Solutions for Common weaknesses ofNGOs

An overviewPlanning and Fundraising as examples

April 27, 2009

Prepared by Zdeněk Rudolskýwww.because.cz

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Introduction

• This document was created to point out the most common areas with the greatest potential forimprovement within NGOs in Central and Eastern Europe. At Because, we work together with ourclients to improve.

• Each of the following slides represents a high-level summary of– the current situation of NGOs in Central and Eastern Europe;– risk exposure the current situation generates;– suggested actions that will improve the situation and mitigate the risks;– costs and benefits for NGOs associated with the suggested actions.

• The managerial scope of a suggested project is shown in the upper-left corner of each slide.

Strategic

Tactical

Operational

Common weaknes ses of NGOs www.because.cz

Common NGO weaknessesAn overview

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Governance and ManagementRisk management, Management by objectives, Planning and Execution

Current situation• Temporarily unstable situationwithin some NGOs• Abrupt major changes in themanagement or Board• Lack of continuity• Lack of strategic, tactical,operational and project planning• No framework of propercommunication activities• Lack of risk management andmanagement by objectives

Risks

• Governance and managementrisks (e.g. reputational risk, highturnover, miscommunication andpersonal problems, instability,misaligned campaign activities)• Operational risk• Financial risks (high sunk cost,little or zero ROI, CF problems)• Compliance risk

Suggested action• Assessment of current situationand identification of criticalsuccess factors• Development of risk register forthe structure and design andimplementation of risk mitigatingactivities• Assessment of responsibilityand ownership ofprocesses/issues• Review of existing policiesgoverning the Board and staffand testing if/how they arefollowed• Review of existing and plannedprojects• Development of an interimbusiness plan• Review and adjustment of SP,OP, PP, BDGT, and other majorplans including definition andevaluation of KPIs• Assistance with the structurerecognition process

Benefits

• Prevention of problems/risksrelated to weak governance andmanagement• Stabilization of an NGO• Coherent strategic and tacticalmanagement tools• Implementation of a transparentand accountable governancemodel

Strategic

Tactical

Operational

Costs• NGO: approx. 20- 80 man-days(first year only)• consultant: 10-40 man-days(first year only)• Mgmt:: supervision of theproject worth approx.3 - 5 man-days (first year only)

Common weaknesses of NGOs www.because.cz

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Communication and Process Optimization

Current situation

• NGOs has:• unclear processes• unclear job descriptions• unclear decision makingpolicies• weak/missing reportingsystem•mix of formal and informalcommunication

• All the above-mentioned thingsare often incoherent and do notform a logical system

Risks

• Inefficient communication andpoor information sharing• Personal issues and highturnover• Wasting of resources for“reinventing the wheel”• Different type of work in eachcountry enfeebling AI impact• Loss of credibility

Suggested action• Performing process mappingand gap analysis withrecommendations for addressingthe most important processesand/or subprocesses

• Defining roles, responsibilitiesand rights of all subjects

• Defining communicationactivities and channels betweenall subjects

• Decision-making process -clarification of ambiguities,implementation of missingpolicies

• Setting up standardizedreporting system and its tools

Benefits

• Boosted performance focusedon NGOs objectives• Prevention of personal issues• Unification of processes andwork to eliminate inefficienciesand to regain focus• Unification of reporting toencourage information sharingand decision making

Strategic

Tactical

Operational

Costs• NGO: approx. 5-15 man-days(first year only)• consultant: 5-15 man-days (firstyear only)• Mgmt: supervision of the projectworth approx. 3 man-days (firstyear only)

Common weaknesses of NGOs www.because.cz

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Human Resources

Current situation• Some NGOs have no staffappraisal, staff satisfaction surveynor integrated motivation andperformance evaluation scheme• Each regional/national sectionhas different job descriptions• Each regional/national sectionhas no or differentplanning/monitoring tools• High staff turnover

Risks

• High staff turnover• High direct and indirect costsrelated to high staff turnover• Staff doing work not alignedwith main processes• Unmotivated staff• Staff that is not chosen well fortheir work

Suggested action• Review or establish themotivation system• Review of job descriptions, theiralignment with processes• Introducing HRplanning/monitoring tools (e.g.Timesheet system, Staff manual,staff and volunteer organigram)• Implementing staff appraisaland motivation system• Organizing necessary trainingsand compiling related documents:Time management, working withvolunteers, financialmanagement, ethical andindependence codes• Make sure human resourcesgoals are incorporated in the nextstrategy/budget

Benefits

• Clear job descriptions• Job descriptions aligned withprocesses• Staff motivation is aligned withNGO goals• Staff understands their rolesand future prospects• Higher motivation, lowerturnover

Strategic

Tactical

Operational

Costs• NGO: approx. 10-25 man-days(first year only)• consultant: 5-13 man-days (firstyear only)• Mgmt: supervision of the projectworth approx. 2 man-days (firstyear only)

Common weaknesses of Gos www.because.cz

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Internal Democracy

Current situation• Board roles are not defined well• Insufficient internal democracydevelopment – members do nottake active role in decision-making (e.g. when creatingstrategy or selecting campaigns)• Few people are willing tobecome Board members

Risks

• Conflict between board andmanagement• Insufficient number of Boardcandidates threatening the qualityof Board‘s work• No participation of members indecision-making potentiallycausing loss of their support tothe organization

Suggested action• Review of policies governingrelationships among keystakeholders (e.g. members,activists, local groups, Board,Supervisory Board, staff)• Training of national boards in:planning, agenda, reporting,decision making, effectivecommunication, segregation ofduties, accountability• Clarifying board roles and boardjob descriptions• Design of activities supportinginternal democracy, sharingknowledge and good practice(e.g. mailing lists for peopleinterested in strategy creation,Activism meeting, Meeting ofGroup Coordinators, AGM,Intranet, e-activism, Ideasexchange conference, Groupsand activists meeting, Intl affairscommittee)

Benefits

• Smooth board - staffcooperation• More candidates for boardmembers• Proactive participation ofmembers in decision-makingprocess resulting in more stableleadership

Strategic

Tactical

Operational

Costs• NGO: approx. 5-15 man-days(first year only)• consultant: 5-8 man-days (firstyear only)• Mgmt: supervision of the projectworth approx. 2 man-days (firstyear only)

Common weaknesses of NGOs www.becausee.cz

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Project Management

Current situation• No project management orinsufficient project management• resources devoted to project adhoc• insufficient project monitoring• insufficient reporting andevaluation• little or no link between projectgoals and personal goals andperformance evaluation

Risks

• project plan behind schedule• goals are not set or measured• project goals are not met• overloaded staff (e.g. with short-term or relatively unimportanttasks)• failure of project• no lessons learned frommistakes in previous projects

Suggested action• Training in project managementbasics• Setting specific, measurable,achievable, realistic and timebound goals for projects• Review of existing projects• Prioritization, setting the rightcost/benefit mix of goals andmeans to achieve them• Alignment of project goals withoperational plan and strategicplan.• Setting interim and final projectevaluation mechanisms• Review of cost allocationprocedures in place (e.g.allocation of direct and indirectcosts to activities/processes)• Building relationships withproject partners (support, onetime gifts, long term strategicpartnerships, gifts in kind)

Benefits

• prevention of problems causedby various types of projectmismanagement• meeting project goals• reasonable allocation ofresources to projects• standardized reporting• costs related to activities areknown and analyzed

Strategic

Tactical

Operational

Costs• NGO: approx. 30 man-days(first year only)• consultant: 5-15 man-days (firstyear only)• Mgmt: supervision of the projectworth approx. 2 man-days (firstyear only)

Common weaknesses of NGOs www.because.cz

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Fundraising/Direct Dialogue

Current situation• Financial dependence on toofew resources• No/useless database• No or inexperienced Fundraiser• No or insufficient FR strategy• Missing or incomplete FRbudget• No or little experience with DD• Lack of controls• Lack of ownership and drive forresults

Risks

• Financial dependency• low ROI of FR projects• Wrong FR goals• DB will not cover FR needs• Inappropriate budget• Difference btw. budget and CF• High fluctuation• Miscommunication, fraud

Suggested action• Performing a proper marketanalysis• Development of fundraisingstrategy including appropriatemotivation scheme for thefundraiser and recruiters and risk-mitigating tried-und-true controls• Coordination of DBimplementation• Recruitment and training ofFundraiser• Setting DD budget assessment• Supervision over the 1st and2nd year of DD project• Sharing of best practice in theregion• Defining proper communicationand reporting roles and activities• Introducing a qualitybenchmarking• Securing support and ownershipfrom the respective board

Benefits

• Gaining financial self-sufficiency• Sound FR strategy and goals• Low risk of DD failure• Proper planning and projectmanagement procedures in place• Standardized database• Trained staff, tried&true practice• Consultants provide fast andflexible assistance

Costs• NGO: approx. up to 45 man-days (first year only)• consultant: up to 45 man-days(first year only)• Mgmt: supervision of the projectworth approx. 5 man-days (firstyear only)

Strategic

Tactical

Operational

Common weaknesses of NGOs www.because.cz

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Summary

The summary diagram shows how suggestedprojects’ scope would impact respectivemanagement levels.

Strategicmanagement

Tactical management

Operational management

50 big project worth 50 man-days

8 quick win worth 8 man-days

Project size

41 Governance andManagement1513

HumanResources

45

Fundraising/Direct Dialogue

Internal Democracy8

Project Management

15

Communication andProcess Optimization

Common weaknesses of NGOs www.because.cz

Common NGO weaknessesPlanning and Fundraising as examples

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PlanningQuick win solutions

Should you identify any of the above-stated weaknesses within your organization, there is usually aquick win solution for it.The following eight steps are ordinarily taken before the solution (change) starts to work:

1. Performing analysis of the As-is situation2. Identification of weaknesses and related risks3. Formulation of hypotheses for solution4. Drafting new or changing the current strategic/operational/project plans5. Acceptation of proposed draft/change6. Preparation of proposal for change implementation7. Acceptation of proposed implementation of change8. Implementation of changes and verification of their impact

The schedule is valid both on national and international level of an organization.

Common weaknesses of NGOs www.because.cz

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FundraisingExample of a quick win project (I)

• What everyone does.. and somehow good… („old FR“): Grants, company/corporate fundraising, gifts in kind.

• What someone does.. somehow good… („old-new FR “): E-fundraising: DMS, SMS, mailing, social networking, support from individuals, running business,social enterprise.

• What most of us forget to do… („forgotten FR“):Savings - change coming from inside, networking, synergy, improving and reviewing of FR,inheritance.

• What all of us want have, or should want to have at least… (dream FR – need to bring it toreality):

New magic form of fundraising, alignment FR, PR, campaigns etc…, approach- relationships-game.

Think it over before you start: Have you considered all the possible ways ofFundraising? What is the best way of fundraising for us? Where else should I look for money?

Common weaknesses of NGOs www.because.cz

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• Is it worth trying to save resources within the organization?Yes. Fundraising is not only about fund-raising, but about effective use of it too. Therefore weshould try to save the resources within organization first:• Do we remunerate right our employees for their work?• Do we use voluntary work where appropriate?• Do we have the best possible suppliers‘/contractors’ prices?• Do we have financial reserves? Does it earn some money?• When was the last time we reviewed whether it still makes sense to continue with some

projects?• How long will it take until our fundraiser has results?

It used to be said: „We need a lot of time to explore the market, then to create a strategy, thena long period of time to contact donors, later on to approach them carefully and AFTER ALLTHAT to ask for money… is should take more than a year …“

1. Forget it.2. Plan only what is really necessary. Then ask for money whenever you have a chance to do

so.3. Set performance measures for your fundraiser in such a way that you are able to monitor

and pay for his/her performance from the very first day of work.4. In this way it cannot happen that you would pay your fundraiser for ages and then he/she

leaves without any results.

FundraisingExample of a quick win project (II)

Common weaknesses of NGOs www.because.cz

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FundraisingExample of a quick win project (III)

we know all this… where are the new forms of Fundraising?

Common weaknesses of NGOs www.because.cz

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1. Plan2. Save3. Improve4. Network5. Build relationships6. Play the game7. When it s over, it is over

• And do not forget:• It is still about a little bit of good luck.• Donors are just humans too, approach them that way..

• Thank you, good luck and good bye!

FundraisingExample of a quick win project (IV)

7 Fundraising. The shortcut...

Common weaknesses of NGOs www.because.cz

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Because

Because s.r.o.Zdeněk Rudolskýwww.because.czzdenek.rudolsky@gmail.com+420 608 95 64 54

Common weaknesses of NGOs www.because.cz