fees high enough to offset a pre-determined portion of those costs. It also requires setting such fees low enough to attract and serve your intended customers. Meeting both objectives requires a thoughtful balancing act. The business plan is specific. It details financial projections, whether from grants, donations, government support or earned-income projects, and it sets revenue targets. The plan also defines markets, identifies and manages risk and establishes criteria for measuring outcomes. In short, it focuses on the bottom line, which equals financial stability. Achieving that bottom line -- achieving a group’s financial goals -- is important to donors and others who give their time, talent and cash to support the organization. It’s important because success there makes possible success with the other bottom line, service to the community. And that all-important community service is where each nonprofit organization truly defines itself. It’s the place where all the lines and number columns come together and enable each group to succeed in its overall mission. In the for-profit world, businesses primarily focus on a bottom line measured in dollars and cents. But our colleagues in the nonprofit world have two interdependent bottom lines. One assures financial stability, the other a healthier, more vibrant community. They can’t have one without the other. The challenge for nonprofit managers is in some ways more complex than it is for profit-oriented business executives. It’s important for the nonprofits to keep the two bottom lines in balance and make sure one doesn’t overpower the other. A well-conceived business plan provides a map and one part of the balance; passion for the mission and a vision for the future take care of the rest. Nancy Schoephoester is manager of philanthropy and community services for Phillips Alaska Inc.

The Foraker Group helps nonprofit organizations stretch dollars

When I was a child I figured out that if my friend and I pooled our toys, we would both have twice as many toys. Since we got along well together and had similar interests, sharing allowed each of us to have a much larger toy box. Later I noticed that the oil companies operating at Prudhoe Bay had come to a similar conclusion, though their "toys" were much larger and more complex than my childhood things had been. The operators follow a practice called "shared services" under which some essential functions are performed by employees available to multiple companies. Sharing services where possible allows more cost-effective exploration and development activities, providing important savings for all participants. Ultimately shared services result in increased production at a lower cost. And, by keeping costs down, they increase state revenues and thereby benefit all Alaskans. Those oil field initiatives led to formation of a new kind of "shared services" organization unveiled earlier this year -- The Foraker Group. This new and innovative nonprofit entity borrows on the concept of pooling resources. The Foraker Group will put high-quality management and consulting services within the reach of even the smallest nonprofits. The Foraker Group was launched with major support from Phillips Alaska Inc., BP Exploration (Alaska) Inc., the Rasmuson Foundation and the United Way of Anchorage. Foraker President Dennis McMillian says the new organization will help nonprofits make the best use of their philanthropic resources and operate more efficiently than was possible by working alone. McMillian doubles as executive director of United Way of Anchorage. Grants are the lifeblood of nonprofit groups. But securing grant funds isn’t easy, especially in Alaska. Mining the money requires knowledge of foundations both here and in the Lower 48. It also requires skill in developing and writing proposals, and the ability to persevere and succeed even when projects aren’t funded by targeted foundations. In some cases the nonprofits will be able to focus on the things they do best -- like providing services to the community and raising revenues within their own networks -- while the Foraker Group pursues funding sources from afar and provides overhead support from professionals they couldn’t otherwise afford. When funding efforts are more likely to succeed through joint efforts, McMillian and his consultants will broker the necessary relationships and work with the organizations as they approach foundations. The possibility of improving effectiveness through shared services exists in many areas. To cite just one example, the Foraker Group will help nonprofits plan and prepare for technological changes and advances. These days computers are as essential for nonprofit organizations as they are for businesses. But nonprofits can’t afford a new computer system every few years. The Foraker Group will give them access to a specialist who can help them analyze and plan for their technology needs. The consultant will advise them on ways to get financial aid to purchase new equipment and software when they are needed. He or she will also look for opportunities for several nonprofit organizations to share their technology capabilities and their costs. Pooling resources and building cooperative relationships is an established way to save money and work more efficiently. We’ve proved it works in the oil patch and are delighted to see the concept applied in this area of special need. Nonprofit organization leaders should get to know the people at The Foraker Group. McMillian and his team can help stretch your valuable donor dollars and give you the best chance possible for a productive future serving the people of Alaska. Nancy Schoephoester is manager of philanthropy and community services for Phillips Alaska Inc.

Staffing insight for non-profits

Nonprofit organizations have become an important part of Alaska’s economy, and many nonprofit board members and staffers are working hard to build expertise and improve their professionalism. Taking a professional approach to doing one’s job is as important in the nonprofit sector as it is in private businesses. In some ways, it’s even more important, because resources are usually scarce and lost opportunities can interfere with accomplishing a group’s mission. Alaska is blessed with a nonprofit community that contributes to its quality of life in many different ways -- by helping those less fortunate, by providing educational opportunities to those who need them, by bringing alive the arts and culture, and by protecting the environment. But our nonprofit organizations face a big challenge today: finding ways to attract and retain good staff and volunteers. At a recent workshop sponsored jointly by the United Way of Anchorage and Phillips Alaska, participants gained valuable insights on how to meet this challenge. The workshop was one of a series designed to build leadership and management skills within Alaska’s nonprofit organizations. Workshop speakers emphasized that training staff in "best practices" leads to better management and more satisfied employees. Building a great nonprofit staff requires creating jobs with meaning that allow people to really make a difference. Nonprofit managers can seldom compete for employees on the basis of salary, so they need to find other ways to make their organizations desirable places to work. There are many possibilities, but two valuable ones are helping staff to acquire new skills and delegating power to them. These two strategies are tried and true approaches; they work. Recruiting and holding onto good board members is equally vital. People are no longer willing to devote hours each month to boring and ritualistic board meetings where their only role is just to listen and endorse staff reports. Board members increasingly want their time to matter and expect to be engaged in the most important decisions affecting the future of the organization. Among the issues they face are: dealing with information overload, using technology more effectively, increasing fund raising from individuals, becoming more entrepreneurial, finding ways to collaborate or consolidate with other organizations, and, of course, recruiting and keeping a diverse and effective staff for their organization. A key element in succeeding with this last issue is to build a strong relationship with their executive director. To do this, they must carefully select this person, conduct annual evaluations and offer fair compensation. On this point, Alaska nonprofit board members should be aware of a recent salary survey conducted by the United Way of Anchorage that shows that female executive directors are being paid significantly less than men for jobs of similar scope and responsibility. These results should send a message to all boards that pay equity must be at the top of their agenda if they are going to maintain a productive staff. Together, our boards and staff are doing the hard work of meeting important community needs. They deserve the best tools and skills we can provide. It is vitally important that we develop today the people who will lead our nonprofits tomorrow. We do that by setting annual goals for recruiting new board members, committee chairs and officers -- and through ongoing training and education of staff. Nancy Schoephoester is manager of philanthropy and community services for Phillips Alaska Inc.
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