Sobel & Co. NoNprofit aNd SoCial ServiCeS

Survey reSultS 2014

introduction

Sobel & Co. has been actively involved in polling the New Jersey/New York nonprofit community for several years, extracting important information and data while revealing emerging trends and changes taking place in nonprofit organizations of all sizes.

This year we worked with an amazing Advisory Board comprised of Vicki Bixel, Semple Bixel Associates; Dennis Miller, Dennis C. Miller Associates; Linda Czipo, Center for Nonprofits; Patrice Picard, Cornerstone Family Programs; Brett Harris, Esq., Wilentz, Goldman & Spitzer; and Gerry Bellotti, The Independent College Fund, all of who contributed thoughtful ideas, questions and suggestions to help make this survey, and the results, meaningful for you, our readers.

While the nonprofit sector is appreciated and valued for its service oriented, warm, friendly, informal and compassionate attitude, many supporters and donors remain concerned about the corresponding lack of formal practices and procedures that is so common among nonprofits large and small. Whether the staff is one or 100, the nonprofit community seems to have developed a reputation for being great stewards but poor strategists. Their attention may be focused on the mission but not on the management; services are offered but success may be difficult to assess.

With this as a back drop, we set out to ask nonprofit leaders what internal processes they have in place that help them remain more focused, more structured, more professional and ultimately, more successful. Their answers paint an interesting picture of the nonprofit world and its constant evolution as it responds to new demands from constituents and contributors in an ever changing world.

We thank all who participated and especially those who distributed this survey to their nonprofit colleagues, including Semple Bixel Associates, The Center for Nonprofits, The Morris County Chamber of Commerce, NJ Monthly Magazine and the Community Foundation of New Jersey, as well as the many others.

We hope you will find the patterns that we observed to be relevant for your organization and that you can find ways to apply the results to assist your own organization.

executive Summary

The goal we set for this year’s survey was to engage the nonprofit community in conversation regarding their commitment to being more process driven, more formal, more methodical, using for-profits as a model for their initiatives.

We have heard a lot of ‘chatter’ about the nonprofit community’s lack of structure, lack of professionalism and even lack of accountability. Yet the nonprofit community provides value that, when measured, is staggering. The millions of employees, the millions of dollars and the unparalleled services they offer to a vulnerable community in need cannot be ignored.

So how do these organizations, these agencies and associations, that serve such a key role in our world, learn to behave in a way that replicates the best and most appropriate practices of the commercial world without losing the special ingredients that make them unique?

Nonprofits are the stewards of the community, the watchdogs who work tirelessly on our behalf. As such, we look to them for guidance, direction, support, caring and help. However, as revenue streams diminish, competition increases and transparency becomes the watchword of the day, nonprofit leaders will have to do more to translate compassion into measurable results to have an impact. In fact, they will have to demonstrate the value they deliver in a meaningful and relevant way that will resonate with their volunteers and philanthropic supporters. They will have to be accountable, share facts and data and make the compelling case for their efforts. And they will have to build strong infrastructures that reflect the lessons they have learned from their corporate peers.

Many have already begun this journey, some still lag behind.These trends are obvious in the replies from the nonprofits who responded to this survey.

One of the most exciting statistics we discovered was the longevity of the nonprofits in New Jersey. 28.7% of those who took the survey were 30-49 years old and 36% were more than 50 years old! 19.8% were one to 15 years old and 18.8% were 16-29 years old. This level of success is rewarding to see – and it underlines the necessary role played by these organizations.

27.7% represent organizations with budgets less than $1 million, 29.7% represent organizations with budgets from one to five million and 18.8% represent organizations with budgets from five to ten million dollars. The remainder represent larger organizations with budgets from ten to thirty million dollars.

The majority of respondents, 49.5%, consider themselves to be in the social or human services sector. The next largest group at 18.8% is in healthcare and 19.9% are from the academic world. Arts and culture represent 4.9% and an unidentified “other” made up the rest.

Most of the organizations – 45.5% - serve multiple cities and counties throughout New Jersey while 22.7% are statewide and an equal number, 22.7%, are local to one county or one city.

Conclusions can be inferred from the results we share with you. For the most part, the smaller organizations, those with fewer staff and fewer resources tend to be the ones less likely to have instituted the processes and procedures that will help them thrive in the next decade.

Certainly, human and monetary resources impact the strength of processes and procedures. However, in today’s competitive environment, creating an effective business structure without compromising the integrity of the mission is essential.

We see in all the responses a movement across organizations of all sizes to become more efficient, more professional, and more focused on reaching their goals. Written strategic plans, strategic planning retreats, the increasing presence of professional development directors and marketing directors, and the growing focus on board orientation and training, all highlight the continuing evolution of the nonprofit community as it works to increase its credibility, driving loyalty and gaining wallet share among their audience.

Going forward, more nonprofits will collaborate with each other and with for-profits, and we suspect that along the way they will all learn to use technology to level the playing field and grow their organizations.

Please feel free to share these survey results with your Board, your volunteers and your staff. We hope that some of the trends we uncovered and the insights and information gathered from your fellow nonprofits will help you make smarter, better educated decisions that will guarantee your future success.

results

1. Does your organization have a written business plan?The answers to this question were close to evenly divided. While 47.5% said yes, 51.4% said no. This means that fewer than half of the respondents have a written business plan. The key word here is “written,” implying a thought-out, well prepared document. Many organizations have an informal ‘plan’ that drives their activities, but those without a detailed blue print to guide them can easily get lost along the way. It would seem that every organization should have a written business plan, agreed upon by the Board and the paid staff.

2. Was your business plan written less than two years ago?This follow-up question was asked in order to determine how old the business plan is for those organizations that have one. Almost half, 47.5%, said their plan is more than two years old, with only 29.7% saying their plan is less than two years old. While the plan is essential, updating and reviewing the plan is equally as essential. This is an area where the nonprofit must devote additional time – updating and refining the plan as needed.

3. Do you have a written strategic plan?69.3% of the respondents said they have a written strategic plan and 42.5% said the plan is less than two years old. This is interesting because most of the nonprofits said they did not have a business plan – yet more than two thirds acknowledge having a current strategic plan. This may point to the growing popularity of strategic planning and annual strategic retreats, resulting in the creation of a visionary plan. Perhaps planning for the future (strategically) is more compelling than preparing for the day to day, week to week and month to month issues that might be encompassed in a business plan. It is also a process that is done on an ongoing basis, keeping it fresh and relevant in most instances.

Nonprofits may be more comfortable with “strategic’ plans than ‘business’ plans, especially if they do not identify themselves as a ‘business.’ As one leader commented, “We have confirmed a steady, strategic, successful course that we tweak as needed.”

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4. Does your organization have a written marketing/branding plan? The answer to this question somewhat mirrors the reply to the business plan question discussed above. 44.5% have a written marketing plan while 52.4% do not. This is a perplexing trend, demonstrating that less than half of the groups responding recognize the importance of building a brand, creating a reputation and developing a presence in the community they serve while more than half believe this is not a core element to their success – or at least, they are not willing to invest in a structured marketing approach.

5. Does your organization regularly quantify the economic impact of its programs and services on the community?Interestingly, less than half, just 42.5% of the nonprofits, said they DO quantify the economic impact they have on their community - while 56.4% admitted they do NOT track this important information. Those who do track results promote it through their website, in an annual report, and through letters to their supporters. E-mail notices and press releases are used to a lesser degree.

One response said, “We share stories and data about the impact of our mission, but not the economic impact.” But in today’s turbulent environment, this impact of mission just begins to tell the story. Going forward, nonprofits will be called on to demonstrate how indispensable their services are. This is one more compelling way for them to attract and retain high quality donors and supporters. If the organization is not gathering the facts that clearly show the critical economic role it plays, it is much harder to convince the community of the value that it regularly adds. Without proof, the work of the nonprofits may be judged as expendable, rather than essential.

6. How often do you review your budget?Exactly three-fourths, 75%, of the nonprofits who replied to the survey, said they review their budget monthly. This is important information, especially for the 12% who review bi-monthly and the 5% who review semi-annually as well as the 4% who review annually. If you are not looking at your budget every month, you will have much less control over your cash flow and less influence over expenditures. The budget is a key tool in maintaining a strong infrastructure, giving the organization the ability to make financial decisions based on fact rather than conjecture.

7. Does your organization have written job descriptions?91% agreed that their organization has written job descriptions. This is a great process to have in place. It helps the organization select, train and nurture the appropriate people for each role and it enhances communication across the office. Each job should be carried out by employees with the appropriate skill set in order to avoid confusion, waste time and resources as well as minimizing the disappointment of poor performance.

8. Does your organization conduct personnel performance reviews?77% of the respondents conduct annual personnel reviews with 4% doing this semi-annually and 2% making time quarterly. 11% said they conduct the reviews with no regularity and 7% never conduct reviews at all.

Conducting employee reviews represents a significant step for a nonprofit that strives to behave in a more professional manner. Without good feedback, without an honest dialogue, without a legitimate platform for offering constructive criticism as well as praise, employees cannot improve their performance. Nonprofit leaders, like those in for-profit companies, must make time to assess their staff and help them do their jobs as best they can. This is especially significant in environments common to small nonprofits where there are few resources and everyone must optimize their talents and training. For those groups that conduct reviews sporadically or never, it is good to remember that employee morale is negatively impacted when there is no opportunity for sharing opinions or suggestions for improvement on a regular basis.

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9. Does your organization have a written harassment policy?88.1% of the responses to this question were positive. Clearly, nonprofit leaders and their Boards understand that it is vital to have a written harassment policy. Bad things can happen – even to people doing good works. Staff and supporters must be protected.

10. Does your organization have a written social media policy?Considering that less than half of the respondents have a written marketing plan, it is interesting to note that more than half – 58.4% - have a written social media policy. 37.6% do not, but the clear trend is to embrace social media and manage the process in a professional way. Social media can provide a dynamic boost to any organization, giving it the ability to send its message virally, through blogs, videos, Tweets and more. LinkedIn pages and Facebook are very popular for sharing nonprofit events, calendars, photos and success stories but it is a wise organization that documents the rules around messaging.

11. Do you have a Director of Development?Because of the high value a Development Director has for any organization, 66.6% of them have a person focused on this task. Only 33.4% do not have anyone designated to fill this role. Having a professional on board who understands donor cultivation, and can assist in identifying and nurturing current and future supporters can often provide an important competitive edge. Six percent of the organizations that do not have a full time development director on staff outsource the function but 41.5% do not – indicating that if they do not have anyone in-house, they are not likely to rely on (or pay for) outside consultants in this area.

In about 21% of the cases for organizations without a Director in this role, the Board members are expected to fulfill this function.

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12. Do you have a Marketing Director?Not surprising, based on the response to the written marketing plan question, 35.6% of the organizations have a Marketing Director on staff while 62.3% do not. It might be inferred that in the world of nonprofits, marketing communications and branding activities play a less critical role and may be seen to deliver a smaller return on investment (ROI) than development activities or fund raising campaigns which have an immediate effect on the organizations’ bottom line. Often, the role of Marketing Director is fulfilled by the Development Director, as the position is seen to go hand in hand with creating awareness and then engaging prospective donors. Those without Marketing Directors do not, for the most part, outsource this function – with less than 5% saying they use outside services in this area. Board members are typically not expected to fill this function although they are expected to behave as advocates and champions for the organization!

13. Does your organization have D&O insurance?88.1% of the organizations had D&O insurance – which is essential for any organization.

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14. Does your organization conduct a formal board orientation?This question, like others, was inserted to help us measure the level of professionalism and formality that these nonprofits have incorporated into their infrastructure. A serious focus on board governance, including conducting formal board orientations, is at the foundation of a successful and sustainable organization.

Well thought out orientations can help prepare members for a meaningful role and help them to assume their responsibilities while at the same time pre-empt questions and concerns about the organization, its financial position and its ability to achieve its mission.

Despite this, 32.6% conduct formal orientations and 60.2% do not! This statistic shows the lack of concern by the majority of nonprofits for engaging and educating their Board members – and helping them understand the organization so that they can be its best cheerleaders.

15. Does your organization host a strategic retreat scheduled separately from a Board meeting?The strong response to the previous question regarding having a written strategic plan was expected to set the stage for this follow up question. Yet even though 69.3% have a written strategy in place, only 32% host an annual strategic planning meeting. 43% hold a strategy session occasionally and 25% never do! For those that do commit to strategic planning, they seem split regarding the value of using an outside facilitator. 38.6% use the services of experts while 39.6% do not.

Regardless of who leads the discussion, leaders who do not make time to work on the organization as well as in it are missing an enormous opportunity to ensure its growth and sustainability. It is all too easy to get caught up in the daily routine, especially when balancing the challenges presented by a small staff and a large workload, but that doesn’t diminish the importance of investing the effort in a regularly scheduled strategy meeting. While monthly board meetings are designed for short term planning and a focus on operations and management, the agendas for strategic planning meetings encourage and support thinking for the future. With no long term strategy in place, the organization is likely to falter, flailing without clear direction or a defined destination.

16. Does your organization conduct or provide leadership training for board members?41.5% do provide leadership training while 53.4% do not – a response that makes sense when considering the similar reply to the question about board orientations. Only 32.6% have board orientations annually and 60.2% conduct these periodically. The same is true regarding a commitment to leadership training for the board.

Given that people are the most important asset in any nonprofit, the more of a focus and emphasis there is on the growth of the volunteers and board members, the greater the benefit to the organization. 17. Does your organization provide board members with a document stating all their responsibilities?Even though the organizations do not necessarily provide annual orientations or regular training, more than 80% do distribute a written document stating the roles of board members and the organization’s expectations for them.

41% ask the board member to sign and return the document, giving it the status of an informal “contract” between the two parties. But 47.5% do not ask for it to be signed or returned. This may lessen its impact if the impression is that it is just another ‘handout’ that need not be taken too seriously as it may soon be headed for the shredder.

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18. Has your organization collaborated with another nonprofitorganizationonanyprojectoreventinthelastfiveyears?A whopping 80.1% answered that they have collaborated with a nonprofit in the last five years. This further underlines the continuously growing importance of collaboration and cooperation between nonprofits. 16.8% said they have not collaborated.

19. Hasyourorganizationconsideredamergerwithanothernonprofitorganizationinthelastfiveyears?This question, unlike the previous query regarding collaboration, had a different response. This time, a little more than one-third, 33.6%, said yes while two-thirds, 66.3%, said no – they have not considered a merger. This indicates that while collaboration is an important tool, the much greater step of actually merging with another organization and potentially diluting their own mission and brand is a less attractive option for most nonprofits.

As an aside, more than 50% of the respondents to this question followed by saying they were not likely to be contemplating a merger over the next five years. Only 7.9% said it would be highly likely for them to do so and only another 11.8% said it is somewhat likely. At least for now it appears that anyone who has not entered into merger discussion is not likely to do so in the short term.

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20. Hasyourorganizationcollaboratedwitha forprofitcompanyonanyprojectoreventinthelastfiveyears?54.4% of the answers to the question were YES, as compared to 40.5% that were NO. While these numbers reflect only half as much activity between nonprofits and for-profits as exists between nonprofits and other nonprofits, nonetheless it is interesting to see that nonprofits are enjoying the benefits of collaborating with the for-profit community. As “Corporate Social Responsibility” becomes a central feature of the for-profit business community’s culture, more nonprofits will start to build meaningful alliances that can pay off in a wide range of ways. From drawing on a larger pool of volunteers, to gaining experienced board members, to receiving grants and other funding, support from a for-profit company is a powerful resource for local nonprofits.

21. Have you planned for potential changing trends in your traditional revenue sources? 83.1% replied in the affirmative – that they have indeed recognized the need to be ready to make changes in the way they generate revenue as public funding decreases or other sources diminish. The challenge for all nonprofits is to always be positioned and ready for the next obstacle. For nonprofits to create a continuous flow of revenue means they must be thinking outside of the box, leading the way to embrace new ideas and always ready to consider new options.

“This survey gives us some interesting insights. It is relevant information I canreally use!” - Patrice Picard, CEO, Cornerstone Family Programs

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