Fred was pleased with the early success of his new charitable organization. The process of forming his organization and gaining IRS 501(c)(3) recognition took more than he expected. But as soon as he had his organization’s determination letter, Fred was off and running, executing his long-held plans. Yet his early success hadn’t made things any easier. Just the opposite: his early success seemed to have compounded his challenges. It was then that Fred realized he didn’t have a clear idea for how to manage his new 501(c)(3) charitable organization. He needed some guidance if he was going to be able to keep up with his organization’s growth and success. He was definitely on to something, and he didn’t want to lose it.

Management

Charitable organizations depend on sound management. Some businesses you can get up and running, and then more or less leave alone. Not so with charitable organizations. Donors, volunteers, staff members, board governance, executive-director leadership, supplier relationships, program activities, and changing patron needs and demographics all make for a complex and fluid mix. If you can manage a 501(c)(3) charitable organization, you can manage a lot of other challenges, probably including a for-profit business. If you haven’t yet managed a charitable organization, don’t be surprised if you need help. Instead, seek and find the help you need so that you master the management challenge. 

Resources

You can help yourself manage your charitable organization by realizing that you are not in it alone. The nation’s 1.5 million 501(c)(3) organizations generate a lot of offers and resources for management assistance. Investigate those resources. You may, for instance, find a local United Way chapter that offers courses, training, coaching, and other help. You may find a national, state, or regional organization devoted to helping charities in your specific field, in the way that Feeding America and the Salvation Army help local soup kitchens. Or you may find a charitable organization much like your organization, serving effectively in another location nearby, the manager of which is happy to share insights and ideas. You may also find retired charity leaders as mentors and a network of lawyers, accountants, bookkeepers, and other professionals with whom you can briefly consult for tips or advice. Build and rely on your network resources. 

Leadership

Sound charitable-organization management begins with effective charitable-organization leadership. If you have a strong, unified, and talented board of directors in place, then you are well on your way toward effective management. But boards only govern. They don’t exactly lead. Board members are volunteers, generally with limited time and energy to devote to your charitable organization’s leadership. Instead, your organization, if of any appreciable size, will likely need a compensated employee as its leader. Charitable organizations generally call that paid leader the executive director or ED for short. Don’t confuse an executive director with members of the board of directors. An executive director is generally not a member of the board of directors. Instead, the ED works closely with the board chair or organization president to inform the board, while then carrying out the board’s directions. 

Executive

Your organization probably needs to hire an executive director, once it obtains the funds to do so. The executive director may be you, the organization’s founder and incorporator, unless you prefer to retain board leadership as the board chair and organization president. For a time, while soliciting donations and getting the organization up to speed, your organization may proceed without a paid executive director. You may lead the board as a volunteer president, while also managing the organization’s initial fundraising and program activities without compensation. That arrangement may even persist for a good long time. But once your organization’s activities become so complex and its fundraising sufficiently successful as to afford and benefit from dedicated paid leadership, you and the board would recruit, interview, and hire an executive director, if you, with board approval and as the organization’s founder and principal mover, choose not to step into that role.

Attributes

The attributes of an effective charitable-organization executive director generally begin with a stable and positive personality, good at forming and maintaining positive interpersonal relationships. Your charitable organization will need directors, donors, and volunteers, who will generally participate only if respecting, trusting, and even enjoying the company of your organization’s executive director. Choose an ED with a great personality, if you can. An ED also generally needs strong skills in recruiting and managing volunteers and employees. Hearts and hands are the lifeblood of most charities. If your ED cannot recruit, inspire, and support committed volunteers, then your organization won’t have the management it needs. Your ED should also have at least some knowledge about fundraising, finances, human resources, and related administrative skills. And your ED should also have a heart for, and know the needs of, your organization’s patron population. Cast a wide net in recruiting your organization’s ED. The perfect candidate may be out there waiting for your call, if that candidate is not you.  

Volunteers

As just mentioned, volunteers are the lifeblood of many charitable organizations. The ability of a charitable organization to recruit volunteers to carry out charitable service is a strong indication that the organization is a charity. I once had a client 501(c)(3) organization receive an offer from a large corporation to give the organization a six-figure grant if the organization would abandon the religious aspect of its charitable service. The organization made an easy decision to reject the offer because it knew it would have no volunteers to carry out the service if those volunteers could not express their faith in the course of their charitable service. Communicating your organization’s charitable purpose and mission clearly is generally the key to volunteer recruitment. Develop and implement clear and consistent plans for volunteer recruitment, through your organization’s website, flyers, signage, network, and staff activities. Make clear that your organization welcomes volunteers for specific roles, the rewards of which inhere in the charitable service and patron relationships.

Retention

Not just volunteer recruitment but also volunteer retention can be key to a charitable organization’s success. Charitable organizations invest substantial time, trouble, and expense in volunteer recruitment, orientation, and training. High volunteer turnover can exhaust your organization’s resources and degrade your organization’s operations and charitable service. Some charitable organizations depend heavily on skilled, dedicated, and experienced volunteers who have served the organization for years or even decades. To increase volunteer retention, study, amplify, and promote the natural rewards that volunteers draw from their charitable service. Those rewards can include the community and fellowship shared with other volunteers, the appreciation volunteers derive from the organization’s board, leader, and staff members, the satisfaction of the charitable service itself, and the relationships with the patrons whom the organization serves. Enhance those natural rewards where possible. Foster opportunities for your organization’s volunteers to enjoy them, and your organization should find volunteers returning. See the later chapter devoted entirely to volunteers.

Employees

Skilled and dedicated employees can also be critical to a charitable organization’s effective management. Below your organization’s executive director, your organization may benefit greatly from an administrative assistant, finance administrator or bookkeeper, communications director, fundraiser, program directors, volunteer supervisor, facilities manager, and paid staff in other roles. As your organization gains the donations, grants, program revenue, or other funds to support a larger staff, develop a staffing plan and organization chart. Work compensation and benefits costs into your organization’s budget. Then follow sound processes to recruit, interview, hire, orient, train, supervise, compensate, and evaluate your organization’s staff members. Managing your organization’s human resources may be your organization’s single most challenging and complex function, and its most-important activity affecting its success. See the chapter below on how to staff your charitable organization.

Policies

As your charitable organization grows larger and more complex, you may find it helpful to develop policies to share internally, to guide staff members and volunteers. Flying by the seat of your pants may be necessary initially, in some areas. But soon, you should have discerned best practices, useful procedures, and common protocols. Record them, study them, refine them, adopt them, and share them with those whose actions they guide. Your organization’s policies may include personnel policies, fundraising practices, finance policies, program guides, communications policies, technology policies, volunteer policies, facility use policies, and policies in other areas. Charitable organizations tend to manage operations by their people more so than their policies. But your organization’s people can benefit from well-developed, clear, consistent, and helpful policy guides. Your board may find that developing and adopting policies on key subjects is a good way to ensure consistent governance. 

Technology

Technology is another area on which your organization can focus to improve its management. The technology your organization acquires and employs may depend on the charitable programs it pursues. But some technologies are broadly useful across all or many charities, no matter how much their programs differ. If you can, recruit technology experience and skill to your organization’s staff, volunteers, and board. Your organization may benefit greatly from timely advice and guidance on the computers to purchase, software to license, and technology systems to deploy. Those systems may cover functions like voice communication, text and email communication, word processing, presentation design and delivery, wifi, security systems, bookkeeping and accounting software, payroll software, and fundraising software, among other technologies and systems. Don’t over or under spend on technology. Technology can be either a force multiplier or drag, depending on how you deploy it.

Equipment

Your charitable organization may also need to acquire and maintain furniture, furnishings, and equipment (FF&E). Don’t just wing it, buying things when you can afford them. Instead, develop a capital budget for technology and FF&E. Be frank, if also conservative, about what your organization really needs. Your organization may have to start on a shoestring without furnishings and equipment that would greatly benefit its charitable cause. But don’t just keep operating that way. Figure out what your organization really needs, come up with a budget to purchase it, and then develop and implement plans to acquire it. Consider a capital campaign for furnishings and equipment. Start with essential program-related equipment, like stoves and plates for a soup kitchen. Invest first in program-related equipment, while buying or borrowing used furnishings for back-office operations. Your donors will appreciate your wise stewardship of capital funds.

Facilities

Your organization’s choice and acquisition of a facility can also be key to successful management. Charitable organizations often start out of their founder’s home or garage, or a borrowed space in the business of a founder or director. Keeping facility costs low or at zero initially can foster early program success, attracting greater donations and more volunteers. But soon, your organization may need a facility of its own, meeting its peculiar needs. Your organization may rent a facility, perhaps in an incubator space for charitable organizations or other start-ups. Beware committing to long-term leases, especially with rent increases built in. Flexibility to move to a better or less-expensive rented space, or to purchase the organization’s own facility or accept a donated facility or donated space, may be key to the organization’s future. Form a facility committee, and recruit volunteers or hire staff members with custodial and facility maintenance skills. Your organization’s facility could be its best asset or downfall, depending on the attention you give to it. See the later chapter on facilities.

Programs

Your organization’s charitable programs are the core of its mission. Planning, implementing, and managing those programs to serve your organization’s patrons is the way in which your organization will achieve its charitable purpose. As your organization’s founder, you have plenty of administrative responsibilities that can distract you from your organization’s charitable programs. Don’t get too distracted. Prioritize your organization’s program designs, resources, and time. It’s all about the purpose and the programs that accomplish it. A lot else, including your diligent administration, may be necessary, but nothing else is the point. Focus on your organization’s programs. Design them, fund them, evaluate them, and improve them, as your organization’s highest priority.

Development

Charitable program designs often develop over time. Your organization may set out initially with a reasonably specific purpose, say, to give disabled adults opportunities to acquire and refine work skills for paid employment. Your organization may pursue that purpose initially with a narrow program, say, to invite disabled adults to a job-training site on regular days at regular times, to establish a habit, practice, record, and discipline of attendance, while working on other job and social skills. But your organization may soon discern an opportunity to offer disabled adults actual paid work, inspecting or assembling parts, shredding documents, or performing other light, safe, low-demand tasks. Those tasks and their locations, supervisors, and methods may vary over time, in fluid development, the variety from which serves even better the disabled adults participating. The point is to continue to evolve your organization’s programs to meet patron needs and draw on available resources, around your organization’s consistent purpose. Give due attention to your organization’s programs. They are your organization’s core function. 

Suppliers

Managing supplier relationships is another key function for charitable organizations. Charitable service often involves more than just you and your volunteers and patrons alone. Charitable programs exist within communities. And your organization’s suppliers, including both businesses and professionals, are an important part of that community. Your organization may interact with and depend to a greater or lesser degree on landlords, lenders, accountants, tradesmen, custodial services, technology providers, utility providers, law enforcement personnel, social workers, medical care providers, food services, designers, and a host of other suppliers of goods and services. Pay due attention to your supplier relationships. Your organization may need a sudden roof repair, computer repair, or heating or cooling repair, to continue on with operations. Suppliers can not only provide essential and emergency goods and services but may also be willing to do so on a discounted or even donated basis. Make good friends among your organization’s suppliers. Your organization may count on them just as much as on volunteers and donors.

Key Points

• Charitable organizations depend on effective management.

• Abundant resources are available for improving charity management.

• Managing a charity effectively begins with sound board governance.

• Managing a charity next requires skilled executive leadership.

• An executive director should have people and administrative skills.

• Plan sensitively to recruit, train, retain, and reward volunteers.

• Recruit, retain, train, compensate, and evaluate effective employees. 

• Develop policies to guide personnel in repetitive charity functions.

• Deploy technology wisely to increase effectiveness and efficiency.

• Acquire necessary equipment through capital campaigns.

• Ensure that your facility is meeting your charity’s needs.

• Focus primarily on your charity’s program development.

• Respect, foster, and value your charity’s supplier relationships.

Read Chapter 11.