Investing in Leadership

This brief guide is designed for both emerging and established philanthropists. It sets out five key questions that donors can ask to evaluate leadership.

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Introduction

Some of the most important information a donor can gather before investing in an organization has to do with people, not spreadsheets. The people who work, volunteer and care about a nonprofit organization often provide a clear reflection of how the organization operates.

It would be inefficient —not to mention very costly —to try to interview a wide cross section of stakeholders. That’s why examining the leadership of an organization can be so helpful to donors. It’s a way for thoughtful philanthropists to get a window into the strengths and weaknesses of the entire organization, to understand its operational culture.

Leadership is one of a number of factors that determine the effectiveness of a nonprofit organization’s work. Visionary leaders possess the ability to assess the way things are and then inspire us to help create new solutions. In this sense, leadership does more than set policies and define goals; it creates a paradigm for a better world.

When venture capitalists research potential startups, they first evaluate the entrepreneurs who guide them. So, too, can effective donors evaluate leadership in potential grantees. Strong leadership —or the lack of it —can be a decisive factor in making funding choices.

 

Five Questions to Ask

Five Questions to Ask

This brief guide, part of the Philanthropy Roadmap series, is designed for both emerging and established philanthropists. It sets out five key questions that donors can ask to evaluate leadership.

  1. What is the leader’s vision?
  2. How does the leader make and communicate decisions?
  3. Is the leader a good team-builder?
  4. How does the leader handle conflict?
  5. Does the leader balance passion with strategy?

Finding the right fit

It takes different leadership skills to guide organizations at different stages:

A startup might need a leader with a grand and compelling vision.

A growing organization might need someone who is good at building systems and teams under steady financial management.

A mature organization might need a stabilizing leader who can make use of established systems in more sophisticated ways; for example, someone who is an expert in board relations.

Question 1

What is the leader’s vision?

Most philanthropy seeks to create social change. A nonprofit leader’s vision is like a blueprint for that change. It’s far more than a dream. It details not only what the organization seeks to accomplish, but also what role it will take in its field and in the communities where it operates.

It’s not uncommon for strong leaders to rely on powerful communication skills to inspire their colleagues and other stakeholders, painting a compelling picture of how the organization’s work will create a better world. But that inspiration becomes much more powerful when it is also strategic and practical. Donors may want to ask a leader about what forces influence the organization’s work—for the good and the ill—to get a sense of how the leader’s vision will play out in the real world. Donors may also want to assess if a leader’s vision reflects an understanding of evolving opportunities and challenges.

Many donors also find it useful to ask about an organization’s financial and fundraising vision. There are few things as important to the sustainability of a nonprofit as its ability to fundraise. So the leader’s vision of how to achieve fundraising goals— including issues such as the fundraising role of the board and the importance of growing the endowment—can reflect not only an organization’s ambition, but its ability to survive and grow.

Question 2

How does the leader make and communicate decisions?

Decision-making can reveal a lot about the level of trust a leader has with his or her team.

How well can the leader explain her method of making decisions? Can she tell you who influences —and who participates in — key decisions? Is it clear to colleagues when a leader is looking for advice, for consensus or just for information?

Leaders in nonprofits often want to build collegiality and so err by being too diplomatic. They spare feelings, but lose clarity in direction. Or, if the leader has a strong desire to be liked, miscommunication can result as the leader tip-toes around perceived sensitive subjects.

Honesty and plain speaking can be of great advantage here. Some decisions may be the leader’s alone. Others can be arrived at through group deliberation or delegated to individuals. But good leaders make clear what process will be followed. Experts say this kind of clear and consistent approach to communicating about decision-making leads to trust. And this trust has multiple benefits: it supports not only the values of the leader and the organization but allows greater effectiveness in advancing the work.

Question 3

Is the leader a good team-builder?

Organizations undergo changes that require staff to show unity and agility. Naturally, team building gets significant lip service. But what does it mean?

Clarity of vision defines an organization’s purpose. But a strong team is also built on resilient relationships operating within a strong group identity. Good leaders rely on an understanding of the needs and perspectives of staff and the populations they serve. They balance that empathy with honesty.

Beyond these fundamentals, there are two questions many leaders must confront as they seek to build a motivated team.

Who are we?

How will we work together to achieve our goals?

These are very practical questions. The identity of the nonprofit must first be defined before it can be accepted by stakeholders and guide the work being done. This identity reminds staff and donors that the organization’s work is part of something bigger than any individual. The answer to the second question shows how an organization’s structure and strategy interact in practical terms and reminds people that their individual contribution is essential to the success of the whole endeavor.

 

“The only two things you need to build in a team, and you must build all the time, are identification — a sense we are a team — … and interdependence — that we need each other to succeed.” - Professor Clifford Nass, Stanford University

Question 4

How does the leader handle conflict?

Nonprofit leaders sometimes struggle to answer this question and to give a particular instance of how they dealt with a conflict. They can feel vulnerable. Conflict, by definition, is a problem. Leaders usually prefer to focus on their achievements. However, anyone with experience in the field will tell you that conflict is as common in charitable organizations as it is in any other sphere of human endeavor. So dealing with conflict productively is very important.

Good leaders benefit from qualities like wisdom and patience in dealing with conflict. And all leaders must rely on the trust they have built with staff and others involved. But experienced leaders also usually have an idea of what process they will go through and some organizations have formal strategies for dealing with these problems.

A conflict can have its roots in creative tension or personal misunderstanding or even perceived mistreatment. The potential causes are many. But leadership is demonstrated by how the organization responds to these challenges. Do managers ignore it and hope it will go away or do they address it? Is there confidence in organizational values and systems to help clear up the problem or do people lack faith in the system?

It pays the donor to approach this subject with tact, but it should not be ignored. How an organization deals with difficulties often says a great deal about its core values and potential.

Question 5

Does the leader balance passion with strategy?

Most nonprofit leaders have passion for their work. If they don’t, donors might well ask why. It could be that the organization has been operating for many years —with a leader so experienced and an operation so well-established that commitment has refined into a kind of calm competency. On the other hand, that competency may have slipped into complacency based on a lack of engagement. In any case, it’s worth checking on.

For most organizations, though, passion is quite common. Here, donors might consider asking how the passion is being translated into specific plans.

Many of the best disaster relief organizations demonstrate complete passion and commitment to the cause of saving lives and alleviating suffering. But they must do more than have conviction about their cause. They must prepare. They don’t know where the next tsunami, earthquake, fire or man-caused crisis will occur. Still, they stockpile supplies at strategic points, they create relationships with partner organizations worldwide, they devise contingency plans that can be adapted quickly, and they hire staff and advisors with the experience to guide their response to disaster.

Shakespeare wrote, “The readiness is all.” Where leaders combine passion with practical planning, philanthropists may well find effective organizations to support.

 

Moving Forward

Moving Forward

A leader is an example, a catalyst, a motivator, a manager and a decision-maker. But above all, a leader is accountable for results —to colleagues, to clients, to communities and, of course, to donors.

A good leader also knows how to track results. She knows the answer to the question: how do we define success? And she can report to donors truthfully on how the organization is doing in relation to its goals.

Accountability is not something dry, to be determined only by consulting a ledger sheet. Donors can see it in the faces of motivated employees and feel it in the atmosphere of a positive, focused office.

Accountability can also be seen in how an organization reacts to changing circumstances —whether it be a programmatic opportunity or an operational difficulty. A leader who has established trust with staff and other stakeholders has usually also built loyalty. And loyalty emerges at crucial times when people step forward to show they are accountable not only to the leader but to the cause the leader espouses.

In this sense, leadership reveals not just what a leader does, but how a charitable enterprise functions.