Beyond Belt Tightening Part 3 – Strategic Investing

Many nonprofits are busier than ever as they respond to Covid-19 but don’t necessarily have the strategic tools in place to deal with the enforced change. Those that take extra time to respond strategically will come out stronger on the other side.

[TEXT BOX: “Companies that master the delicate balance between cutting costs to survive today and investing to grow tomorrow do well after a recession. … These companies reduce costs selectively by focusing more on operational efficiency … even as they invest relatively comprehensively in the future….” — Ranjay Gulati, Nitin Nohria, and Franz Wohlgezogen]

Strategic thinkers will make strategic cuts because across-the-board cuts weaken the healthiest parts of their organization. They will also make strategic investments because a failure to prepare for the future translates into having no future.

Strategically investing in the right tools will:
• Save you money
• Increase productivity
• Create a better experience for your beneficiaries, staff, and donors
• And, therefore, increase their confidence in the organization

So how do you make strategic investments in the middle of a crisis? And how do you make them into a habit?

Let’s start with an example …
Once upon a time I served a great organization with an awful membership database. It wasn’t as awful as using notecards, or excel, or a database created by a volunteer; but it was pretty close. They had a tool. It was even the right kind of tool. However, it was still the wrong tool. When the vendor created it back in the 1980s, it might have even been an awesome tool. Sadly, they hadn’t updated it since then.

Consequently, this particular membership database had a number of weaknesses. Rather than cloud hosting, it lived on one of the organization’s computers which meant if the computer gave up the ghost, all the data could disappear too. Extracting the data and making sense of it required someone with an engineering degree and lots of time. It certainly didn’t sync with any other systems, so all new data required manual reentry by staff. Worst of all, every key stakeholder knew this about this precarious situation; that it had persisted for years undermined their confidence in the organization.

In fact, only by a stroke of luck did the organization avoid disaster. The one dedicated volunteer who could extract the data managed to pass the torch along to a younger retiree just a few months before passing away.

We had a high-risk, high-consequence situation on our hands. The organization already had stress due to a leadership transition and a financial shortfall. Fixing the situation would require more work, new expenses, and more political capital. Not fixing the situation could be worse. So, we replaced it with a much better database.

In fact, strategic improvements like this to the organization’s back office, even during a crisis, allowed the organization to emerge much stronger:
• It removed an area of risk and worry – allowing increased focus on other areas that also needed attention
• It boosted members’ confidence in the organization – after years of hearing excuses about that darn database, they needed to know that we’d fixed it
• Member donations went up because they saw results and improvements in the back office. That gave them confidence that their giving to the organization represented a solid investment and that the organization would survive the crisis

[TEXT BOX: Would you like more examples of how nonprofits have made strategic investments, in the face of crisis, to get to a position of financial strength? Check out this portion of my April 2, 2020 webinar.]

What new habit do we need to practice?
A regular review of technology tools; ideally every 12-24 months. New technology emerges faster today than ever before. 2010’s “cutting edge” solution could be a dinosaur today. Ideally, executive directors and finance/operations leaders should invest the time to maintain a bird’s-eye view of new tech developments and how impactful nonprofits have adopted them.

One clue: if you spend a lot of time on a task that feels redundant and tedious, a computer might do it faster and better.

Pro Tip #1: Staying on top of emerging technology when you’re busy
Even people who enjoy technology can find it hard to stay current when they already have their hands full with day-to-day work responsibilities.

Fortunately, you don’t have to become an IT specialist to perform your due diligence in this department.
You can regularly connect with a peer network that includes people who have the knowledge, passion, and time to keep up with relevant technology trends.

If your organization has the resources to have a skilled, trained IT person on staff you can and should leverage them. Keep in mind, though, that they will need plenty of input from you to understand the big picture, the organization’s priorities, and opportunities.

And, of course, third-party experts (AKA independent consultants) can lend a hand. Be careful that the expert you work with has plenty of experience relevant to nonprofits your size. Someone who has done amazing IT work for Fortune 500 companies might not even know where to begin with a small nonprofit with 8 staff and a $1 million budget.

Pro Tip #2: Don’t lump this in with “other duties as assigned”
Yes, you might have someone on staff who has a passion and knows a thing or two about technology. They might even know a lot. But if they already have a full-time job as your office manager, program coordinator, or what-not, think twice before assigning a tech review to them. You have too much risk of them performing an inadequate job: if not with the tech review itself then with one of their other responsibilities.

This becomes even riskier if you haven’t stayed up to date on trends at a high level. How will you know if their proposals fall within the ballpark of best practices or otherwise pass the smell test? How will you even know what questions to ask them or what goals to set?

Your next steps:
Are you ready to strategically apply technology to help your nonprofit through these challenging times? Here are some questions to help you build the new habits to get you there:
• If it could mean thousands of dollars in savings, and improved long-term organizational health, would it be worth a little extra effort right now? Your answers will help rally others to this cause.
• Put it on your calendar. You should ideally give this serious attention every 12-24 months.
• Do we have any clues about where to start? If you have any staff or other stakeholders regularly grumbling about any tools or processes, you might have an opportunity to introduce technology to reduce pain.
• Who else? Who else might help me gain perspective on how to apply mission and values in my organization? People inside my current network? People outside my current network?

About the author
Sean Hale, of Sean Hale Consulting, has served nonprofits for more than twenty years. Most recently, as Mission Capital’s Chief Financial & Operations Officer, he made improvements that reduced waste, generated new revenue, boosted staff productivity and morale, grew financial transparency, and shrank risk. Over his career, he’s also helped boards and management to navigate complex situations and consistently left the organizations stronger and ready for their next stage of growth.

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