10 Mistakes I Made as a Nonprofit Executive Director
Mistakes as an Executive Director
One of the things I am most passionate about in this world is nonprofit leadership development. I have served as an executive director five times and believe that the nonprofit sector is largely not doing a great job of training and preparing people to lead charitable organizations. One of the best ways to train leaders is to help people avoid common mistakes.
I believe in leading by example so this blog post will detail 10 mistakes I have made as a nonprofit executive director that I don’t want anyone else to make.
Money-Related Nonprofit Mistakes
Some of the most common mistakes that nonprofit executive directors make revolve around finance, budgeting, and fundraising (which are all key elements of the ED’s role). Let’s look at a few of my mistakes.
Not staying on top of spending
I was very excited to get my first executive director job in 2008 in North Carolina. I was offered the position to lead the organization in June. I started on August 1. I had asked the board to show me the financials when I accepted the job.
What I didn’t know was that in the two months between when I accepted the offer and started on the job, the board had made some decisions that caused the nonprofit to hemorrhage cash. I am happy I asked for proof of financial stability early on, but I should have stayed on top of it. Though we were able to solve the challenges, it was an unnecessarily stressful time.
Cashflow missteps
My first nonprofit executive director job was for a combined 501(c)(3) and 501(c)(4) organization that also had a political action committee. So, there were three entities to lead. To keep it all legal, the organizations would, at times, need to transfer money to each other.
In January of 2009, I reviewed our financials and my heart sank. It looked like we would run out of money in 30 days. Six months into my first ED job, I had already bankrupted the place! I went for a long walk and tried to calm down. I called our bookkeeper and it turned out we just hadn’t updated one of the accounts. We had a longer runway than it appeared at first glance. I was relieved, but the fear, shock, and personal shame I felt stuck with me.
Since then, I have been even more committed to creating financial reserves and using cash flow analysis. I developed an easy-to-use budget and cash flow template to calculate what our finances would look like 12 months into the future. Looking at nonprofit financials with this view helped me feel more powerful and in control. If you aren’t doing cash flow projections, I strongly recommend you do. If you don’t know where to begin, my budget and cash flow tool can get you started!
Trying to grow too quickly
My first Executive Director job was in the first month of the financial crisis of 2008. I was able to protect and stabilize the organization, but I got too cocky. I needed a development director and thought if I could just hire additional support, I could continue my track record of raising money despite the economic uncertainty and recession happening all around me. I was wrong.
I didn't fully appreciate how the dip in foundations’ endowments in 2008 would impact giving in 2009. Because of this, the new development director and I weren’t able to raise money as quickly as I had in the past. This created cash flow issues and it looked like I was going to need to lay off that just-hired development director. Thankfully, they found a different role six months into the job and left.
I had bitten off more than I could chew – hiring in the midst of financial uncertainty – and learned to always make sure income and cash flow projections were solid (rather than hoped-for).
Leadership-Related Nonprofit Mistakes
Waiting too long to get feedback
Many executive directors have just accepted that their boards will not do any work. Sometimes, this comes with a hidden benefit: the board stays out of your hair. But it’s a double-edged sword.
I was leading one organization in North Carolina and I thought I was killing it. Nearly every measure of what I was charged with was doing well. I asked for an annual review. I didn’t get a review, but I kept getting raises. All seemed well and good. Until it wasn’t.
Our organization experienced a very public attack. It lasted a week and we were dragged through the mud in the media. People around the organization were polarized about what our response should be and the strain and stress exposed fissures and cracks. Criticism of me started to emerge by coalition partners. Somehow in the good times, these criticisms didn’t surface, but once I was in the crosshairs, everyone had an opinion about my leadership. It was the toughest thing I ever faced.
“Somehow in the good times, these criticisms didn’t surface, but once I was in the crosshairs, everyone had an opinion about my leadership.”
Because I wasn’t getting regular feedback on my performance much of this new criticism was surprising, shocking, and hurtful. I also didn’t have the best attitude about feedback then and tended toward defensiveness. The whole experience changed me but I do wish I had been more prepared personally. My bruised ego would have appreciated it.
This experience is also one of the reasons why I developed an executive director annual performance review template – so that other leaders would be able to more easily request and receive feedback. It was designed by me, an ED, not a board, because I know how executive directors want to be measured.
Everything in writing is discoverable
The organization I led in 2013 was faced with accusations we did something illegal. We had not. But in a politically charged environment, a few enemies in the state legislature threatened to hit us with subpoenas as a bullying tactic.
Even though we had done nothing wrong, this would have been expensive and distracting. But more importantly, the subpoenas may have exposed private and potentially hurtful correspondence between our staff and coalition partners. Private conversations where a coalition partner called another coalition partner a “jerk” or where another organization admitted they couldn’t prove their programs worked could be damaging to everyone.
The stress that this could happen on my watch was overwhelming. Since then, I have been militant about making sure email, collaboration platforms, and other communication channels are free from any conversations that could be misconstrued. You need to keep your organization pristine and above board.
Better preparing for crisis
What would you do if there was a public challenge to your organization’s reputation? I mean a VERY public challenge? What if a former volunteer leaked your donor list with credit card details? What if a board member was accused of inappropriate sexual behavior? What if someone accused your organization of discrimination?
Most organizations do not plan for a communications crisis, and I did not either. In 2013, when the nonprofit I was leading faced such a challenge, I was caught off guard. Now I am committed to showing organizations how to plan for, mitigate, and reduce the impact of these challenges. If this kind of planning interests you, reach out to me at sean@mindthegapconsulting.org.
Human Resources-Related Nonprofit Mistakes
Not getting an employment contract
I didn’t know that nonprofit executives should have an employment contract. Most don’t have this in place and I aim to change that!!
When my organization was falsely accused of wrongdoing in 2013, it shook our organization. Long story short, a major funder told us that someone needed to go. Either the board or the ED (me) needed to exit stage right.
The board decided that none of us would go and that we would try to make do without the funder. While I appreciated the vote of confidence I didn’t want to cost the organization $400K-$800K per year. I offered to leave, but I didn’t have an employment contract. Instead, I asked the board to pay my severance in exchange for my leaving. Luckily they did.
That experience taught me that the head of the organization is the first one people turn to for a resignation, whether they deserve it or not. Having an employment contract would have put me in a better position and countless other leaders could use the same protection today.
If you’re an executive director or considering becoming one, you can grab my ED employment contract template and protect yourself, your family, and your career.
Not firing fast enough
One of the things I came to dread as an executive director was spending time on search processes. The time, the energy, the pouring over hundreds of resumes…it all was soul-crushing. I think this leads many nonprofit leaders to hold onto low-performing employees. Many executive directors wait until there is a smoking gun or clear malfeasance to fire someone. Firing and rehiring is time and labor-intensive.
One thing I have learned over time, though, is that having the right person in a position is like night and day. When you have a high performer, your life is just better. Most managers know that if you need to put an employee on a performance improvement plan, it’s probably already too late. It’s hard to repair bad performance and rebuild trust long term. But you need to give employees a chance. However, when you know it is time for someone to go, you owe it to your organization’s mission and your stakeholders to get the right people in place.
In a more dramatic example, I had an employee in 2009 make some very disparaging and anti-gay remarks about me while at a work-related summit. The employee did not have stellar performance but she was OK. I struggled with this incident because, on the one hand, I believed she had a right to be homophobic as long as it didn’t impact her performance, but on the other hand, she damaged her own reputation at this summit and undermined me. After talking to a mentor, I was finally convinced she needed to go. It was the right call.
Not staying on top of delegation
I have been guilty of this in the past and now I try to keep it under control. Sometimes, there are so many tasks to do you can do a great job at delegating and “pushing” the work down to others so you can focus on critical leadership tasks.
But for a while, I wasn’t keeping track of everything I was delegating. I didn’t have a system. This is a problem because employees will wonder if the assignments were really important if you never followed up. You can’t just assume the employee has a system, either. Now, I use a task management system and try to keep everything in Asana. It has helped me get 90% of the way there.
Not giving myself dedicated time to think
I don’t think I appreciated that executive directors needed dedicated time to think until I was seven or eight years into my nonprofit leadership journey. Too often, every minute of every day ended up being booked with calls, meetings, or urgent tasks.
Eventually, I developed a system of not allowing meetings on Monday, so I could have a “no meeting day.” But in addition to a day of high productivity, I learned to create work blocks just to think and strategize. Sometimes, you need space to turn things around in your head, whether it’s a strategic hire, a new program, or a branding investment. Having this time is game-changing. I wish I had prioritized it years earlier.
Mistakes Are Part of Nonprofit Leadership
Nonprofit leaders make mistakes. The goal is to learn from them and even share your mistakes with others so we can grow as a field.
I am not perfect and don’t claim to be. I have found that sharing my own mistakes can make me better and help others feel less isolated or struggle less with imposter syndrome.
Of course, some mistakes are learning opportunities and others are just a disaster. During your career as a nonprofit leader, the key is to be committed to personal development in fundraising, human resources, finance, board relations, and other areas of nonprofit leadership responsibility.
