The Seasons

A snowy winter

As I am writing this, it’s snowing – again. But it’s March – finally. And if it’s March, surely spring can’t be far off – can it?

As we approach (I think) the end of the most relentless winter – not to mention one of the snowiest and coldest – I’ve ever experienced, we’ve been reminded – with frustrating frequency – of how badly elements over which we have absolutely no control can affect our organization. Harsh winter weather adversely affects the volume of donated goods we receive and has a negative, sometimes devastating effect on our retail sales. Yet, while revenues drop, expenses rise – for snow removal, salt, higher heating bills, and the costs of higher absenteeism.

While we have no control over the weather, we do have to respond to it. We have to adapt. This year we have had to postpone or eliminate some of what we had planned to do in 2014. Some vacant positions will go unfilled, some capital expenditures will be deferred, and cost controls we’ve imposed will probably remain in place for the rest of the year. But that’s not necessarily bad. It’s a good time to do examine a lot of what we do, do some selective pruning, and become even better stewards of our resources.

It’s also worth noting that weather effects are short term, and despite the early year financial challenges, our mission is not threatened and we will continue to be a strong organization. If nothing else, this winter has reminded us that one of the reasons it’s important to have a strong balance sheet is so we can weather (pun intended) the periodic downturns and occasional external shocks that all organizations invariably experience from time to time.

Even with the constraints we’ve had to impose, we will still accomplish a lot this year. We have nine retail store projects we expect to complete in 2014 and a tenth that will be underway by the end of the year. This will mean more jobs – especially for people whose options are limited by disability or other barrier. More stores also mean more convenient places for donors to drop off goods and for bargain hunters who love to shop at Goodwill.

Our nine Excel Centers remain at capacity, and we will graduate nearly 500 students this year. Most will also earn a post-secondary credential that increases their employability.

Nurse-Family Partnership will continue to grow, as will the extent to which we are able to realize synergies across our various operations and services. For example, more of our NFP moms and Goodwill employees are enrolled in Excel Centers or are receiving job preparation and placement services from TalentSource.

There’s always been a seasonal pattern to Goodwill’s donated goods/retail operations. In the Midwest, donations of goods tend to be highest from spring through early fall, with a spike the last week of the year. Retail sales tend to be strongest when winter turns to spring and when fall weather arrives, with a spike just before Halloween (a relatively recent phenomenon).

But there is no season to the work we do to increase positive impact in the lives of people and the communities in which we operate. Employment of people with limited options is year-round, as are the Excel Centers, Nurse-Family Partnership, and other services Goodwill offers. And our emphasis on continuous improvement means exactly that – continuous.

So – despite the challenges of a winter we’ll never forget, there’s plenty of reason to be optimistic and glad to be part of the work Goodwill does. And if we get a bit crazy when spring weather finally does arrive, at least we know everyone in this part of the country will understand – and probably join in.

What goes around comes around – a brief historical perspective

In the late 1930s, in the midst of the Great Depression, the small Goodwill organization in Indianapolis was offering the following services:

  • A kindergarten
  • A pre-natal clinic
  • A dental clinic for school children
  • In conjunction with the Marion County Medical Society and Methodist Hospital, a home-based health care program
  • Classes for female heads of households. Topics included childcare, food preparation and purchasing, and how to run a household when a spouse is in prison
  • A library with books that mothers could read to their children

And yes, the organization also provided jobs in Goodwill stores. While the available resources and number of people served were small, the approach Goodwill took in those days was – using current terminology – holistic and dealt with the whole family.

When the U.S. became involved in World War II, Goodwill’s primary emphasis shifted to employing people – particularly people with disabilities – who previously had few, if any employment opportunities. Following the war, an emphasis on vocational rehabilitation was added. For the next forty years, Goodwill’s primary mission could be paraphrased as helping people – primarily, but not exclusively people with disabilities – prepare for, find, and keep jobs.

By the early 1990s, major societal changes – some of which began gaining momentum in the 1960s – prompted Goodwill to become involved in several initiatives designed to address growing social problems. Eventually, we launched efforts to try to improve education outcomes for young people who had struggled or failed in other settings. Those experiences, in turn, made us increasingly aware of the need to work with students and their families in a much more holistic manner.

Simultaneously, we began seeing a great deal of dismaying data that vividly illustrated the long term negative trends of a number of significant social indicators, despite massive increases in public spending and a huge proliferation of not-for-profit organizations. We also began searching for programs that have demonstrated long term positive impact reducing social problems.

As a result of all of this, we have begun implementing Nurse-Family Partnership in Marion County. In addition to the basic, nurse-led services offered under this highly regarded, evidence-based national program, each mom or mom-to-be will be linked with a Goodwill Guide who can assist her in accessing education services (e.g. through Goodwill’s Excel Centers) and/or employment opportunities (e.g. in Goodwill’s retail system). The Guide will also advise the mom on financial matters, housing and transportation, child care, and health care. It is a holistic, whole family approach that we believe can help reduce generational poverty.

With and for parents who so desire, we intend to take a similar holistic approach with the children of Indianapolis Metropolitan High School students and graduates, Excel Center students and graduates, Goodwill employees with barriers, and families of all of these individuals. To the extent possible and desired by the parents, we intend to maintain these relationships for a long period of time – ideally, until the children are grown.

As this approach develops, it may increasingly resemble Goodwill’s approach in the late 1930s – only with much greater scale, current information and technology, and, hopefully, long lasting impact – in the lives of people and in the larger community.

Goodwill and the Economy

Goodwill in central Indiana was founded in 1930 during the depths of the Great Depression. Since that time the organization has experienced the effects of several recessions, several wars, many changes in the political landscape at the local, state, and federal levels, and incredible technological changes.

During the recession of the early 1980s, it became apparent to us that nothing would help Goodwill or the people we assist more than a strong, growing economy. That continues to be the case.

Despite the economic challenges of the past several years, though, Goodwill has had some significant growth. At the end of 2007, we had 1867 employees in central Indiana. Today we have 2500, nearly 2/3 of whom have limited options because of disability, criminal history, or low education level. We weathered the most recent recession better than we had any right to expect. However, with continuing uncertainty about the economy, the toxic political atmosphere in this country, and a widespread lack of confidence that our elected officials in Washington will be able to agree on a course of action likely to lead to a renewal of economic growth , we wonder if we will be able to continue to grow.

Time will tell, of course, but at Goodwill we’re in a stronger position today than we were in 2007. During the last three years we’ve taken advantage of some opportunities that were a consequence of the slow economy and opened several new stores that have been well supported by our customers and donors of goods. We have also invested in and seen rapid growth in our e-commerce operations, which now employ 80 people. The success of these initiatives has helped further strengthen our balance sheet.

The largest customers in our Commercial Services Division, which employs over two hundred people with significant disabilities, are in sectors of the economy that are more stable than many, and funding for the schools we operate is likely to remain reasonably stable.

It’s not all positive, of course. The outlook for job opportunities for people who come to us for employment assistance is not likely to improve – and may even worsen – thus placing even more importance on Goodwill’s ability to provide jobs for a lot of people with limited options. That, in turn, is dependent on our ability to continue to grow our businesses in a financially sustainable manner.

Also, the amount of money we have to invest in new initiatives might be reduced by the negative effect of market declines on the endowment in the Goodwill Foundation. Fortunately, we do not rely on those funds for day-to-day operations.

The brightest comment we can offer about the gloomy economic outlook is that it will continue to be a good time for people to upgrade their education and skill levels. For those who lack a high school diploma, it’s a great time to return to school. The Excel Center, launched by Goodwill Education Initiatives in 2010, offers a viable option for many adults, and we’ve expanded the school this year in response to heavy demand. And for adults who have some college, but no degree, this may be a very good time to go back and finish.

We have no control over the economy. But we do have control over how we respond and adapt to the circumstances we encounter. At Goodwill, we will continue to take actions that we believe will enable us to have maximum mission-related impact while maintaining a financial position that will enhance our prospects for continued long term viability.

Employing people with limited options

Employing people with limited options – Nothing we do is more important

At Goodwill, the collection and sale of used goods has always been a means to an end rather than an end in itself. The organization grew out of an effort to provide an earned income stream for unemployed people – most of them recent immigrants – in the south end of Boston at the beginning of the 20th century. Jobs were scarce, and there was no government safety net. The founder of Goodwill, Edgar Helms, went to the wealthy areas of Boston and asked people to give him the goods they no longer wanted. He put people to work repairing the goods, sold the goods to the public, and used the money to pay wages to the workers.

Today, at Goodwill Industries in central Indiana, we have nearly 2,500 employees, over 1,400 of whom work in our retail system. That system includes 50 retail stores, three warehouse and distribution centers, recycling and secondary market operations, and a rapidly growing e-commerce unit. Largely because of the growth of that system in recent years, we have 1,000 more employees in our organization than we did five years ago.

More significantly, 68% of our employees have limited work options because of disability, criminal history, or lack of a high school diploma. And it’s particularly important to note that for 50% of our employees we are the primary source of income in their households. That places an enormous responsibility on those of us in senior positions to run the organization well enough that we will be able to continue providing a livelihood for all of those people who are counting on us. And we take that responsibility very seriously.

Our retail system is also the financial backbone of the entire organization, and in that system our business and mission objectives are tightly woven together. In addition, cash from retail operations helps support other Goodwill services that do not generate enough revenue to sustain themselves.

While Goodwill adds value in the community in several ways, nothing we do is more important than providing jobs for people with limited options. Certainly, the importance of that role is magnified during periods of relatively high unemployment. We also have a responsibility to provide as many opportunities as possible for those individuals to improve their education and/or enhance their skills so they might eventually qualify for higher paying jobs with us or with another employer.

Of course, our ability to employ people over long periods of time is dependent on our ability to operate businesses well over a long period of time. If those businesses are growing, we can often employ more people. Fortunately, we’ve been able to do that for quite a few decades.

It’s particularly noteworthy that the part of our organization that employs the largest number of people has been with us from the start. It’s survived wars, the Great Depression, several recessions, and many other changes in the economy, demographics, technology, competition, laws and regulations, as well as occasional natural disasters. But the future of that business is not guaranteed. We must take nothing for granted.

Context and Change

Organizations that want to be effective for very long must understand their context – their context within the communities in which they operate, their context within the larger society, and their context within the industry or industries in which they compete. They need to understand where they fit and how what they are doing relates to what others around them are doing.

They also need to have their antennae out and constantly be alert to changes in their external environment. They need to be aware of what’s happening “out there” – changes in the economy, demographics, technology, the competitive landscape, the legislative and regulatory environment, etc. – that could affect what they do or how they do it – that could create a new opportunity or pose a threat.

Organizations that fail to understand their context or the changes taking place in their external environment run a serious risk of becoming irrelevant or extinct. This happens far too frequently  – especially among smaller organizations in which the chief executive is too preoccupied with day-to-day operations to pay enough attention to what is going on outside the organization.

The more an organization is removed from day-to-day market forces, the greater the danger it will develop 20/20 tunnel vision and eventually be blindsided. People in leadership positions in some not-for-profits can also be so focused on and passionate about what they are doing that, even if they are aware of external threats, tend to ignore them and just hope they’ll go away. Organizations that allow themselves to engage in such wishful thinking may have a short life.

Of course, once you’re aware of changes that might affect your organization, you have to decide how to respond. During my career we have had to adapt to an incredible number and variety of changes in the world in which we operate. Some of the changes we’ve made have been incremental; others have been more revolutionary. Some have involved launching new initiatives; others have involved shutting down operations or services.

We put a lot of emphasis on continuous improvement and innovation. If you look at what we are doing this year compared with last year, you might not see a lot of change. But look back five or ten years, and you might wonder if it’s the same organization.

Occasionally, someone will ask me what I’m most proud of in my work with Goodwill. The answer is not any particular initiative or development. What I’m most pleased with is how far we’ve come over time. We’ve grown, to be sure. But the level at which the organization functions is orders of magnitude higher than it was 30 or 40 years ago. Our challenge is to continue raising that level, increasing the organization’s impact, and making better use of all of our resources. And that will continue to involve frequent incremental improvements,  occasional major innovations, and constant adaptation as the world in which we operate continues to change.