1. Non-Profit Health Check
Key Areas to Evaluate for Long Term Sustainability

2. Agenda and Goals
Facilitator Introductions – Todd Smith and Suzanne Maas
Goal of this session - Long-term Sustainability – What is it?
Lessons learned from American Textile History Museum
Lessons learned from Higgins Armory Museum and Tower Hill Botanical Gardens
Q&A breakout – 30 minutes

3. Facilitator Introductions
Todd Smith
Strategic consultant
Interim Executive Director of American Textile History Museum
Assessment, governance & leadership, financial viability, new models
Suzanne Maas, Leadership Transitions
Transition consultant and interim leadership
Interim Executive Director of Higgins Armory Museum
Assessment, decision making, new business model, integration
Interim Executive Director of Tower Hill Botanic Garden
Assessment, culture & governance changes, new business model

4. Sustainability – What is it?
Encompasses both financial sustainability & programmatic sustainability
Ability to generate resources to meet needs of the present without compromising the future
Ability to develop, mature, and cycle out programs based on constituent needs over time
Sustainability is a direction and an orientation, not a destination.
Requires continuous decision making that reflects the dynamic environment in which nonprofits exist.
Bell, Masaoka, Zimmerman, “Nonprofit Sustainability: Making Strategic Decisions for Financial Viability,” Jossey-Bass, San Francisco, 2010.

5. Tasks to evaluate sustainability
Organizational Assessment
Performed by External consultant or volunteer
Financial viability – length of runway
Governance health
Systems analysis
Capacity assessment
Organization culture
Mapping your Business Model
Performed by Internal Staff/Board
Identify core business lines
Identify mission and financial impact for each business line
Make Changes based on informed decision-making
We’re using the “length of runway” as a way of clearly identifying how critical an organization’s situation might be.
If you have 5 years or more, there are more options.
If you have 3 years or less, then time is too short for many outcomes and you need to make emergent decisions.

6. Lessons Learned from American Textile History Museum

7. Key Points – ATHM 2015
Focus on Budget Challenges – the “Ostrich Effect”
Avoid Mission Creep
Evaluate the Collections Policy & Its Integration into Governance

8. Budget Challenges and the “Ostrich Effect”
Budget Issues Do NOT Resolve on their Own
Boards Must Ask the Difficult Questions
Balance the Budget
Sustainable Revenue is Key
Huge red flags with a consistent, large annual budget deficit.
Yet many organizations are reticent to address the elephant in the room
Even very supportive Boards must ask important clarifying questions to assure that all scenarios are addressed.
Everyone MUST think creatively about earned revenue beyond admissions

9. Avoid Mission Creep Mission Focus Fundamental to Museum Success
Boards Must Focus on Mission
Business Lines/Programs Must Fit Mission
Donations Must Fit the Mission
When the staff or board lose focus on the Mission, collection and program costs can increase unnecessarily.
Mission fit needs to be considered with every accession or program shift.
Sometimes funding/donations can carry unexpected costs when outside mission focus.

10. Evaluate to the Collections Policy
Where is Your Collections Policy?
Revisit Collections Policy Every Year
Collections Policy Identifies the CORE Collection
Deaccession Regularly to Refine the Collection
Many organizations do not review their collections policy on a regular basis. Do not let it get stale.
Responsible deaccession efforts can hone the collection and assist partner organizations.
Deaccessioning regularly over time allows better focus on the preservation of both the core collection and the non-core objects going to alternative homes but staying available to the public.

11. Lessons Learned from Higgins Armory Museum

12. Higgins 2010 Interim management enters at a time of executive turnover
Organization assessment and financial forensics
Presents report on financial position to Trustees
Decision - set course for Turnaround

13. Characteristics of a Nonprofit Requiring a Turnaround
Obsolete mission
Extremely weak financial position
Severe problems with the business model itself or its execution
Serious problems with people and communications
One of these indicates a serious problem; 2 or more signify crisis
Glick, Jan, Nonprofit Turnaround: A Guide for Nonprofit
Leaders, Consultants and Funders, 2010.

14. Steps in a Turnaround Assemble a Turnaround Leadership Team
Sense of Urgency – Board acts
Diagnosis
Triage
Improve Culture and Communication
Assemble a Turnaround Leadership Team
Fixing the Business Model
Planning and Execution
New Revenues for Long Term Health

15. Leadership Practices & Decision Making
Leadership sets new tone
Model Openness and Transparency
Implement Performance Management
Build Leadership Team
Listen
Build Buy-in
Establish decision making protocols
Many decisions, little time

16. Diagnosis Process – Working Towards Success
Solid Situation Assessment: Individual interviews with board and staff required; assess culture and communications.
Accurate Financial Assessment: Use whatever means necessary to determine financial position and strength of the organization and each department/program.

17. Diagnosis Process (cont’d)
Key Steps in Diagnosis Process:
Financial data must be presented for strategic decision making.
Interim ED and consultants: Complete enough of assessment in 30 days to allow initial triage steps to begin. (Permanent executive directors may take somewhat longer.)
Assessment builds buy-in from board and staff, brings in new thinking and perspectives from stakeholders, builds teamwork and a culture of reflection, and dictates what is needed to assemble a turnaround leadership team.
Assess organizational culture from outset, model open, honest and regular communications with board and staff.

18. Initial Triage Steps
Once far enough along in assessment, (30 days +/-), make initial triage steps:
Re-examine the mission and museum’s focus on mission;
Identify key business lines and assess for mission and financial impact;
Make changes in positioning and/or branding;
Start to divest or scale back ineffective programs
Deaccession responsibly;
Fix internal systems; and
Terminate any ineffective employees.

19. Improve Culture & Communications
Most significant problem in virtually all crises/turnarounds
Strive to establish new culture, based on:
Performance management
Open, transparent, frequent communications
Teamwork

20. Address Cultural Obstacles
Ineffective mindsets & sacred cows: can’t make a “profit,” can’t spend on capacity building, all decisions must be consensus;
Organizational, board/staff conflicts -- issues have been personalized;
Staff emotionality regarding rapid assessment and change especially when programs are cut or changed & if staff turns over.

21. Endgames Successful Turnaround (min. 5 years)
Merger, Integration or Acquisition
Inconclusive Outcome to Turnaround (which leads to…)
Closure

22. Q&A Breakout – 30 minutes 2 Breakout Groups – Pick the Topics
Assessment indicating unsustainable business model - 3 year runway
Assessment indicating turnaround is possible or underway – transition to sustainable business model
Backing a turnaround – funding support and organizational challenges
Merger, Acquisition, or Integration – what to consider and who to reach out to
Provide opportunity for more detailed questions and answers based on experiences at three MA museums

23. Bibliography
Glick, Jan, Nonprofit Turnaround: A Guide for Nonprofit Leaders, Consultants and Funders, 2010.
La Piana, David, Nonprofit Mergers Workbook: A Leaders Guide to Considering, Negotiating, and Executing a Merger, Amherst Wilder Foundation, 2000.
Bell, Jeanne; Masaoka, Jan & Zimmerman, Steve, Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, Jossey-Bass, San Francisco, 2010.