© solarseven/iStock/Getty Images Plus
Failure is not an option for organizations that provide essential, lifesaving or life-supporting services to people with disabilities and the elderly. And yet, so many close programs, or worse, shut down operations, each year leaving the most vulnerable among us without a safety net. How can leaders of nonprofits work to ensure their organizations remain viable and are positioned to serve well into the future? One sure way to avert failure is to install a business-minded leader at the helm to apply financial acumen and margin-focused management.
Fifteen years ago, I was lured from a successful career in healthcare finance to join Bancroft in its time of peril. Bancroft, founded in 1883, is one of the largest nonprofit service providers in New Jersey and the Philadelphia region for children and adults with autism, intellectual disabilities and brain injuries. Thinking I would gain experience in navigating the merger, acquisition or closure of an organization, I discovered the financial realities were only part of the story, that the reality of the people and families the organization served painted a very different canvas.
In my book, Too Important to Fail, I relate the story of extreme financial challenges and the steps I had to take to take to affect a turnaround. It is from this place that I assert the absolute necessity of placing business leaders at the top of essential service-focused organizations.
When I first came on board, I led Bancroft through its first financial crisis primarily from instinct. The crisis was in full bloom, and I had to act swiftly. Fortunately, I knew that obtaining positive cash flow is first and foremost in a turnaround, so my initial focus was to manage the spending and accelerate collections. While some of the preliminary steps I took didn’t always produce the intended result, I was able to pivot quickly and decisively.
The need to cover payrolls twice a month, every two weeks, regardless of many, many other demands became my obsession. Watching all the key performance indicators closely was required, as speed and decisiveness were necessary. Time was Bancroft’s worst enemy or best friend in a crisis, so understanding what was happening and planning ahead was critical.
The discipline of looking ahead and understanding the impact of change well before it shows up on the financials is the key to staying ahead of a disaster. The sooner action is taken, the better the prospect for a successful outcome.
And, dealing with such seemingly insurmountable challenges, when so many people are looking to you -- the leader -- for reassurance, hope and vision, failure is not an option. It’s up to the leader to unite everyone together around one goal: to save the organization.
“...it’s important to remember that turnarounds don’t happen just because of one person or just in the finance department. Communication and transparency about the situation are crucial as everyone throughout the organization -- employees and board members -- must think and act differently in order to have the most effective outcome. Understanding why the change is necessary, and how each person individually can contribute to the solution, is vital. When everyone truly appreciates the situation at hand, they can better understand the need for tough decisions like closing programs or implementing a hiring freeze.”
My experience demonstrates what can be achieved when failure is not an option. For nonprofit leaders in particular, important missions to provide critical services drives the passion and commitment to success. Concern about the people being served is paramount. But the mission and margin balancing act rule the day. In the life cycle of most nonprofits, turnarounds are routine. Operating with such small margins, if any, doesn’t allow much room for a hiccup, which often emanates from sources out of our realm of control.
There were so many times I thought Bancroft wouldn’t make it. I feared we would run out of cash. I worried we’d never sell the Haddonfield Campus. I was afraid we would miss our debt covenants. But I never gave up. I kept moving forward, trying over and over again to find new ways to overcome the current challenge at hand. You will too. When failure is not an option.
Today Bancroft continues its legacy of pioneering programs in special education, treatment and rehabilitation, community living and job training for those who need those essential services. With a wide range of community programs and a new campus that was built specifically for children being served today and not 100 years ago, Bancroft is an agile organization that is positioned to sustain itself for years to come.
Toni Pergolin is the author of Too Important to Fail: Leadership Lessons for Nonprofits, is President and CEO of Bancroft.