Happy Leap Day!

Recently a colleague was eating at a Smith & Wollensky’s steak house and saw a giant banner apprising diners that 2012 is “The Year of the Steak.” If Smith & Wollensky’s can unilaterally appropriate a whole year to market a product that my doc has all but banned from my diet, then there’s no reason we can’t appropriate Leap Day to share the latest updates from the Leap of Reason community.

First off, I want to commend two outstanding—and sobering—accounts from Daniel Stid and colleagues at Bridgespan: the report The View from the Cliff and the article “Five Ways to Navigate the Fiscal Crisis.” Stid et al. have done a much better job than I to assemble facts to back up one of Leap’s core premises—that the fiscal crisis is anything but a passing phenomenon, and it will force nonprofits and their boards to be more rigorous in how they pursue and assess performance. Here are just a few of the many valuable insights from the Bridgespan works:

• “The long-term outlook for human services funding is bleak. The federal government is facing record budget deficits and interest payments to service its rapidly accumulating debt, the rising cost of health care, and the demographic challenge of paying for entitlement benefits for retiring baby boomers.”
• “Given that roughly one quarter of state government funding and one third of local government funding come from Washington, D.C., the federal budget squeeze in turn will impinge on human services budgets at these levels.”
• “Moreover, state and local governments have their own demographic time bomb to address, in the form of an estimated $1 trillion to $3 trillion in unfunded pension and retirement liabilities for current employees and retirees.”
• “As one former state government [CFO] told us, echoing a common view among the officials we have talked with, ’All levels of government are facing steeper costs on health care and pensions, where the relentless demographics are just grinding down on all other items in the budget.’”
• The Hillside Family of Agencies CEO Dennis Richardson: “We started focusing more on measuring our outcomes as a result of our organizational curiosity—What are we doing that actually works? We also have come to believe—looking ahead to the future—that if we couldn’t answer that question, our funding would go to someone who could.”

I was equally impressed with the Alliance for Children and Families’ recent reportDisruptive Forces: Driving a Human Services Revolution, inspired by the forward-looking IBM Global CEO Study and intended “to push [leaders] to think outside of their comfort zone.” Here are a few of the many good insights in that report:

• “Funders and communities will expect greater impact at a lower cost. The Hyundai-style approach of providing functional attributes in design and quality at a low cost has taken hold; competition will be cost based.”
• “The number of individuals with the same social ills we face today will increase…. Government will significantly reduce its funding of the sector. Foundations will hone their focus to the few proven, impact-generating organizations.”
• “Successful, high-performing networks of human services organizations will embrace technology, employing sophisticated and integrated systems to manage clients, operations, and advocacy form innovative partnerships that deliver via multiple sectors view the sector as a system, where all parts are interconnected and impacts are collectively measured be comfortable with increased complexity.”

The bottom line is clear: With tight money and growing needs, every nonprofit will need to rethink, redesign, and reinvent for this era of scarcity. Even if you’re not the direct beneficiary of public funding, please don’t assume that you don’t need to think about these cuts. The competition for foundation grants, major gifts, and fee-based contracts will skyrocket as those whose public monies are cut look to other funding sources—like yours. Performance is the best way to protect your organization and meet the growing demands that are coming your way.

These tough realities are surely the key factor in the surprising spread of the Leap of Reason message. In the words of a good friend, “The book is ok. The timing is great.”

• As of Leap Day, we have now leaped over the 34,000-book threshold.
• Over the past month, more than 1,225 people have downloaded our new Leap of Reason board package to prepare for and sharpen the focus of board retreats, strategic planning efforts, visioning sessions, and self-assessment exercises.
• In the article “Mario Morino’s book, ’Leap of Reason,’ has nonprofits examining how they operate,” Plain Dealer columnist Margaret Bernstein wrote about the surprisingly strong response in Northeast Ohio. Bernstein interviewed a host of local leaders who are putting the book to use in their work. For example:
  • “I read it in one night and thought, ’Oh my gosh, this is it,’” says Margaret Mitchell, president and chief executive officer at YWCA Greater Cleveland.
  • Denise San Antonio Zeman, head of the Saint Luke’s Foundation in Cleveland, said she got the book in the mail and thought, “Wait, this is exactly what we need to do.”
• Elliot Harmon interviewed me for Tech Soup Global, a blog that is a great source of information for nonprofit technology leaders. It’s been heartening to me to see how the book has resonated with those who care deeply about technology, even as I’ve made it clear that technology is not the decisive factor in whether organizations make the transition to managing to outcomes. As I said in the book, “Far more important is the mindset of the leaders who put these systems in place.”
• Our friend Tracy Gray, Ph.D., the Managing Director at the American Institutes for Research, shared that she and her team have been putting the book to use as a guide for their evaluation work with schools and districts around the nation. “Your book provides clarity that is critical to measuring outcomes effectively and improving teaching and learning,” she wrote.
• Finally, we should mention that the Kindle version of the book is now free. (The iPad and pdf versions have always been free, but we were originally required to charge a dollar for the Kindle version.)

Back in the 1980s, an authority in the field of change management shared his view that dramatic personal change doesn’t happen until what you had stops or is taken away. Our fiscal realities—coupled with seismic demographic and social shifts—are likely to be this kind of turning point for the nonprofit sector, and possibly for the public sector as well.

My fervent hope is that this moment produces a true movement—a movement of public, private, and nonprofit leaders committed to tap the potential of, encourage, and support those leaders who have the courage to leap high in pursuit of performance for those they serve.

– Mario Morino