Organization Development

A sustainable nonprofit is an organization with reliable infrastructure, high achieving programs, low turnover, and consistent documentation. Achieving sustainability requires creating a long term vision that prioritizes long term growth over short term gains.

The student-led microfinance model is naturally cost-effective since it relies primarily on a staff of volunteers. This allows for grant dollars to go further. It also creates additional challenges with leadership turnover, institutional memory, and scale.

Building a team

“Great vision with mediocre people still produces mediocre results.” –Jim Collins

Getting the right people on the right seats on the bus is one of the most challenging pieces of building any organization. No organization can create positive social change without a solid team of dedicated individuals. This article does a great job of articulating the value of taking time to build a time. Additionally, student-led MFIs face the unique challenge of starting with volunteers. Moreover, the volunteers are, by virtue of being students, usually most available from September to December and January to May. And even during the school year, student staffers must juggle school, work and other personal commitments. At the same time, student-led MFIs have the advantage of extremely low start-up costs and the ability to leverage university resources for funding, ideas and connections. Don’t get overwhelmed with the challenges. Here are tips for getting started with building a team:
  • Find a couple of key people to join you as leaders of the new initiative.
  • Seek out an underclassman to join you: It is helpful to bring a younger leader into the start up organization early to ease the burden of turnover.
  • Recruit student staff and volunteers: Be clear about the positions you are looking to fill. Detail the responsibilities and time commitment involved, as well as the skills you expect the person to have.
  • Consider hiring volunteers within the community to work with you.
  • Do not be afraid to be selective when recruiting. Host a proper interview, call references, and ask probing questions to get to know candidates. Remember that one high performing team member will produce the equivalent of five low performing team members and take up much less of your time.
  • There is no shortage of university students eager to take what they are learning in the classroom and apply it in meaningful ways in the local community. The challenge, however, is getting the word out about your organization so busy students can hear about the opportunities they would have working with you. Use mass marketing (like listservs – some ideas below) and target specific individuals.

Recruitment Ideas

  • Public Service Office: Most universities have an office dedicated to public service, volunteerism, community service, etc. These offices are there to create opportunities for students to serve people in the local community. By partnering with these centers, it is possible to gain access to the pool of volunteers that are already active with community service. In addition, these offices will post staff descriptions on listserve that they maintain.

  • University-sponsored email listing: Many universities have a daily email that outlines events, opportunities and other important information that the university and sometimes surrounding community should know about. Posting a staff description in this email listserve is an effective way of getting the word out.

  • Presenting to classes dealing with related topics: Any courses dealing with social entrepreneurship, economics, business, social service or local issues are ideal for giving presentations. Speak to the professors of several courses, or even the chair/ department head of, say, the economics department and, provided that you are clear in what you are requesting, they are more than likely going to be willing to give you some time to present to their students.

  • Student Clubs/Organizations: Many student clubs and organizations are devoted to issues that are closely related to microfinance. For instance, there might be clubs that focus on entrepreneurship, poverty or women, all of which have members that are likely to be interested in the work of your organization.

Andy Posner, as co-founder and now Executive Director of Capital Good Fund: my lack of experience in business, economics and finance have not proven to be impediments to the growth of the organization. If anything, coming from a unique background—Spanish and Environmental Studies—has allowed me to try new things that I might not have had I “known more” about the field. More important than the educational background you have is an understanding of the impact microfinance can have and a desire to offer a social service in a way that is truly impactful for the client and sustainable for the organization.

Turnover and Commitment

Turnover in leadership — the people guiding the team — can leave holes for an organization (especially a start-up) that cause organizations to reinvent the wheel, relearn, and spend time going backwards instead of progressing. The more you place importance on building an institution without holes that is sustainable, the more effective your organization will be. This is especially important for maintaining relationships with your university and with the community. Check out these sustainable leadership tips from Ashoka’s Youth Venture.

To be successful, every member of the team will need to understand the nature of the commitment necessary. Starting an organization requires hundreds of hours of work fundraising, networking, developing partnerships, researching, strategic planning, and learning. Invariably, some members of the team will drop out over time as the workload becomes too great or other commitments take precedence; however, the more the initial team understands what is involved in starting the organization, the more you will be able to focus on the task at hand.

In many ways, the groundwork for starting an organization is similar to taking a very challenging course. The differences, however, are important to note. First, there are no set times during which you will work on this initiative. Often, your schedule will be dictated by the availability of community members to meet with you. Second, the goal of the organization is to serve people who truly need your services. As such, the commitment you are making is serious: it’s one thing to not follow through on a class assignment, but another entirely to not follow through on a service that can change a person’s life. Be very clear with each team member about the seriousness of the work you are undertaking, and be careful not to raise expectations in the community that you cannot live up to.

Staffing and Management

Managing staff is always an uphill climb, even for professionals with decades of experience. Running a start-up is an opportunity to practice being a good manager. Regardless of the type of hierarchy or staffing structure your team decides to implement, management skills are useful for working individually, with peers, or with your board. There are lots of resources to learn management tools that you can implement on a daily basis - in staff meetings, making strategic decisions, and simply working to get things done.

Clarifying roles and responsibilities for all staff and volunteers is a top priority. Elmseed Enterprise Fund's staff is organized into Departments: Client Services, Public Relations, Strategy, Development and Finance. Each Department has a Director, who, along with the Executive Director, makes up the Executive Board of Elmseed. Additionally, Elmseed has a Board of Directors made up of a diverse group of professionals. See the Elmseed Staff Structure.pdf here.

Another example of student-led staff structure is the Community Empowerment Fund which has a central admin team of over 15 people who cover core functions of making the organization work (ie fundraising, measuring impact, paying the bills/finances, etc). Then there are hub-like teams of over 8 people in each hub directed by a 'team leader,' someone who has been with the organization for at least a semester to help carry over institutional memory. See the whole structure here: CEF Org Structure.pdf. Check out this visual:

CMA_Org_Structure-1.jpg

For more downloadable resources and advice on nonprofit management visit The Management Center.

Hiring Your First Employee

Before you hire your first employee, there are some important pieces of information that you need to know. The following two sections go over some basic steps in the hiring process as well as discuss certain requirements that employers need to fulfill when managing employees.

Creating a Job Description

Job descriptions help you to define what you’re looking for in a candidate when hiring. An effective job description describes the main objective of a job, its essential and nonessential functions and responsibilities, skills and knowledge base required for the job, and working conditions specific to the job.

Before starting the job description, you should identify and define the essential functions of the job. In other words, define exactly what the employee is responsible for. To identify whether something is an essential function, ask yourself what would happen if you took that component out of the job. Would the job be rendered useless? If that component is necessary to the job, then it is an essential function.

In your job description, you should:
  • Provide a brief job identification and position summary (why does this job exist?)
  • List the essential functions and duties expected of an employee
  • Outline the skill set and knowledge required
  • Mention any educational or background experience requirements
  • Describe any physical aspects of the job (bending, lifting)
  • Describe any environmental demands (will employees need to out in the field?)

Interviewing Candidates

You will want to interview all candidates so that you have the opportunity to get to know them face-to-face. Here are some basic dos and don'ts of interviewing:
  • Don't ask questions that go towards “Protected Class Status” (which include race, religion, gender, origin, ancestry, sexual preference, disability)
  • Don't ask about family medical history
  • Don't ask about family planning (i.e. Are you planning on having children in the future? etc.)
  • Do ask anything that has to do with the job description, the background necessary for the job, needed experience and skills set, or the essential functions required for the job

Writing an Offer Letter

Once you decide on a candidate that you’d like to hire, prepare an offer letter. An offer letter is an essential document and should be written carefully and thoughtfully.

Key elements of an offer letter include:
  • A clear statement of at-will employment status (at-will employment status means that the employee is being hired for no definite period of time and that either party may end the employment at any time for any reason so long as it’s not an unlawful reason)
  • Wage rate or salary amount
  • Indication of schedule/hours
  • Payroll cycle (weekly, biweekly) and regular payday
  • Can include some information about employment policies and practices regarding wages, sick leave, vacation days, etc., but you can also say that the employee will be provided with an employee handbook containing this information at their new employee orientation
  • Can attach a job description
  • Clearly specify if the offer is contingent for any reason (background check, substance testing, physical exam)

Managing Your Employees

Wages and Hours
There are two forms of paid wages: hourly and salary. Stemming from these two forms of paid wages are two types employees, exempt or nonexempt.

Exempt employees are salaried employees who must meet three primary criteria: salary level, salary basis, and duties. Exempt employees must be paid a minimum salary rate as per federal or state law and are paid the same amount week in and week out regardless of their quantity or quality of work. Finally, exempt employees are classified by the duties they perform. The main classifications include Administrative and Professional exemption.

In each classification, the employee’s primary or principal duty must meet certain requirements. The primary duty of an employee with administrative exemption is the performance of office or non-manual work that is directly related to the management and business operations of the employer. The primary duty of an employee with professional exemption is the performance of work requiring advanced education, often requiring a 4-year education.

Nonexempt employees are employees not eligible for classification as exempt. They must be paid on an hourly basis and paid at premium rates for overtime pay.

Payroll and Payment
You want to decide whether you want a weekly or biweekly payroll. However, before you start thinking about who will run the books for you, you need to a timekeeping system. A timekeeping system is an essential part of recordkeeping for your organization, and such systems include a timesheet or a time clock for employees to use when punching in or out of work. Many employers will outsource their payroll management to companies, which is generally recommended due to time and cost efficiency.

Record Keeping Requirements
Each state has specific requirements of records that employers must keep for each of their employees. Such records include wage and hour records and personal files.

Information regarding wages and hours that an employer must record include:
  • Name
  • Address
  • Salary, weekly amount paid (for exempt salary employees)
  • In/out records (for hourly employees) (must record every time an employee clocks in and leaves, even for lunch breaks!)

Personal files contain all documents and information used when considering an employee for employment, promotion, disciplinary action, termination, etc. These files include documents such as job descriptions, offer letter, employee’s written acceptance, disciplinary records, and employee evaluations. Note that you should keep medical records separate from personal files, and access to medical files should be only on a need-to-know basis.

Obtaining an Employer ID Number and Unemployment Insurance Registration
When you consider hiring a new employee or once you hire a new employee, in addition to applying for a Federal Tax ID number, you need to register a report with your state’s Department of Taxation and Department of Labor. You need to register for a state employer ID number for the withholding of income taxes and register with the state’s Department of Labor for state unemployment agency purposes.

Employment Eligibility – Form I-9
Form I-9 is used to verify the identity and employment authorization of all individuals hired for employment in the US. All employers must complete Form I-9 for each individual hired (both citizens and noncitizens) for federal compliance with immigration laws. Both the employer and employee must complete the form. After your employee has provided you with documents to evidence their identity and employment authorization, you should inspect that the form has been properly filled out and that their documents fulfill the necessary requirements. Be sure to re-verify your employee’s work authorization if any of these identification documents have an expiration date.

State New Hire Reporting
You are required to report any new hires or rehires to the state. Reports must contain the following: employee’s name, address, date of birth, social security number, date of hire, employer’s name and address, and Federal Tax ID number.

Insurance Coverage
Make sure that you meet your insurance obligation. States have different requirements regarding Workers’ Compensation Coverage, so you should check with your state’s Department of Labor website. However, in general, all employers must have workers’ compensation coverage.

In regard to all of these forms and regulations, it’s important to check with your state’s Department of Labor website for the most up to date information.

Building a board

A board of directors can bring your organization many benefits including professional expertise, knowledge and fundraising resources, and credibility. Boards can also cause big headaches if you have the wrong people or the group is not led or managed well. There are endless strategies for board development and management and we encourage you to find them and read them. We stress the importance of investing in the development of a strong board of directors. Good governance is a critical piece of building a strong nonprofit organization. Here are a few resources we have found useful:
  1. Nonprofit Leadership Center
  2. National Council of Nonprofits
  3. Free Management Library
  4. Bridgespan Group Guide: Nonprofit Board Recruitment Strategies>

Craft a clear message

The best way to clarify to yourself, your team, and other stakeholders what you plan to accomplish is to write down your purpose and objectives. Consider writing a mission statement that addresses what your team wants to get done and identify why the organization exists. The words don’t have to be perfect yet (you will create a marketing strategy and messaging document later) and you don’t have to have a 5-year timeline mapped out, but taking the time to be clear about your purpose will be very helpful as you are speaking with funders, staff members, constituents, partner organizations, and other collaborators.
Some resources to help you craft your mission statement:
  1. How to Write a Mission Statement
  2. Social Business Plan Mission Statement

It is also crucial to be able to explain clearly and concisely what you are doing in 30 seconds or less. If you run into Muhammed Yunus in an elevator, how would you describe your work? All organization leaders need an elevator pitch to tell family, friends, strangers in elevators about their work to build partnerships, raise awareness, and raise money.
Some resources to put together an elevator pitch:
  1. Watch great pitches posted on TechCrunch. Refresh the page every few minutes.
  2. Ten ways to improve your pitch here.
  3. Creating a Pitch Deck.

Information systems

Invest in reliable management information systems and use them. Turnover isn’t just a problem for student-led organizations – it’s a challenge every business has to deal with. From the beginning, document everything in a system that is web-based. Record phone calls, emails, meetings, contact information – take notes and keep them online where other current and future staff can access them. There are several options available to manage information sharing that vary in functionality, cost and required staff time. Here are some options used frequently by student-led organizations:

Software
Cost
Features
Use
Highrise
$24/mo
5 Gb of storage; 5 users; 5000 contacts
Client management; funder relationships management
Dropbox
$9.95/mo
50 Gb of storage
Document sharing
Quickbooks
$12.95/mo
Create invoices, pay bills, manage expenses, create financial statements
Accounting

When you are busy, it is difficult to take time to reflect on how ideas are evolving and your organization is growing. Over the course of the first few months of start-up, you will overcome many challenges and learn lots of lessons. Force yourself and your team to write down what is happening – document staff meetings, correspondene with clients, staffing concerns, questions you encounter, communication with funder and university liasons. Prioritize time to debrief with clients and staff and write down lessons learned.

Common mistakes when starting up

1. Poor initial research
2. Lack of commitment from leadership
3. Failure to keep good records
4. Misjudging time requirements – ‘running a nonprofit is not a hobby’
5. Lack of clear, consistent objectives