Leaders Need Guts, Cooperation

February 1, 2001       Paul Clolery      

As Fred Grandy left his job as president and chief executive officer of Goodwill Industries International he seemed a bit frustrated. While progress certainly was made at the Bethesda, Md.-based organization during his five years, much larger, sector-wide issues weighed on his mind.

"I always thought that if organizations have the opportunity to band together to perform a greater good, that’s their natural default position. Well, it ‘ain’t.’ Just the reverse is true and that’s kind of too bad," said Grandy during a one-on-one with The NPT during his next to last day on the job this past November.

Grandy is headed to the University of Maryland to train the next generation of nonprofit managers for at least one semester while deciding on what’s next in an eclectic and successful career that has spanned Hollywood, the halls of Congress and the charitable sector.

"In this society, because we’re driven by outcomes and measurements, you’re as good as the measurements that you put up on the board. And, unfortunately, I see in the nonprofit world an enormous amount of energy devoted to self-preservation."

Nonprofits with national operations and affiliates, such as Goodwill, United Way and many others, are facing a crisis of courage and faith in each other, he believes. Local organizations are balking at many directives from national and are attempting to chart their own course. While they are holding tight to the brand name, they are simultaneously trying to hold at bay with the other hand.

There is civil war in some national nonprofit systems, with locals holding back dues from national and pushing for more control.

"This is what I’ve never understood. Surely there is a common ground where you leverage your corporate money with your individual clout. The more I look at confederacies, I realize this is not a governing model that we want to emulate," said Grandy. "The problem right now is there is a compelling societal need for these organizations to not just work together but to be leaders – to show government how to make welfare work or workforce investment policy work."

The problem is an inability of some top leaders, he said, to compromise. "We don’t really have a nation of nonprofits. We have an archipelago, and they separate themselves voluntarily and happily," he said.

You’d think there would be some cooperation and there is, just not when there’s turf involved, Grandy contended. "There are 181 Goodwills right now. I’ve seen this organization from the bottom up and the top down, and we are a lot more alike than we are different. I’m sorry. There is a commonality of mission that you may choose to disavow when you’re protesting some national policy at the board level. But we do, for the most part, the same thing. The level of delivery? That’s a little different. But, the basic day-to-day operation? That attention to the work needs of varied individuals is a common theme and we are much more alike than we are different."

Meaning of membership

The chief executives at nonprofits with numerous affiliates have to change the way they think and operate if they are to survive without insurrection, touting the commonality of purpose. "I think that on balance, even though members chafe about control, they like the quality that comes with it. If I did anything, I did it through the power of the pulpit," said Grandy.

Goodwill’s national board is now 50-50 sitting executives and lay members. "What they haven’t quite become aware of is they have the power," said Grandy. "But that’s not the mystery. The mystery is how do you exercise the authority? That’s what I’m hoping will be the defining factor for nonprofits as they go forward. The locals should control the national organization, but they need to have effective rules for governance. They can’t make them up as they go along. It can’t look like the Florida recount process." The boards also can’t evolve into peer admiration society if the organization is to thrive. In fact, the chief executives have to get in each other’s faces when it is appropriate, he said.

"They have to say we’re going to achieve these goals, and to do this we will all work out of the same play book or if we want to, relax them. There will be established procedures by which we do this," he said. "We have to have a common purpose. You have to have a common mutual respect, and you have to adhere to that. You cannot wrap yourself in the cloak of independence and autonomy any more than the national office can say: ‘You’re out because we just don’t like the cut of your suit’."

One of the challenges is that the nonprofit sector has emerged as a good job market. A decade of fighting to make nonprofit management salaries competitive with the private sector has made the top jobs quite desirable.

"It used to be that – certainly within Goodwill – you never had to worry about a board chair making less than the executive director. That’s not necessarily true anymore. I mean, we’ve got a Goodwill in Portland, Ore., which is doing $1 million a week in retail. I mean, that’s how successful they are as a business. Their executive is very well compensated and he earns every penny. But what that does is create a kind of parity of affluence between the executive director, the staff, and the board execs in a very kind of fast moving economy where people can be dispossessed very quickly, particularly in the financial services sector. We have more than a few board chairs that say: ‘Hey, you know, that wouldn’t be a bad job for me.’ That, to me, is a disastrous scenario."

Since it is happening more often, boards need to make some decisions. "You’ve got to upgrade your governance. You have to ask yourself: ‘Okay, do we then need some hard and fast rules as opposed to some comfortable understanding as to how, whether or not a board member can or should move to an executive staff position?’ That’s where nonprofits are not as nimble-footed as they might otherwise be," Grandy said.

Asked to describe his role as the chief executive of an evolving organization with some national versus local fights, he said, "My real role is to be an amiable pest, is to remind you of your potential and where you are, perhaps, not moving as rapidly and successfully as we should. And, frequently, to tell you things you don’t want to hear. One of them is: You are creatures of the tax code; there is an implicit bargain with government that you have got to fulfill. And you cannot cloak yourselves in obscurity."

That brings the question as to whether an "amiable pest" is a chief executive of a multi-affiliate organization or boss of a trade association of independent parts.

"I got hired to lead a national organization, and that was my presumption from the day I walked in until the day I leave. That assumes a new definition of rights and responsibilities. Is autonomy an important tool in this organization because it gives Goodwill the ability to assess and perform according to their community’s needs?"

While community needs vary, the mission should not, in Grandy’s view. "To me, the mission statement is something that you hang over all Goodwills and say: This is what we all believe in. This is our statement of purpose. The best mission statements to me are the ones where you look at the mission statement and know who it’s about without having to read the brand."

Brand is a growing awareness in the nonprofit world. "Although they fiercely maintain their independence and autonomy, they all choose to call themselves Goodwill Industries. Well, to the external audience, there is one Goodwill Industries. If I’m in Goodwill in North Carolina and a Goodwill in Oregon, is pulled into court because they are either abusing their clients or they’re selling stuff out of the back room, the first reaction is: ‘I’m not part of that.’ But if the scandal is large enough, as we know from United Way, people say: Hey, that’s a distinction but not a difference’."

Brand should mean something, and it should mean something equally to all, said Grandy. "I still argue that what holds this organization together and kept it strong is the commonality of mission. And if you want to go back to the social gospel movement in the late 19th century, if you want to refer to Robert Putnam in Bowling Alone and talk about replenishing social capital or in civic engagement – this is all kind of high blown kind of stuff that you hear. But it has real meaning if organizations want to go forward. I mean, this is why all of a sudden we’re seeing this renaissance of faith-based organizations. What holds them together? Faith. They believe in a common thing. They sacrifice individual prerogatives and concerns for a common good. And I think that, to a very large degree, is what makes us a little different from Dollar General."

Grandy believes there needs to be a sector-wide rethinking of mission. "There needs to be a renewing of the coven, but it has to be a covenant. It’s not a constitution where you sit down and say: ‘These are my rights as members; this is what I have to get for my dues; this is what you have to give.’ It has to be stronger than the artwork of lawyers. It’s got to be a belief that this organization is in place to make sure that people who are disabled, dispossessed, disadvantaged, disenfranchised, whatever – choose your ‘dis’ – will find a chance to achieve independence."

And, he said, "that’s what we do and we do it better than anybody else, and anybody who gets in our way is toast."

NonProfit  Times
The Leading Business Publication For Nonprofit Management