Planning to survive

by Jini Stolk

I confess. Sometimes I’ve felt good about the fact that Canada has far fewer big charitable scandals than the United States. Whether the story’s about financial malfeasance (United States Navy Veterans’ Association), shady use of donated funds (Wounded Warrior Project), dramatic loss of trust and supporters (Susan G. Komen for the Cure) or the abrupt closure of a much-loved institution (Sweetbriar College and the San Diego Opera) Canada’s been relatively immune.

And then along came Goodwill Toronto, reminding me not to be so smug.

At this time, there aren’t many reliable details on why Goodwill spiralled so quickly out of control. But a few things are immediately obvious, even at this early stage. Creative Trust included planning as one of the key characteristics of strong and healthy arts organizations. “Organizations that plan and learn are able to respond, adjust and take advantage of changing realities” we said in our Year 3 Evaluation Report. “Each Creative Trust company details its commitment to take specific steps towards health and sustainability in a written Work Plan.” Analyzing and balancing risk, ensuring that each organization understood the financial, human and other resources needed to fulfill their mandates, and planning for expected and unexpected financial difficulties were all part of our program.

Where was the planning at Goodwill?

  • Cash flow shortfalls are common; they turn into cash flow crises when no one analyzes whether/when expenses will exceed revenues and there’s no plan to close the gap and minimize disruption.
  • Structural financial difficulties, when revenues and expenses remain out of balance over time, are not uncommon. They require the CEO and the Board to act with determination, planning adjustments to their financial assumptions, budgets, and business model.
  • Non-profits need to stay on top of changes in their environment, planning ways to respond and adjust in order to stay strong and sustainable. If the competition among vintage and used clothing stores in the GTA is growing, what’s the plan? If sales per square feet aren’t keeping up with rental costs, what’s the plan?
  • All non-profits and charities have a moral responsibility to be good and decent employers. In Goodwill’s case, their non-profit purpose lies in training and employing people with disabilities; their secondary purpose lies in selling used goods at affordable prices to people on low incomes; only coincidentally are they a source of hip vintage clothing for you and me. Their first priority should have been planning to protect their employees’ jobs and salaries.
  • The worst response to an organizational crisis is silence or looking like you don’t know what to say. A communications professional could have come up with a plan to respond honestly and openly to Goodwill Toronto’s public relations debacle. They accept public funding for their programs; they owe an explanation and an apology to the public.
  • Where was the Board’s plan to rebuild the organization’s finances and reputation? Did Goodwill’s Board members think they were avoiding legal liability or public outrage by resigning en masse?

You’ll notice that my baffled outrage doesn’t include questioning the CEO’s approximately $200 – 250,000 a year salary. Here’s where the critics have it wrong. This seems like appropriate, even modest, compensation for someone managing a $28 million a year organization…as long as their skills are up to the job.

By the way, while it’s a drastic error to stumble into a crisis without any plans in place, planning is also essential when the good times roll around. Any major change to an organization’s environment or business model requires thoughtful and detailed planning – in writing – or it won’t go well.

Surprising fact: Thinking and planning skills are centered in the prefrontal cortex section of the brain. Eat your Wheaties, with blueberries on top.

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