This is an unanticipated third part of the discussion of hiring and paying for an organization’s first staff position.  Here we present the challenge in confronting a situation where several dynamics need to be addressed to raise significant funding for personal services:  no funding currently exists for said position; administrative costs are not reflected in funding requests, substantial funds raised do not pass through the organization’s budget on their way to government agencies, private funds are all directed directly into project expenses.  Does adequate justification exist to make dramatic adjustments to these policies to pool adequate funds for capacity building, such as staffing?

According to the volunteer board members themselves, there are several reasons to reach toward policy adjustments supportive of staffing.  First, having a staff member may reduce the time in completing the organization’s mission by 50%.  Second, having a staff person would dramatically reduce or eliminate costly missed time-sensitive fund raising opportunities.  Third, having a 40 hour per week dedicated worker would significantly increase productivity of the organization.  Fourth, the potential cessation of operations and organizational death resulting from the departure or burn out of a partial handful of very motivated board volunteers could be substantially prevented.

Are these reasons adequate for an all-volunteer organization to make the painful, time consuming and challenging adjustments to its culture to support new policies and operational procedures?  Only time will tell.  It is very easy when looking from the outside in to say that somebody else should be focused on strategic adjustments for long term viability and success.  It can be very difficult to attain motivation to make dramatic changes to get beyond the short term tactical perspective when you are the one lashed into the harness and feeling the unrelenting responsibility for producing an organization’s outcomes.

OK, let’s assume that you have already recently completed a strategic planning process in which you verified that there is an ongoing niche your organization can best fill, in terms of community value that your organization can be counted on to create.  Convert these outcomes into an average annual budget, thinking about a range of dollar value activity that you are convinced that your organization should be providing the community.  Since the organization has been in business for several years, base this value on actual experienced expenditure levels.  Now be very conservative and think about the minimum staff time required to produce the low end of the range of annual dollar activity. 

Since you already have a board, you can now adopt an annual budget, that includes some level of living wage AND reasonable benefits for a first staff person, your E.D. (executive director).  Together, these two figures constitute your “personal services.”  If you have contracted for staff work in the past, then you already have a head start:  you are just converting out-of-house contractual expenses into in-house personal service expenses.  If you are still not persuaded that you have enough annual work for a staff person and the board is never going to have challenges with succession or burn-out, then be happy with your contractual services approach and don’t read the next five paragraphs!

Now that you have a budget and a resulting target for annualized personal services, at least for the first year or so, you have some serious policy to adopt.  Let me preface this to say that far too many young nonprofits believe the wishful thinking of some of their funding sources, that is:  all we want to pay for is the bread that goes into the mouths of hungry children, not “administration.”  This assumes that “administration” or the activities to accomplishing the outcome of placing bread directly into the mouths of hungry children is valueless but nothing could be further from the truth. 

Without “management,” service delivery could not exist.  Somebody needs to locate and verify the degree and nature of a group of hungry children, find and secure reliable and appropriate quality and quantity of said bread, transport it to the children, distribute it to the children or their guardians, verify the delivery took place, evaluate that the provision of bread made a difference in reducing the children’s level of hunger and the impact of improved nutrition on the lives of the children. 

The point we are making a long journey to is this:  it takes anywhere from 10-20 cents to provide every 80 cents of direct service in ANY organization, even in a shoestring rock-bottom cost nonprofit.  Any nonprofit that does not include administrative/overhead/indirect/program management costs in its grant requests or in its own budget is insuring the demise of the organization.  Without communications capacity, nothing can accomplished on a reliable basis.  Yes, all of these types of support costs CAN be contributed but no ongoing organization, nonprofit, faith-based, government or commercial, get’s completely on direct service expenses alone (unless the direct expenses are for activity conducted by staff)  and your organization shouldn’t either!

So, start by budgeting for the true complete cost of the community service that your organization is providing.  Stop relying unrealistically on heroic levels of contributed board time and start building this true cost into your grant seeking and fund raising.  This true cost basis supports converting expectations in the community, so that your stakeholders realize that yours is a professional organization just like all of those you for which you are raising funds. 

In the April 1 post, I referred to an organization that raises substantial funds without staff for community infrastructure.  Trust me, all of the architecture, engineering and material supply businesses that you are distributing funds to have staff and support costs, or your organization wouldn’t rely upon THEM to wisely spend the money you are so generously raising to meet their cost requirements.  These businesses are not doing their work for free and even if you are nonprofit, neither should YOUR organization!  Without your organization to develop and promote these projects, desired infrastructure wouldn’t be created and community value wouldn’t be generated. 

Believe it or not, I recently came across an organization that primarily raises funds for community infrastructure and, you know, they are really good at this.   So good, that many on the board wonder why they can’t all just keep going as a band of highly committed, highly effective volunteers.  Well, it isn’t against the law to have an all volunteer organization forever but it has been more of my experience that most nonprofits can’t wait to hire full time staff.      

Such a simple question, yet so many ways to respond to it.  I want to present my thoughts in two separate chunks.  Well, the few obvious answers are:  1)  When you are ready; 2) When continued success demands it; 3) When the community needs more from you and 4) When you can afford it.  Ethically, I think #4, affordability, is really key.  So again, I ask:  do you have the cash flow for a half time or better staff position at a market rate of pay with a competitive benefits package?

So many nonprofits start out with a part time first staff position or an underfunded full time position, that is, there isn’t enough for a market rate salary or there is only money for the first year [hey, new ED, what a deal we have for you:  you get to raise your own salary from now on AND increase our outcomes – when can you start?].  These boards expect the ED to build up their own salary and many times cause a high anxiety situation where the staff member is so focused on finding contracts and projects to pay for her or his time, that more strategic revenue source strategy and service development is put off.  And the first staff member is frequently lost and the organization is set back.  More thoughts in two weeks.

A recent exposure to the board of an all-volunteer organization reminded me of just how rewarding board service can be.  In this case, as I attended an annual conference, the keystone event of the organization, I was struck by how much time the board members in attendance were putting in to make the event successful, to make all of the attendees feel welcomed and valued.  Each of them had spent goodness knows how many hours preparing for this event and devoted two solid work-week days to overseeing the event.

I was in awe of some of the board members, local rock stars in their professional field, going about their assigned clerical chores with joy.  These people were happy with the task of representing their organization and took pride in their achievements.  In older, better funded organizations that can afford  professional staff, we tend to see junior paid staff or perhaps other volunteers in these “menial” organizational roles. 

One wonders what it might be like, on occasion, for board members of more mature organizations to think about why they are involved and how much success pursuing the mission of the organization means to them.  Are they willing to roll up their sleeves alongside staff to pitch in and make wonderful things happen for the community we share?