Timing denial

Theo Jansen, artist and creator of Strandbeesten explained in a TV-documentary about his work that in his creative flow every problem that presents itself immediately comes with the dream to solve it.  I so admire optimists!

Seeing in a crisis the opportunity as the famous saying goes requires you – at least temporarily – ignore the pain of failure and problems, and be a dreamer. But what if the problems are existential? Existential as in exit.

“Look on every exit as being an entrance somewhere else.” – Tom StoppardRosencrantz and Guildenstern Are Dead

Exits, transformations and radical cut-backs in not for profit organizations are profoundly painful processes for all those who are affected. Yet some degree of denial of the pain may allow you to see the opportunities. But productive denial requires good timing. In the world of funders and not-for-profits I also see a lot of denial of organisational pains that allows crucial problems to fester and lead to crises. So how do you time your denial well?

Over the next months I expect to be immersed in issues faced by not-for-profits from which funders exit.  None of the NGO’s involved has been part of a formally planned exit by a funder(s). Questions like: How long do you keep on trying? What did we miss, should we have seen this coming? What about the future of the paid staff and (unpaid) volunteers? Do we scale back? Liquidate?  Go dormant?

Funders of not-for profits have serious problems with exits, planned entrance in a country or field on the basis of an entrance and an exit strategy. I wrote about exits for funders in a GrantCraft publication.  Emulating venture capital practices, the venture philanthropist are very keen on preparing for exits and sustainability and EVPA also collected lessons learned and provided guidance to their members through and EVPA guide on planning and executing an exit.  Many funders circumvent the exit problem by suggesting from their side there is not real entrance: they provide funding on a project by project basis and do not really strategize about the field or sustainability of the continuity of the capacities and organizations that implement the projects they support.  It is an opportunistic approach, but unless a complete field collapses none of the crises that exits cause will affect them.

But awareness and commitment does not provide guarantees. What if NGO’s and their funders both underestimate or even deny the financial fragility of the causes and organizations they support. Problems of financial fragility are rarely a crisis that hits out of the blue. The problems tend to creep-in very slowly: how to manage growing budgets changes into making ends meet, into chronic deficits. After a bad year, if there is a financial reserves, extensive discussions about their use to stop-gap ensue. And a lot of effort and dedicated capacity will be invested in gettin fundraising back on track, but do you revisit your fundamental strategy?  Or do you delay that discussion until the next year. Will doubt vis a vis the fundamentals undermine the effort to get back on track?

Ironically, denial of structural problems can also be fed by unexpected large gifts that hide more strategic issues.  And another factor that allows for financial fragility to remain unaddressed is the urgency of the cause as it stimulates a focus on fixing things instead of managing with a long term perspective.

So how do you manage to balance optimism and realism? The guides for funders referred above encourage funders and charities to work together and face financial sustainability at every stage of their relationship. But equally important is  how the management and board members of NGO’s can support each other to face this issues at the right moment and see the opportunities, the new spaces opened by the exit doors.

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