A new book called ‘The Challenger Customer’ points out that government and business are both much larger than in 1990. The result of this huge increase in scale is more stakeholders who review your contract or grant. The judgment of one person is replaced by the varying perspectives of a committee. Committees don’t agree internally so everyone gets more cautious with the contracts.

Each stakeholder adds an extra rule – just so that their unpleasant teammate can’t report them to the boss.  A grant that took one person 3 days to process in 1990 is reviewed now by 5 people on average, based on data in the book. And the new massive rule writing threatens to inflate the cost of ink.

I direct a non profit with 7 contracts. Let’s look at typical changes this year  —

September – new rule that you can’t file a renewal until it expires although expirations freeze contracts. Government returns 42 page application. I respond and complain.
October – Government says “my boss says the renewal is fine, send it back.”  (a week later) “Oh. I’m returning part because the person who signed before is no longer eligible.”
November – new insurance certificate is required November 1 but the insurance company won’t issue for the next policy year until it begins on the 15th. Contracts paused.
December – insurance declarations certificate is no longer acceptable.  New form required. Payments Paused.
January – new language required on the Additional insured in new insurance form and is more characters than the Insurance Company computer allows. Government response =”Not my Problem”. Director starts screaming at broker and insurance company until they shrink the type and provide a magnifying glass for government to read the text.
January again – new insurance policy is accepted, all is fine, but no money. Government replies – “we did not mean that you get the money, we have to send to Comptroller now”

I seriously wondered if there was a political vendetta against us. But no, the local Jewish Community Center has been receiving $15,000 per year. The new rule is that amounts over $5,000 require an audit. The cost of the audit? $15,000

So, apart from more whine, wine and vacation – what can we do?

If you are small or midsized, you need a Strategic Plan for growth, or a partner non profit to outsource administration, or a planned possible closure.

Growth – A study sponsored by Goldman Sachs indicated that non profits in 2005 needed to have an Operations Budget in the $8-$10 million range for long term sustainability. Growth is uncomfortable but you need the scale to afford the labor costs to handle all of the stakeholders.

Outsource – If you are small and specialized – consider an affiliation with a larger general agency who allows you program autonomy as long as you cooperate on financial and legal.

Wind Down – A community group here has stopped applying for government money and realize that they are vulnerable to closure if volunteer vision does not continue. That’s not a bad thing. If we do good in non profit work and then close – it does not ruin all the good that has been already done.

The good news is that your feeling of smothering is not paranoia or inability to handle the top job. You are being smothered!  (in addition to any other problems you have).  More good news is that you have choices. But –  the bad news  – you need to respond before the rest of us finish you off so we can have your contracts and grow 🙂

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