Category Archives: Non-Profit Management

Perfect Timing in the News

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Today the Winston-Salem Journal published the last article in a three-part series on the two major nonprofit health care systems in the Winston-Salem area, Novant and Wake Forest Baptist Medical Center, and this particular installment focused on executive compensation. Here's an excerpt from the article:

Dr. Roy Poses, a clinical associate professor of medicine at Brown University and former physician at three academic medical centers, writes a blog called "Health Care Renewal" in which he frequently tackles the issue of executive compensation…

"The same rationales are cited to justify their treatment — executives are said to have very difficult jobs, and competitive pay is necessary to hire the brilliant people required.

"Left unsaid, however, is how difficult these managerial positions are in comparison to the demanding work and sometimes life-or-death responsibilities of health professionals, how brilliant executives are in comparison to such well-trained professionals, and why the executives deserve competitive pay when other employees may be laid off." (Emphasis mine).

Later in the morning Novant made the following announcement:

Carl Armato, president and chief executive of Novant, said in a memo to employees that the system is eliminating 82 management positions and 207 staff positions, effective immediately. The majority of the eliminated positions are in Novant's Winston-Salem and Charlotte markets…

Armato said there are four main reasons behind the decision.

"We all know there's a national mandate to lower what our nation spends on health care and to make care more affordable," Armato said…

"The poor economy has clearly changed people's behaviors and they are using fewer health-care services, including elective surgeries and outpatient testing, such as diagnostic imaging."

Armato said Medicaid and Medicare reimbursement for services "is dramatically declining. Put simply, we are being paid less for our services and this trend will unfortunately not improve.

"The amount of charity care we provide has increased 200 percent over the past five years.

Pretty nice juxtaposition huh?

Question: If you had to guess, what would you say the odds are that Mr. Amato showed some leadership by taking a voluntary reduction in pay, or even a pay freeze, before deciding to seriously screw with 289 people's lives by laying them off? 

Having Their Cake and Eating It Too

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According to an article in today's Winston-Salem Journal the Triad affiliate of Susan G. Komen for the Cure is experiencing a deep decline in its fundraising after the Planned Parenthood controversy the national organization created last year. That's not terribly surprising, but a quote from the president of the Triad affiliate is a bit befuddling:

Natasha Gore, president of the Triad affiliate, acknowledged the challenges that the local group faces, stressing that most of the money raised here stays in the region. She also expressed frustration that some would-be donors do not differentiate between the local affiliate and the national organization.

"A lot of the time, people think we are one and the same," Gore said. "If they're boycotting us because of something happening with the national organization, it does not really fit with what's going on."

The quote is befuddling because it's amazingly naive, if not downright disingenuous. Of course people are going to confuse the organizations because in the grand scheme of things they are the same organization. Sure the local affiliate has it's own board, staff, volunteers, grants, etc. but it has affiliated itself with the national organization, which means it benefits or suffers from the national organization's activities. The Triad affiliate certainly benefited from the national organization's advertising and branding activities and I don't recall hearing any concerns about brand confusion from the local affiliate before the controversy.

So the donors aren't confused, rather they're saying loudly and clearly that they've lost faith in the organization and it is up to organization on both the national and local level to win back that faith. If the local affiliate thinks the brand is too damaged to repair then they might want to consider:

  • Disassociation from the national organization
  • A name change (would likely be required by the national group anyway)
  • A clear articulation of the local group's principles/standards and how they're different from the national group's
  • An ad/branding campaign to introduce the "new" organization to the Triad, and to highlight all of the organizations that benefit from its grants

In the end an affiliation is like a marriage: you're stuck with it in good times and bad, and if the bad gets horrific then your only choice might be a divorce.

Pink May Not Be So Pretty After This Week

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Having worked with multiple non-profits, both as a staff member and as a volunteer, I'm going to be watching with great interest what happens with Susan G. Komen for the Cure over the coming months. Why? Because they've had two significant PR events just this week that I think might affect them financially for at least the near future, if not over the long term.

The first event was the announcement that they are cutting off funding to Planned Parenthood for breast cancer screenings. Their stated reason is that they have a new policy that prevents them from funding organizations that are under investigation by the government, but it's been pointed out that the implementation of the new policy is conveniently timed to coincide with the launch of an investigation by a conservative Florida congressman. The new policy hasn't prevented them from accepting funds from organizations under investigation by the government (Bank of America to name one). It's also quite a coincidence that Komen's Senior VP of Public Policy is a pro-life Republican who ran for Governor of Georgia two years ago. At a minimum the organization looks disingenuous and quite frankly I think they've offended a huge segment of their supporters.

As if that's not bad enough a new documentary about Komen is getting ready to hit the indy theater circuit this month and given the organization's recent missteps I have a feeling it will get even more attention than the producers could have dreamed just a week ago. Judging by the trailer (see below) it doesn't look like this is a glowing tribute to the organization, and added to this week's developments I have a feeling it could put a serious dent in Komen's fundraising activities. Depending on your view that could be a good or bad thing – there's an argument to be made that the money that doesn't go to Komen could go to other worthy causes – but I think it will be a case study for non-profit managers to study for years to come.

Short Term Thinking Not Good for Non-Profits

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Before I leapt into the role of being a full time manager of a single non-profit I spent years consulting with non-profits and publishing companies.  One of my clients was a trade association with a mission of providing education and services to professionals with a particular role within corporations.  As with many trade associations there were essentially two kinds of members: those who comprised the "core" membership, in this case people who were consumers of the educational and service offerings of the association, and associate members, companies that sold products and services geared towards the core members.  Not surprisingly there were several competitors in just about every service/product category, and since my main function was managing the association's relationship with the associate members and selling them advertising, sponsorships and space at the trade show, I was keenly aware of who competed with whom.

As it happened there were several consulting companies that were competing for contracts with the multitude of core members, and in order to get in front of those members the consulting companies tried very hard to be selected as speakers at the annual conference and instructors at various seminars oranized by the association.  One consulting company in particular spun off a training company and literally created a certificate program for its graduates.  That same company agreed to allow the association to market and produce a couple of two day seminars that were taught by the company's principals and had titles that were trademarked by the company. The seminars were highly profitable for the association, but you can probably guess what kind of feedback I was getting from that company's competitors.  You can also guess how many times I had to defend the association when it was accused of "playing favorites."

Today I just read that my former client has partnered with that same company to provide a professional certificate program for its members.  I can only imagine the reaction from some of that company's competitors, but in my imagining I do hear lots of screaming.  Since I'm not in touch with anyone involved with the association I really don't know what the factors were in this decision, and for all I know it could be the right decision, but I get nervous whenever I see an association get into exclusive arrangements with companies that have services to sell to the association's members. It may just be me, but I'm not comfortable with giving any provider some level of "ownership" of one of the association's core service offerings.  I wouldn't have a problem with a company being a "sponsor" of a class or seminar because that's an opportunity that can be made available to any provider, but literally sharing the service or product ownership is, to me, a big problem.  So these would be the questions I'd ask about the relationship:

  • In the case of dissolution of the agreement who owns the course?  Who owns the copyrighted work, trademarks, etc.?
  • Does anyone on the association's board of directors have a stake in the company?  If so, did they recuse themselves from the vote?
  • What happens to the relationships with the company's competitors?  Did they have the opportunity to bid on the partnership, or do they get the opportunity to engage in similar partnerships with the association in the future?
  • Is the offering something that the association is absolutely unable to provide itself under any condition, or is it simply something that the association can't currently provide due to budget/staff constraints? If it's the latter did the association consider putting together a plan showing what would be required to offer the certification itself and then approach all of the companies to see if they'd be willing to underwrite it in some fashion – most likely long-term sponsorships or grants?

Honestly I think that last question is the most important.  If the association made the move simply because it was more convenient in the short term then I feel rather strongly that it was an erroneous decision.  I can't think of any organization that is successful in the long term when it signs away the right to one of its core products and at the same time risks relationships with some long time, key supporters of the organization.

Again, I don't know the specifics of this deal and I don't know what all the variables the board of directors faced in making the decision, but given what I know about the organization's background I really have a hard time buying that this is the best thing for the organization long-term.  Maybe it's necessary for short-term survival, but let's just say I'm glad I'm not selling ads or sponsorships on their behalf right now.