Episode 165: New Organization Structures - What Philanthropy Must Do

Welcome to another edition of "Around with Randall" your weekly podcast on making your nonprofit more effective for your community. And here is your host, the CEO and founder of Hallett Philanthropy, Randall Hallett.

To steal from Mr Rogers it's a beautiful day in the neighborhood right here on this edition of "Around with Randall." Today we hop back into our thought process of philanthropy, having taken step this last time to look at another great philanthropist. And today I want to talk more about some of the changes that are coming, particularly in healthcare. But I'm seeing a few other organizations as well regarding governance structure and what that's going to mean to those of us who are kind of on the philanthropic side. A recent story caught my attention from emmer, actually it was from Beckers, but about Emery and their structure and really what the article was all about out was that as Emory looks at working through some of its governance structure they're eliminating local CEOs and repositioning leadership in the Executive Suite at the local level. There'll still be somebody pretty much in charge at the local level but all of a sudden the title's changing and the emphasis and influence is changing. They're beginning to regionalize some things and that control. Not saying that's bad. From an organizational standpoint there's a cost savings. Plus probably it takes out layers of management that could increase the time it takes to make decisions, get communications, things of that nature. So in and of itself it's not bad, but the question becomes how does it affect philanthropy.

I have a client has a system who's going through some of the same conversations and all of a sudden they're regionalizing some things, and that actually they have a couple of CEOs in smaller hospitals that are sharing that responsibility. Meaning they have two hospitals that they're responsible for. That alone, they aren't big enough to constitute need or demand in the current financial circumstances two CEOs when one CEO could do it, and they might go two days here, three days here, either in person, via Zoom, or some combination, which is then changing the relationship, like Emory, that philanthropy has. So a couple of premises to start with. I assume that we all agree that philanthropy is best done locally. It doesn't mean that we don't have if we're a healthcare system or if we're sharing if we're social service. I've seen the Boys and Girls Club do this like we're going to merge two clubs. They're going to have two locations but one governance or leadership structure. YMCA, the same principle. I've seen a couple of those. it doesn't mean that philanthropy can't be done across the entire organization for huge causes. If we're in the major genomic research area you don't do that at a small hospital. You do that across the system or in an academic medical center and you position yourself to maximize resources and outcomes when they are limited. But for most of us in philanthropy what we're being asked to do is much smaller than a billion dollar campaign. Yes, academic medicine and large universities are in these mammoth campaigns, but most of us are in much smaller circumstances, which brings us to this conversation of what happens when our local leadership disappears, or there's less of it, or there may be people that are in you can see me air quotes leadership but the decisions are actually being made more distantly.

Now I think this becomes a real issue and ironically unplanned it aligns with what I wrote and released late last, in 2023 as I hold it up on video about my book, Vibrant Vulnerability about this idea of what we should be doing to integrate into the decision-making process. This one is about Healthcare, but you could substitute healthcare for other things, but most importantly how our CEOs and our Executives aren't aligned with us, which is causing a problem, and really what I want to spend some time talking about is what are we going to do about this. So the problem becomes very evidently and obvious. We, all of a sudden, were if we've done this correctly have a relationship with our local CEO who has some authority. If you're part of a system or larger organization maybe not as much as you'd like to make decisions on strategic initiatives: What we're going to invest in, how we budget, things of that nature. All of a sudden if you remove the CEO and they are regionalized while they're maybe a chief operating officer or someone else with a title, the power is being removed locally where that organization is now making those strategic initiative decisions, those budgetary decisions over here away from you. And you all of a sudden don't have as much influence as you would like or want when it comes to where philanthropy fits into this larger perspective, and that's a problem, at least for some. There are a number of people, and I'm sure those listening to this aren't any of these, who just want to be left alone and go raise money from the golf tournament and a few grant applications. Nobody really asks them any questions and they just do their job. They're not pushing the envelope. Well that's not what my book's about. I mean when we think about my book and what I talk about, it's truly about how do we ingrain philanthropy into the Executive Suite and really making them more responsible for it.

So the Tactical today is to take some pieces from the book as this new kind of moment occurs, and seeing if we can figure it out. So let me start with the broad, and then we'll get to the very tactical seven things I think you can do and should do. Number one overall, number one, and number two A and B whatever you want say is this is going to require more effort, more strategic

thought. If you want to be a Difference Maker you're gonna have to think about it differently. I have a good friend, colleague, a client who is really good at his job but I don't think the system, the organization, understands the value that he delivers. If he was given more access, authority, involvement, and what's interesting is amongst the best leaders I work with and he's an, I think exemplifies it at the highest level. But I've got one or two others that are kind of in a similar boat. They're not quite in the same kind of destination he is because he's been dealing with this for a number of years. Great leaders aren't satisfied with just sitting around and doing nothing they just aren't, and that if they can't feel and know that their impact is making a difference eventually good leaders will go find a place that they can do that, and that's kind of where my friends at. And I got two others that our clients and friends were kind of moving in that direction, like what is the organization doing. So what I counsel all three of them on is politically smart, without making accusations or causing such disruption that you become a problem, rather than an asset, is you have to challenge the status quo respectfully in a very positive way, without casting spears of people or the organization, making people feel like they are stupid or dumb or they don't understand. But that's really what I get paid for, but frankly I like about my job. I challenge status quo. I, me people feel uncomfortable. Some people react to it negatively. That's okay. Some react to it like oh this is interesting. Those are the ones I love working with. What I know about, all of this is that.

If you're listening to this and you're looking at your organization, and let's say maybe you haven't had a governance change or structural change, organizational change, but you're still, these seven things are going to apply to you, and you're not willing to do them, then the question I have for you is then why are you doing what you're doing. The answer may be a paycheck. That may be fine for a lot of people. It's not they want in the short time. They have on this earth even shorter time than they have professionally, and even a shorter time than they have as a leader inside the profession as a part of their life to change what's going on. And as Emory goes through this, and my client goes through this, in terms of their Regional leadership, what I'm pushing on is to say what are you going to do about it respectfully, positively. Just sitting there is not going to help anything.

So what are the seven things I would recommend if I was advising philanthropy at Emory, or as I do with my client who's kind of looking at restructuring, or with the other two clients that I'm actually having this conversation with. What am I telling them? Well the first thing is that the most important aspect is you've got to push into strategic planning conversations. Sometimes they're formalized, there's a committee. Sometimes if it's a small enough organization it's just the executive committee of the hospital or the executive team. But if you're not at the table as they're thinking and talking about strategy then you are so far behind the curve it's almost impossible to keep up. If you have to beg to get in that room you need to do so. If you're the chief development officer, I'm not talking about the coordinator for the annual fund, they're not necessarily need to be in the strategic planning of the hospital, the the university, the the N the YMCA or wherever or Make a Wish, doesn't make difference what nonprofit. But if you're the chief development officer or whatever else title you carry you're not in that room you got to go back, fight, because that's where the decisions are made and it may be a lot less strategy right now as finances and non, some nonprofits is a little bit of a challenge. Just decisions on budget because that is strategy. If you choose to cut part of the budget that's a strategic decision because that's going to have an effect. The other thing that I appreciate, I heard this discussed in Orlando at the Association for Healthcare Philanthropy conference and then obviously my book talks about Vibrant Vulnerability is you have an onus to be incredibly well-informed about the organization and the industry in which you serve.

If you're the chief development officer or if you aspire to be one, if you're in healthcare, you can't just say well the CMO is using all these acronyms and I don't know what they mean and I don't understand what drgs are, and I don't understand the financial situation of the hospital or how they get their money. You can't answer it that way. Or if you're in a YMCA, the balance between membership and donations and certainly the the clubs that go along and where they Market. You have to know those things. You cannot be an active partner in strategic Vision planning even if it's just budgeting, looking forward for a year or two. If you don't know what the organization does do you have to know it as well as the CFO or the COO, no, but you darn well should know it about 60% of that. When I came into Health Care from education at the at the Nebraska Medical Center, one of the things I take and I mentioned this in my book that I'm so appreciative of is Glen Fosdick and my boss the CEO for giving me, in some ways almost forcing me wisely so to learn about the organization beyond philanthropy, sitting on the executive team, sitting on strategic planning where I am forced into these acronyms and and financial models I'd never been exposed to. When we started moving philanthropy in a positive way all of that background information was incredibly helpful to me to articulate in their language what I was trying to help them achieve. So your first responsibility is to know about the organization and the industry. That means you need to do some homework. That means you need to take an online class. That means you need to find YouTube videos of people, and my gosh I don't care where you are and what you, what area of nonprofit sector you work in. There's plenty of free education. Yes you may have to do it after the kids go to bed. Yes you may have to go in early and do it before everyone shows up to work. Yes, you may have to work on the weekends, but at the end of the day it's your responsibility. So number one is to be able to push into strategy, into those planning meetings, begging to be in the room when those conversations occur, is being able to be knowledgeable enough and wise enough about the area to have a comment.

Number two is you're going to have to push for time. One of the things I talk about in Vibrant Vulnerability and I see with my clients the people who raise the most amount of money have the most amount of time from the CEO. I'm tired of organizations, and particularly leaders, saying the CPO the CDO is responsible for philanthropy. No the CPO CDO is responsible for the execution of philanthropy. The CEO is responsible for it actually happening. Now I may be on an island all by myself, but this island's going to get bigger because people are going to figure this out. Donors are sophisticated, particularly those at the highest stand. And with all due respect to the great work of CDOs and CPOs those Chief philanthropy development officers of which I was one for my entire professional career before I went into Consulting, I never spent a dollar of the money the CEO did whether that was the president of the school, the chancellor of the school, the CEO of the hospital, the CEO of the of the YMCA, or whatever nonprofit you're affiliated with or know of, which means our time with them is valuable, and not just our time with them in the organization but our time in getting them out into the community. And yes there's a lot of pressure on their time, but we need them building relationships with us, with the key donors. Not all of them, not a $5 donor. If your CEO isn't spending off non-solicitation time with if they're not spending time with the top three to 5% of your donors, the people who are going to move the needle, then what I would tell you is you're not raising enough money, you're not fighting for enough time. And if you have a CEO now that's over two organizations, two parts of the organization, two hospitals, two YMCAs now you got potentially two fundraisers, two CD CPOs fighting for that time, and so you've got to be respectful, and it may be shared. You may have to have more communication, but you have to have that CEO engaged particularly with the top people or this just doesn't work.

Number three is more and more often you need to have mini campaigns. It, mini campaign, may be for the year like we need $2 million to move this forward, we need $300,000 to do this, and you're running two or three or four, many campaigns rather than a comprehensive campaign. This starts to push into Healthcare more so than other places, but I think it's coming in other ways. What can we do this year philanthropically that can support the long-term Vision, which goes back to number one, if you're not in the room what it's being discussed you can't be part of the solution. But it's smaller bites now. If you're an academic Medical Center University Glen Grant University you're probably doing comprehensive campaigns but most aren't that big anymore. And so many campaigns can be broken out that really build relationships with the people who are interested in this specific thing. We can do it in six to 9 to 12 months max. Then we're going to roll out two or three more that are different stages of a campaign timeline, break things apart into smaller bites is really the key of of many campaigns.

Number four is to utilize our structures. I have a client where the CEO just really doesn't get philanthropy. It's a real struggle and I finally said look do you have a board member that you really trust, and they said yes. And I said put the board member in the room with you, with the CEO, and let the CEO just blow it and the whole thing will blow up, and help your board chair, respectfully, help the CEO understand. Because the board chair happens to be a large donor that they're going to stop giving, Which is going to happen regardless unless there's a change, unless CEO engages. I've done this with one or two bosses of my own where it wasn't until they felt such discomfort not from me but from people that they wanted money from that they went, oh I got to change what I do. So using outside influences like your board, a little discomfort, sometimes it takes an outside influence like me where I come in and say that's just not the way this works. I have meeting like that coming up and I had one last week with two Executive Administrative groups. I said that's not how this works and there was tension in the air, but the CDO CPO afterwards said we needed that because that's going to open more conversations. Don't run from discomfort, run to it respectfully, not there to say anybody's dumb or stupid, to help them get to where they want to go because that's the unifying factor. Everybody wants to go here, Healthcare, help more patients, better quality care, better experience. Students education, help those students to get to where they want to go academically. Social Service to feed people, house people. YMCA to provide an environment that is whether it's athletics for kids or sports for kids like my my kids participate in, daycare, all these other things. Everybody wants the end user to be the winner, use that to your advantage.

Number five is to show results, your results, other results. If you're not benchmarking what you do against others and say not only are they raising more money but here's the reason they are because they have this and this that we don't have some of that time is just Financial Resources some of that's time of the CEO, sometimes that's being a part of Street. Most of the leaders I deal with who don't understand philanthropy, they don't understand what it takes to do it and so if you're not showing results in benchmarking you're really leaving them thinking you're guessing. We're not guessing. This is science. We know what we're doing. We just have to show them what the science is.

Number six, make sure that you're reporting up to the highest level person, locally, you can. If you're not reporting to that CEO or that, and I've got a number of organizations where this Chief philanthropy officer is reporting to a layer or two down from the CEO, and I go your fundraising is dead, you can do golf tournaments, you can raise a little money here or there, but at the end of the day it's the CEO. I've got a client who's going through some Financial issues like a lot of nonprofits and they had an event and we worked together and really, she did most of the work, but she put her CEO up in front of 345 people at this event and said I want to be honest with you as to why we're here, and what we're doing, and why you're important. And I want to let you ask any question you want about what we're going through. Then the CFO came up right behind them and said, I want to talk to you about the finances of it. They quadruple the amount of money they raised just because they had someone else other than the CPO engaging with their donors. You can't do that if you're reporting three levels down. Donors want to see, hear, and feel the leader. As much as I love Chief development officers and chief philanthropy officers, that ain't the leader. It's the CEO that's the

leader.

Number seven, get closer to the CFO. I've read an article here recently that more and more organizations are turning to CFOs to become CEOs. I'm not sure I think that's a great idea because it becomes too much about finance and not about strategic vision and growth, but there are always exceptions. One is which is in my book, who I just Sue Anderson out in Marian Medical Center out in Santa Maria California. She came, she's in phenomenal CEO, engaging in the community. That's why I interviewed her for the book because she has a unique perspective coming from Finance, but understanding community relations. What I would tell you is that your ability to get to the CFO may get you into the room for strategic planning, may get you a better understanding of the organization, may lead to better understanding how many campaigns can support the budget. I don't think CFOs like philanthropy because they can't control it quite as often. They don't understand it. They can't tell the donor where the money goes if the donor want doesn't want to give it. They're used to having more autonomy. They're much different than we are. They're more on the conservative side where we kind of push the envelope. At the end of the day they're still control the money so you're gonna have to build a better relationship, and I regret that in one of the jobs I had I was not on the best of terms with my CFO and we were equals. We both reported the CEO, and frankly at times it caused some issues. Part of that's my problem or my responsibility. He didn't help matters. At the end of the day I have a responsibility to be a great partner for whoever wants to show up to move the organization forward, and philanthropy is the area in which I do that. And I hope you can think about that a little bit as well. So push into that strategic planning process, and your ability to learn about the organization so you have a valuable input into that, push for time for the CEO not just about asking but about engaging and listening to Communications. Do lots of mini campaigns, break things down into smaller bites so the organization can better understand them, utilize power structures, find people that can help support what you need to do to build those kind of relationships in the executive team and administrative teams, show results comparatively. Benchmark it and what it means to get to that. Also make sure that you're reporting up as you can. There's a reason. I'll use an example. Higher ed, I don't know anybody in higher ed that's a vice Chancellor, vice president for advancement or philanthropy, whatever department is doesn't report the chancellor president. And yet in other places it's like two rungs down. I'm like do you not see what they're doing over here? And lastly get closer to CFO. Better understand the budget and the value that philanthropy can help deliver to them as well. If we're not pushing in, if we're not challenging the status quo, and it's not where we want it then we get no better results, and at the end of the day that's bad for the nonprofit. It's bad for philanthropy. It's bad for our donors. It's bad for our community. That's why we have to sometimes push a little more than what we really want to, because it's the right thing to do.

Don't forget, check out the blogs. More and more am getting comments about them. I appreciate that greatly, two a week, 90 seconds. You get an RSS feed right to you. Not a problem. And if you want more information or want to talk or have a comment about this podcast just email me at podcast@hallettphilanthropy.com. I think 2024 the importance of philanthropy is going to become more and more illuminated, and the question is who are the leaders that are going to step up to do the work. And I hope you know the value you bring whether you are the CPO or you're aspiring CPO, you're a gift officer, you're just somewhere else in the organization, philanthropically that you play a critical role in the organization's success, and help the people that your mission articulates that you're supposed to be helping. Don't forget some people make things happen, some people watch things happen, then there are those who wondered what happened. Philanthropy are, is made up of people making things happen for the people and things that are wondering what happened, and that's a great professional life hope. You know that hope. You feel that hope. You can embrace that. I'll look forward to seeing you next time right back here on the next edition "Around with Randall." Don't forget, make a great day.