Helping Nonprofits Take Care of Business

The problem with nonprofits, the hired gun suggests, is that, too often, they have their hearts in the right place, but don’t have a brain for business.

Well of course not, the folks who run these agencies often reply. Nonprofits aren’t called nonprofits for nothing.

To these people, management consultant Karl Klein explains, business “might have a nasty sound.” A typical reaction, he suggests, may be: “We’re here to help battered women. How can we think like a business?”

But a shelter that can’t pay the rent can’t shelter anybody. And so Karl Klein and other volunteers with the Executive Service Corps (ESC) spread their gospel of the bottom line. It’s a gospel that has been espoused for years, and yet many people still seem just too nice to listen.

“Many of these people are driven by goodness. Many have the mentality that the Lord will provide,” says Megan Cooper, the corps’ executive director. “They are kind of able to limp along without effective management structure.”

But with competition for public and private dollars getting tougher, Cooper says, more nonprofits are recognizing the error of their ways.

That’s when somebody like Karl Klein steps in. He is a fiftysomething, self-described MBA-type who held executive positions with TRW and Avery Dennison before launching his own consulting practice in 1990. Klein, who lives in Porter Ranch, has traveled overseas on projects for such companies as Mattel. But, through ESC, he spends more time now donating his expertise to outfits such as the East Valley Multipurpose Center for Seniors in North Hollywood, the Glendale Community Foundation and the Venice Shelter for Battered Women.

For Klein, one of the ESC’s busiest volunteers, the reward is personal satisfaction. For the nonprofits, the rewards can be greater effectiveness and efficiency--and as in business, this can sometimes mean a smaller payroll. But sometimes it may mean the difference between survival and collapse.

Not every agency is in such dire straits. Consider the East Valley Multipurpose Center, one of three such facilities operated by the Valley Interfaith Council.

In the corporate world, management is seen as a talent unto itself, a skill that can be taught and adapted to just about any industry, be it banking or food or whatever. Earnings and stock values provide a gauge of success.

For nonprofits, the bottom line may be judged in the creation of smiles, the preservation of dignity, sometimes even the saving of souls. Lori Litel is a licensed clinical social worker who now is director of the East Valley Center. She wasn’t even seeking the director’s job when she applied six years ago.

She applied for a position as a caseworker to provide aid to frail, homebound seniors. Litel said she was surprised when she was offered the then-vacant job of director.

So she learned management on the job.

By many measures, she’s had some success. Although traditional sources of funding have been reduced, the East Valley Center’s budget has grown from $147,000 to more than $1.2 million under Litel’s management. Most of the growth is based on two grants: the Handyworker Program, a city contract that provides home repairs to qualified seniors and people with disabilities, and a grant to help immigrants become naturalized U.S. citizens.

Among an array of services, Litel says, the center in fiscal 1995-96 provided more than 43,000 meals to homebound clients, more than 41,000 meals at other sites, more than 6,000 rides to needy seniors.

With its services and clientele growing, the East Valley Center outgrew the space it rents from First Presbyterian Church and now operates in two sites. When the East Valley Center turned to ESC for help, Klein got the assignment and served as a mentor for Litel.

“This is an extraordinarily busy place,” Klein said on a recent visit to the center. It became apparent, he said, that Litel was so immersed in day-to-day matters that she had little time for the long-range strategic planning that would be necessary to move the center into a better location.

With Klein’s guidance, operations were tweaked to allow Litel time to work on strategy looking three years ahead. She is hopeful of securing rent-free space from the city. Another possibility may emerge if First Presbyterian Church, which lost a large chapel in the Northridge earthquake, rebuilds and expands.

Klein encouraged Litel to become more active in community groups like the Chamber of Commerce and Rotary Club, and to develop ties to corporations. Such networking can raise the center’s profile, expand its base of potential sponsors and give it more political oomph as it seeks a new home. Those relationships, Klein says, may pay off in two or three years.

“The reality is that oomph element is critical,” he explained. “These things need to be massaged.”

He hasn’t always had success. A nonprofit called Furthermore, he says, proved frustrating. The San Fernando Valley agency provided low-cost counseling, but saw its clientele dwindle when health maintenance organizations expanded their services. Klein proposed that Furthermore market itself to businesses to provide counseling for workers, but the agency, he says, found such adaptation difficult.

Among his most satisfying “interventions,” Klein says, was the Korean Youth & Community Center, west of downtown. The nonprofit that had grown with the Korean immigrant population received a large infusion of funds after the 1992 riots. Klein found an organization with no clear management structure or job descriptions. Some people received jobs “not because of talent, but mostly because they had been around the longest time,” Klein says.

As in business, the management of nonprofits can prove painful for some workers. But the point is, business is business--even for nonprofits.

Klein says he volunteers because he enjoys the work. “It may sound a little bit corny, but you have the feeling you want to do something good for people.”

He gives his expertise away, but the Executive Service Corps doesn’t. Nearing its 15th anniversary, the agency has 175 volunteers and a caseload of 50 nonprofits. Although 80% of ESC’s budget comes from corporate grants, it also charges its nonprofit clients service fees starting at $300.

Years ago, Cooper says, ESC offered free consulting, but the firm learned a business lesson of its own.

Free advice wasn’t taken so seriously. But when nonprofits made an investment in advice, Cooper says, they often took it to heart.

Scott Harris’ column appears Tuesdays, Thursdays and Sundays. Readers may write to Harris at the Times Valley Edition, 20000 Prairie St., Chatsworth, CA 91311. Please include a phone number.