Category Archives: Derek Link

Organizational Entropy Part II: Is Overhead Entropy?

This is the second of a three part series by Non-Profit Consultant, Derek Link, on energy, mission, and organizational entropy. Part 1 appeared on February 5, 2010.

You’ll have to read my previous post Organizational Entropy Part I: What the Heck is Entropy? on entropy of organizations before this one, or it may not make sense at all – which it may not anyway, or it may not anyway if the first one didn’t make sense. Nevertheless, here goes, and damn the torpedoes.

I see lots of grants from foundations that seek to give away money but which DO NOT FUND “indirect” costs. In other words, whatever it costs your organization to run the program, tough, you will have to find funds for those administrative costs another way.

I always wonder to myself, what is the color of the sky that these organizations live in? I decided that sky must be a green one, one that rains money. Who pays for their administrative costs, I wonder? Why would they be opposed to paying for a little healthy administration?

So my question – you may have thought I’d drifted away from it for good by now – is whether spending money on administrative costs represents energy/resources that are essentially wasted? Can the work of an organization be done without administrative work? Would it be feasible to give grants only for the good work it is actually going to do but none of the support structure? How would an organization complete its mission if it were giving away shoes to shoeless people in Tanzania and all grant makers said every penny must be spent on shoes and/or shoelaces and nothing else?

Is not administration a necessary part of the work? After all, someone must go to Tanzania to assess the need for shoes, someone must negotiate with local organizations to assist giving shoes out in an orderly and effective manner, someone must inventory the shoes, someone must make arrangements for shipping, someone has to write and sign paychecks to staff, and endlessly so on. Why is this work considered superfluous entropic waste?

Perhaps the answer partly lies in the fact that some non-profits are paying huge salaries to their employees and consultants – ours excepted. It may be that grant makers have seen some of their precious resources wasted by conflagrant administrators. The decision to ban all use of funding for indirect costs may well arise from bad experiences.

To answer my own question, I must conclude that administrative/indirect costs can be entropy, i.e., wasted resources or energy; However, reasonable administrative costs are a necessary part of getting the work done and are supportive of accomplishing the mission. Inadequate administration can actually get in the way of getting the shoes from point A to feet B. Poor administration is probably entropy, busily gobbling up energy and resources of an organization.


Good non-profits make an effort to prove the efficacy of their administration. The fact that grant makers feel the need to set policies restricting administrative costs dictates transparency and a high level of accountability among administrators and Boards. In order to convince grant makers that administrative costs do not represent entropy and in fact are a necessary part of the work mandates that all resources are clearly spent to support the motion of the mission, and are not wasted, thereby creating unnecessary friction.

***************

Part 3 of this series will discuss specifically how organization’s fall into a state of entropy.  It will be published on February 10, 2010.

Published by Creative Resources & Research http://grantgoddess.com

Organizational Entropy Part II: Is Overhead Entropy?

This is the second of a three part series by Non-Profit Consultant, Derek Link, on energy, mission, and organizational entropy. Part 1 appeared on February 5, 2010.

You’ll have to read my previous post Organizational Entropy Part I: What the Heck is Entropy? on entropy of organizations before this one, or it may not make sense at all – which it may not anyway, or it may not anyway if the first one didn’t make sense. Nevertheless, here goes, and damn the torpedoes.

I see lots of grants from foundations that seek to give away money but which DO NOT FUND “indirect” costs. In other words, whatever it costs your organization to run the program, tough, you will have to find funds for those administrative costs another way.

I always wonder to myself, what is the color of the sky that these organizations live in? I decided that sky must be a green one, one that rains money. Who pays for their administrative costs, I wonder? Why would they be opposed to paying for a little healthy administration?

So my question – you may have thought I’d drifted away from it for good by now – is whether spending money on administrative costs represents energy/resources that are essentially wasted? Can the work of an organization be done without administrative work? Would it be feasible to give grants only for the good work it is actually going to do but none of the support structure? How would an organization complete its mission if it were giving away shoes to shoeless people in Tanzania and all grant makers said every penny must be spent on shoes and/or shoelaces and nothing else?

Is not administration a necessary part of the work? After all, someone must go to Tanzania to assess the need for shoes, someone must negotiate with local organizations to assist giving shoes out in an orderly and effective manner, someone must inventory the shoes, someone must make arrangements for shipping, someone has to write and sign paychecks to staff, and endlessly so on. Why is this work considered superfluous entropic waste?

Perhaps the answer partly lies in the fact that some non-profits are paying huge salaries to their employees and consultants – ours excepted. It may be that grant makers have seen some of their precious resources wasted by conflagrant administrators. The decision to ban all use of funding for indirect costs may well arise from bad experiences.

To answer my own question, I must conclude that administrative/indirect costs can be entropy, i.e., wasted resources or energy; However, reasonable administrative costs are a necessary part of getting the work done and are supportive of accomplishing the mission. Inadequate administration can actually get in the way of getting the shoes from point A to feet B. Poor administration is probably entropy, busily gobbling up energy and resources of an organization.


Good non-profits make an effort to prove the efficacy of their administration. The fact that grant makers feel the need to set policies restricting administrative costs dictates transparency and a high level of accountability among administrators and Boards. In order to convince grant makers that administrative costs do not represent entropy and in fact are a necessary part of the work mandates that all resources are clearly spent to support the motion of the mission, and are not wasted, thereby creating unnecessary friction.

***************

Part 3 of this series will discuss specifically how organization’s fall into a state of entropy.  It will be published on February 10, 2010.

Organizational Entropy Part I: What the Heck is Entropy?

Here are some thoughts on energy, accomplishment of your mission, and entropy, provided by Non-Profit Consultant, Derek Link.  This is the first of a three-part series on the topic.

A few big ideas stuck with me from my days at the University and one of them is the idea of entropy. Entropy is a universal principle which is probably why it stuck with me – I love that kind of stuff. My professor said that everything in the universe is moving towards maximum entropy, or disorder. Energy is lost as entropy occurs and the eventual result of entropy is rest, equilibrium, stasis.

The easiest example for my brain to understand entropy is the idea of a perpetual motion machine, like a clock pendulum that once set into motion can continue to swing without any additional force being applied for eternity. We know this doesn’t happen and the reason why it does not is entropy. The friction of the pivot point of the pendulum, of the work it is creating in moving the clock, and even with the air it is moving through is dissipating some of the energy of the swinging and over time, this pendulum will come to rest, equilibrium. When it comes to entropy in non-profit organizations, the concept is important to understand because every bit of work done expends energy that is a byproduct of the work, rather than result of the work.

So how in the heck does this apply to your organization? Well, let’s say that your organization’s mission is like the pendulum. You apply some force to the mission; in other words, you give it money, time, effort, management, supervision, accountability, and governance. The pendulum of your mission begins to swing, the gears start to turn and work gets done. As long as you continue to apply energy to the pendulum/mission, it continues to do work, but if you stop applying energy to it, it will slowly expend all of the energy applied to it and come to rest.

In the case of an organization, energy can be expended on accomplishing the mission but some will always be wasted, that’s entropy. The key is to understand that keeping the pendulum swinging takes continual application of force or entropy will use up all of the energy applied and motion will stop.

If energy flows to it that isn’t directly related to accomplishing your mission, that’s entropy. I worked with a company on a project that would result in the production of videos. We had a non-profit partner and we had a great concept. The thing we needed was national distribution and a recognizable name so we could draw in corporate grants to get the pendulum swinging. We approached a national non-profit I had family ties to and voila, they said yes, we want to take part.

Then entropy set in. The national office of the non-profit approved the project but wanted us to raise an additional 1 million dollars for their overhead. This was equivalent to the entire project budget! If we accepted their participation, we had to accept that a lot of energy would be wasted and spent outside of our mission, so we politely declined the offer to increase the project entropy.

Some entropy is unavoidable, imposed by outside forces, and these things are usually shrugged off as “the cost of doing business”. Some entropy is avoidable so look around. Where is your organization expending useless energy as a result of doing the work? Find those areas and try to reduce or eliminate them. Doing so will mean that you have to apply less energy to your mission’s pendulum to keep it swinging strongly.

******

In part 2 of this series (appearing on February 8, 2010), Derek will discuss overhead and administrative costs.  In part 3, the final installment in this series (appearing on February 10, 2010), the topic turns to specifically how organizations lose the motion of their mission.

Organizational Entropy Part I: What the Heck is Entropy?

Here are some thoughts on energy, accomplishment of your mission, and entropy, provided by Non-Profit Consultant, Derek Link.  This is the first of a three-part series on the topic.

A few big ideas stuck with me from my days at the University and one of them is the idea of entropy. Entropy is a universal principle which is probably why it stuck with me – I love that kind of stuff. My professor said that everything in the universe is moving towards maximum entropy, or disorder. Energy is lost as entropy occurs and the eventual result of entropy is rest, equilibrium, stasis.

The easiest example for my brain to understand entropy is the idea of a perpetual motion machine, like a clock pendulum that once set into motion can continue to swing without any additional force being applied for eternity. We know this doesn’t happen and the reason why it does not is entropy. The friction of the pivot point of the pendulum, of the work it is creating in moving the clock, and even with the air it is moving through is dissipating some of the energy of the swinging and over time, this pendulum will come to rest, equilibrium. When it comes to entropy in non-profit organizations, the concept is important to understand because every bit of work done expends energy that is a byproduct of the work, rather than result of the work.

So how in the heck does this apply to your organization? Well, let’s say that your organization’s mission is like the pendulum. You apply some force to the mission; in other words, you give it money, time, effort, management, supervision, accountability, and governance. The pendulum of your mission begins to swing, the gears start to turn and work gets done. As long as you continue to apply energy to the pendulum/mission, it continues to do work, but if you stop applying energy to it, it will slowly expend all of the energy applied to it and come to rest.

In the case of an organization, energy can be expended on accomplishing the mission but some will always be wasted, that’s entropy. The key is to understand that keeping the pendulum swinging takes continual application of force or entropy will use up all of the energy applied and motion will stop.

If energy flows to it that isn’t directly related to accomplishing your mission, that’s entropy. I worked with a company on a project that would result in the production of videos. We had a non-profit partner and we had a great concept. The thing we needed was national distribution and a recognizable name so we could draw in corporate grants to get the pendulum swinging. We approached a national non-profit I had family ties to and voila, they said yes, we want to take part.

Then entropy set in. The national office of the non-profit approved the project but wanted us to raise an additional 1 million dollars for their overhead. This was equivalent to the entire project budget! If we accepted their participation, we had to accept that a lot of energy would be wasted and spent outside of our mission, so we politely declined the offer to increase the project entropy.

Some entropy is unavoidable, imposed by outside forces, and these things are usually shrugged off as “the cost of doing business”. Some entropy is avoidable so look around. Where is your organization expending useless energy as a result of doing the work? Find those areas and try to reduce or eliminate them. Doing so will mean that you have to apply less energy to your mission’s pendulum to keep it swinging strongly.

******

In part 2 of this series (appearing on February 8, 2010), Derek will discuss overhead and administrative costs.  In part 3, the final installment in this series (appearing on February 10, 2010), the topic turns to specifically how organizations lose the motion of their mission.

Published by Creative Resources & Research http://grantgoddess.com

Is Your Non-Profit a "Closed" Organization?

Non-profit Consultant, Derek Link, offers some thoughts on the dangers of “closed” organizations:

One of the worst things a non-profit organization can do is to become a “closed” organization. First I’ll define what that means to me and then I’ll give you an example of how it looks in action. A closed organization is one that has become inbred and sort of nepotistic. Only familiar people are invited into the decision-making. The Board hasn’t changed in years or at the very least never includes anyone with a different viewpoint or who is strong enough to rock the boat. A closed organization can’t grow because it fears the innovation, requirements, and new attachments that growth requires.

So what does this look like in practice? I’ve seen a few organizational symptoms lately. Last week I was reviewing a nonprofit organization’s strategic plan. The plan looked fairly detailed at first blush, there were lots of items, neatly numbered, and there were various categories of things that the organization wanted to take action on. The problem was that all of the categories were things they already did and there was nothing new. The second problem was that the sub-items were all so general that it wasn’t possible to know what actions should be taken to actually accomplish anything. It was a 3 year plan that led nowhere. To make matters worse, it was a 3 year plan that ended last year and the action of the board was to re-authorize the same plan for the next three years! Obviously that Board is not including any new people and certainly not anyone who would question the status quo in order to propel the mission forward.

The second example is a non-profit that I have a lot of experience with because I sometimes volunteer there. Like most non-profits, the organization is always short of money but that is mostly because they don’t bring in any expertise in fund raising to implement any sort of organized fund raising plan. It’s always put this fire out then put that one out.

The leadership hasn’t changed over time and new members to the Board have not been added from outside the immediate circle of friends. In fact, I attended a Board meeting once when two new people happened to come in from the outside. They proposed that the strategy for fund raising wasn’t very good and they were actually shouted at by the Board President. These were people with concrete experience raising money so their concerns were based on real knowledge, but the closed system isn’t open to new ideas. The “interlopers” were driven away before the Board president’s veins had even receded from his forehead!

One symptom of a closed system is a Board that only cracks open the Board room door when it is in danger of fiscal collapse. Closed systems are locked in a death spiral that may be slow or fast, or it may simply spin in one place for eternity when the Board is wealthy enough. The Board members of the arts organization I volunteer with are wonderfully generous with their own money and time, but they aren’t wealthy. They periodically publish pleas for funding that are couched as dire warnings to the community that they are in immanent danger of going under financially. The appearance they give is that the only time anyone new is invited to participate is when they need money in times of crisis. That comes across as desperate and irksome to people who would enjoy being involved if a sincere invitation to do so were ever proffered.

So long as your organization has a solid funding stream then it may survive being a closed system, but as soon as that funding stream is compromised, it can come down like a house of cards. In the current economic environment, even some foundations with large endowments that have traditionally been closed systems are questioning the feasibility of remaining as such.

Join Derek for our BlogTalkRadio Tips from the Grant Goddess show this week (Friday, 3 p.m., PST).  He’ll be talking about hjow to tell if your organization is a closed system, and what you can do about it. If you miss the live show, you can listen to the recording on demand.

Is Your Non-Profit a "Closed" Organization?

Non-profit Consultant, Derek Link, offers some thoughts on the dangers of “closed” organizations:

One of the worst things a non-profit organization can do is to become a “closed” organization. First I’ll define what that means to me and then I’ll give you an example of how it looks in action. A closed organization is one that has become inbred and sort of nepotistic. Only familiar people are invited into the decision-making. The Board hasn’t changed in years or at the very least never includes anyone with a different viewpoint or who is strong enough to rock the boat. A closed organization can’t grow because it fears the innovation, requirements, and new attachments that growth requires.

So what does this look like in practice? I’ve seen a few organizational symptoms lately. Last week I was reviewing a nonprofit organization’s strategic plan. The plan looked fairly detailed at first blush, there were lots of items, neatly numbered, and there were various categories of things that the organization wanted to take action on. The problem was that all of the categories were things they already did and there was nothing new. The second problem was that the sub-items were all so general that it wasn’t possible to know what actions should be taken to actually accomplish anything. It was a 3 year plan that led nowhere. To make matters worse, it was a 3 year plan that ended last year and the action of the board was to re-authorize the same plan for the next three years! Obviously that Board is not including any new people and certainly not anyone who would question the status quo in order to propel the mission forward.

The second example is a non-profit that I have a lot of experience with because I sometimes volunteer there. Like most non-profits, the organization is always short of money but that is mostly because they don’t bring in any expertise in fund raising to implement any sort of organized fund raising plan. It’s always put this fire out then put that one out.

The leadership hasn’t changed over time and new members to the Board have not been added from outside the immediate circle of friends. In fact, I attended a Board meeting once when two new people happened to come in from the outside. They proposed that the strategy for fund raising wasn’t very good and they were actually shouted at by the Board President. These were people with concrete experience raising money so their concerns were based on real knowledge, but the closed system isn’t open to new ideas. The “interlopers” were driven away before the Board president’s veins had even receded from his forehead!

One symptom of a closed system is a Board that only cracks open the Board room door when it is in danger of fiscal collapse. Closed systems are locked in a death spiral that may be slow or fast, or it may simply spin in one place for eternity when the Board is wealthy enough. The Board members of the arts organization I volunteer with are wonderfully generous with their own money and time, but they aren’t wealthy. They periodically publish pleas for funding that are couched as dire warnings to the community that they are in immanent danger of going under financially. The appearance they give is that the only time anyone new is invited to participate is when they need money in times of crisis. That comes across as desperate and irksome to people who would enjoy being involved if a sincere invitation to do so were ever proffered.

So long as your organization has a solid funding stream then it may survive being a closed system, but as soon as that funding stream is compromised, it can come down like a house of cards. In the current economic environment, even some foundations with large endowments that have traditionally been closed systems are questioning the feasibility of remaining as such.

Join Derek for our BlogTalkRadio Tips from the Grant Goddess show this week (Friday, 3 p.m., PST).  He’ll be talking about hjow to tell if your organization is a closed system, and what you can do about it. If you miss the live show, you can listen to the recording on demand.

Published by Creative Resources & Research http://grantgoddess.com

The Importance of Networking

Non-profit Consultant, Derek Link, shares some good strategies for effective networking:

I am not by nature a super-social person. Not that I suffer from any social-anxiety dysfunction or anything but I tend to be an inward-thinking person who tends to process and do critical thinking internally. I like to process first, express second. Many people process verbally first and unlike me, they love to be in social settings where they can process to their heart’s delight.

If you’re more like me, you need to force yourself to network. It’s important because most business connections are made this way. This places you in the less-than-comfortable position of meeting, greeting, shaking hands, and spending time with those verbal processors. The thing is, networking effectively is mission-critical if you’re in business – and this includes those of you in business as non-profit or school administrators. You must be out there, be known, pass out cards, do some verbal processing; if you don’t, you won’t be given any contracts that play to your internal processing strengths.

  • Practice being a “there you are” person, rather than a “here I am” person. Force yourself to make eye contact and make the first approach. Many people feel just as fearful as you do about making the first contact and they’ll be relieved that someone has taken the pressure off of them by making the contact.
  • Avoid alcohol in places where you are networking. If you’re kind of an internal processor anyway, you may find that drinking isn’t helping you open up, at least, not in ways that are helpful to building business connections.
  • Be sure to carry lots of cards with you! These can help spur conversation about your business. I can be bad about this so I am constantly putting a couple into my wallet since it’s everywhere I am except the shower
  • Take a verbal processor with you and dovetail off his or her natural gift.
  • Work on using some active listening techniques. Respond to what is being discussed with clarifying questions or summary statements. This helps keep your mind in the conversation and truly creates a connection to the other person.
  • Keep moving to contact as many people in the event as possible. Don’t stay in a mini-conference with one or two people, or with people you already know. Work the room!
  • You don’t need to talk only about business, networking can also be social, so if something cool is happening your life it’s OK to share it. remember, the whole point of networking is to establish relationships.

So don’t hesitate to find those opportunities to get out and shake hands. You want to be memorable so put on your best duds, polish that smile, and walk in the room with the “there you are!” attitude.

The Importance of Networking

Non-profit Consultant, Derek Link, shares some good strategies for effective networking:

I am not by nature a super-social person. Not that I suffer from any social-anxiety dysfunction or anything but I tend to be an inward-thinking person who tends to process and do critical thinking internally. I like to process first, express second. Many people process verbally first and unlike me, they love to be in social settings where they can process to their heart’s delight.

If you’re more like me, you need to force yourself to network. It’s important because most business connections are made this way. This places you in the less-than-comfortable position of meeting, greeting, shaking hands, and spending time with those verbal processors. The thing is, networking effectively is mission-critical if you’re in business – and this includes those of you in business as non-profit or school administrators. You must be out there, be known, pass out cards, do some verbal processing; if you don’t, you won’t be given any contracts that play to your internal processing strengths.

  • Practice being a “there you are” person, rather than a “here I am” person. Force yourself to make eye contact and make the first approach. Many people feel just as fearful as you do about making the first contact and they’ll be relieved that someone has taken the pressure off of them by making the contact.
  • Avoid alcohol in places where you are networking. If you’re kind of an internal processor anyway, you may find that drinking isn’t helping you open up, at least, not in ways that are helpful to building business connections.
  • Be sure to carry lots of cards with you! These can help spur conversation about your business. I can be bad about this so I am constantly putting a couple into my wallet since it’s everywhere I am except the shower
  • Take a verbal processor with you and dovetail off his or her natural gift.
  • Work on using some active listening techniques. Respond to what is being discussed with clarifying questions or summary statements. This helps keep your mind in the conversation and truly creates a connection to the other person.
  • Keep moving to contact as many people in the event as possible. Don’t stay in a mini-conference with one or two people, or with people you already know. Work the room!
  • You don’t need to talk only about business, networking can also be social, so if something cool is happening your life it’s OK to share it. remember, the whole point of networking is to establish relationships.

So don’t hesitate to find those opportunities to get out and shake hands. You want to be memorable so put on your best duds, polish that smile, and walk in the room with the “there you are!” attitude.

Published by Creative Resources & Research http://grantgoddess.com

Does Philanthropy Serve the Common Good?

Non-profit Consultant, Derek Link, shares some thoughts on philanthropy:

I love when I hear that a foundation is changing its priorities.It tells me that someone is paying attention, that the Board isn’t asleep at the wheel, and that the Executive Director is in a learning curve about the needs of the community they serve. Changing priorities tells me that a foundation may be avoiding the trap of entrenchment in some ideologically-static mission.

Michael Edwards recently wrote an article, “Philanthropy Needs a Major Overhaul to Better Serve the Common Good” in which he asserts that, “The best way to reinvent philanthropy is for ordinary people to get involved in a way that does not reinforce the unhealthy patterns of the past.”

I can see from grant research why he would make such an assertion because I see many foundations that give away lots of money, yet all of it goes to a specific political or religious cause. The question isn’t whether the recipients of the money are doing nice things with it, the civil society questions should be, “Are those the most important things to be doing?” and, “Should the government be giving tax breaks for giving money away when it merely represents maintenance of social inequalities or blatant promotion of personal bias?”

Social change must be driven by social needs but when the wealthy foundations are rewarded for doing nothing more than supporting programs for the wealthy as when donations are made to a senior center serving relatively well-to-do seniors, or the wealthy children who attend schools of a certain religion, the social responsibility a foundation assumes by accepting tax breaks is undermined.

The idea that foundations should be established for the public good is fundamental to civil society principles. But if a foundation refuses to change its mission even when more pressing concerns are evident in their community, one must question the motives and the relevance of their existence and whether our government should be granting tax exempt status for organizations that are nothing more than proponents of a class, race, religious, or political point of view.

Does Philanthropy Serve the Common Good?

Non-profit Consultant, Derek Link, shares some thoughts on philanthropy:

I love when I hear that a foundation is changing its priorities.It tells me that someone is paying attention, that the Board isn’t asleep at the wheel, and that the Executive Director is in a learning curve about the needs of the community they serve. Changing priorities tells me that a foundation may be avoiding the trap of entrenchment in some ideologically-static mission.

Michael Edwards recently wrote an article, “Philanthropy Needs a Major Overhaul to Better Serve the Common Good” in which he asserts that, “The best way to reinvent philanthropy is for ordinary people to get involved in a way that does not reinforce the unhealthy patterns of the past.”

I can see from grant research why he would make such an assertion because I see many foundations that give away lots of money, yet all of it goes to a specific political or religious cause. The question isn’t whether the recipients of the money are doing nice things with it, the civil society questions should be, “Are those the most important things to be doing?” and, “Should the government be giving tax breaks for giving money away when it merely represents maintenance of social inequalities or blatant promotion of personal bias?”

Social change must be driven by social needs but when the wealthy foundations are rewarded for doing nothing more than supporting programs for the wealthy as when donations are made to a senior center serving relatively well-to-do seniors, or the wealthy children who attend schools of a certain religion, the social responsibility a foundation assumes by accepting tax breaks is undermined.

The idea that foundations should be established for the public good is fundamental to civil society principles. But if a foundation refuses to change its mission even when more pressing concerns are evident in their community, one must question the motives and the relevance of their existence and whether our government should be granting tax exempt status for organizations that are nothing more than proponents of a class, race, religious, or political point of view.

Published by Creative Resources & Research http://grantgoddess.com