Why Nonprofits Fail
While it's true that nonprofits often fail for lack of funding, there are reasons that they don't achieve funding or that they use it incorrectly and/or inappropriately. Here's my experience from eight boards, including chairing two of them:
• The boards are weak. They are made up of “names” who would seem to be significant, but who provide very little in terms of governance skills, strategic viewpoint, or even attendance.
• The executive director/CEO remains too long. The “shelf life” of these leaders is about seven years. After that, they stop serving the institution and the institution starts serving them. They create a tyrannical “fiefdom.”
• No skin in the game. There must be a “give or get” minimum financial contribution from the board. They can't just play with “other people's money,” and many granting foundations insist on such investment as a must for grants.
• They are not run as businesses. There is a budget to meet, strategic goals to achieve, the mission to be accomplished. They often approve budgets with illusory revenue sources, for example.
• They aren't professionally run. Just because you're a “volunteer” doesn't mean you have an excuse to be unprofessional. You need to meet accountabilities, show up, and do your job.
• Donors are not sufficiently romanced. Donors need to be “triaged” so that the highest donors receive the most recognition. One theater, in a fit of “woke” madness, actually put donors in alphabetical order in their playbill, so that no one knew who gave $5 or $50,000. That's just dumb marketing.
• They exhaust funds and credit lines with no idea of how to repay. Debt kills the arts in particular. There's no room to take risks or to contract for expensive rights.
• Politics overwhelm the value. It was just pointed out that every member of the board of National Public Radio, accused of being far too liberal and unfair in its reporting, is a Democrat. That wasn't an accident, and they're using public tax money.
• They default to tactics on the board, not strategy. Instead of talking bout what to create to attract more patrons or donors, they discuss what meal to serve at the next fundraiser.
Every organization is a business. You need customers/clients/members/audience/contributors. You need leadership and board members who know how to run a business and meet goals and financial requirements. Oh, yeah: And you need term limits to remain contemporary and effective.
