Coming full circle

January 19, 2015 was the 152nd anniversary of the birth of Edgar Helms, the founder of Goodwill. At the beginning of the 20th Century, he came up with an idea that included asking people to donate clothing and household items they no longer wanted. Helms wasn’t the first person to do that. But instead of just giving those goods to poor people, he put unemployed people to work collecting and repairing some of the goods, selling them to the public, and using the money to pay wages to the workers. He created jobs – a way for unemployed people to earn money, and the collection and sale of used goods was the means to that end. That basic idea still works over 100 years later and represents the financial backbone of our entire organization as well as a source of a lot of jobs – over 2,000 in central Indiana alone – for people who in many cases don’t have a lot of options.
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Helms believed that every human being has value, and he believed in giving people opportunities – a chance rather than charity – a hand up rather than a hand out. And those basic values are still just as important in Goodwill as they were over a hundred years ago.

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We do things differently today, to be sure. Over the course of our history, we’ve continued to learn and to adapt to the incredible changes that have taken place in the economy, demographics, technology, laws and regulations, competition, and American culture. I believe Helms would be amazed at how large Goodwill has become across this country. And I believe he would be particularly pleased to see how Goodwill in central Indiana has evolved – especially over the past decade – because of the way we are emphasizing whole person, often whole family approaches. Such approaches haven’t been all that common among Goodwills over the past half century. But that’s the approach Helms took in the early decades of Goodwill’s history. That first Goodwill, located in Boston, included a day nursery, a kindergarten, a fresh air camp and farm for city kids, a music school, and a night school that taught trades. Of course, they also offered employment services and jobs.

The other early Goodwills followed that lead and included a similar emphasis on helping families. For example, in the late 1930s, the small Goodwill organization in Indianapolis, working with other organizations in the community, offered a kindergarten, a prenatal clinic, a dental clinic for school children, a home-based health care program, a variety of classes for female heads of households, and a library with books mothers could borrow to read to their children.

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From my reading of the organization’s history, that approach began to change in the early 1940s as providing jobs became the primary or exclusive focus. For the next forty years, our principle role in the community could be paraphrased as helping people with various employment barriers prepare for, find, and keep jobs.

During the last decade, though, in response to some significant changes in our society and the inability of other approaches to solve a number of major social problems, we’re now moving back toward a much more whole person, often whole family approach much like that exhibited by Goodwills in the early part of the 20th Century. In a sense, we’re coming full circle.

Today, though, with current information and technology, along with other resources, we have the potential for much greater scale and lasting impact in the lives of people and the larger community.

From a personal standpoint, what we’re engaged in today is the most significant and exciting work in my 45-year career with Goodwill.

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Optimizing

I describe Goodwill’s overall objective in general terms as “Maximizing mission-related impact while maintaining a financial position that enhances long term viability.” Of course, such a definition requires that we be able to define mission-related impact. And, despite the use of the word maximizing, the overall challenge is really one of optimizing.

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Many of our management challenges involve finding optimal solutions. For example, how much of our revenue should we spend on General and Administrative expenses (In the not-for-profit world, this is typically referred to as “overhead.”)? Some people believe not-for-profits should minimize G&A. In the long run, that is a recipe for ensuring less than optimal performance, as it results in inadequate value-added support of the high mission impact parts of the organization. Spend too much, though, and there could be legitimate questions about whether the organization is being a good steward of its resources. In this, as is in so many situations, one size does not fit all. Two very important factors in arriving at an optimal percentage are the size and complexity of the organization. In our large, very complex organization, somewhere around 10% of revenue seems to be close to optimal. While to some it might seem counterintuitive, a well-run smaller organization would likely have to spend a larger percentage of its revenue on G&A, as those expenses should not increase at the same rate as revenue.

Another example: One of Goodwill’s historic roles is to provide work for people whose options are limited by disability, criminal history, low education level, or other significant barrier. This is a very important part of our mission and one way we can add unique value in a community. Obviously, then, we want to provide as many jobs as possible for individuals who don’t have many options. However, because retail is the financial backbone of our entire organization, we must have a sufficient number of people with skills that enable us to be competitive and efficient. If we do not have enough people with barriers who have the necessary skills, we must hire others who can fill the gap. In recent years, filling approximately 2/3 of the jobs in donated goods/retail operations with people who have employment barriers has generally seemed to result in an optimal mix.

There’s another optimizing challenge embedded in that example, though, and that is the mix of full-time vs. part-time employees. We have quite a number of employees who for any of a variety of reasons are not able to work full time. However, if we have too few full-time employees, productivity can drop, and that will affect financial performance.

External factors can also have a powerful influence on optimization challenges. For example, the Affordable Care Act has resulted in a large increase in the number of employees who have signed up for coverage under our health plan. While we’re glad more of our employees now have health insurance, this has greatly increased our operating expenses – so much so that we might find it necessary to reprioritize and determine a new optimal mix of operations and services and/or full-time vs. part-time employees that will enable us to continue maximizing mission-related impact while maintaining a financial position that’s good for long term viability.

Nothing is static. Conditions are constantly changing, and we must constantly adapt or suffer the consequences. Optimization issues are always before us, and we’re always striving to find the best balance point – at least until something else changes.

The Millennials

A lot has been written about the generation known as Millennials – some positive, some less so. Of course, ascribing a particular set of characteristics to an entire generation of people is a bit absurd, given the enormous variability one can find in any large segment of the population at any point in time.

Nevertheless, what I see in many of today’s young people – i.e., many of the Millennials – is very encouraging. They give me hope.

We have a lot of people in their 20s and 30s working for us. They work in many parts of our organization – quite a few of them in our schools. They are typically bright, energetic, eager to learn, and excited about life. I enjoy talking with them.

I’ve also had several opportunities in recent months to speak on university campuses and interact with some incredibly bright, talented students. Most of those I’ve been fortunate to meet are interested in more than just getting into a career that will enable them to earn a good living. They’re also interested in helping make the world a better place. They want to make a difference.

I’m not just referring to liberal arts or social science majors either. Many of the students I’ve been meeting are majoring in business, engineering, or computer science. And some of the opportunities they are having on a number of university campuses today are helping them learn creative cross-disciplinary approaches designed to better prepare them to develop innovative approaches to help reduce some of the persistent social problems in our country and around the world.

One such program is being offered at my alma mater, Georgia Tech. It’s called Grand Challenges. Established in 2012, Grand Challenges each year accepts 110 entering freshmen and is open to students of any major. They live in the same dormitory for a year and learn how to work in multi-disciplinary teams, developing problem-solving skills to find possible solutions to real world problems. Students learn how to give and receive feedback, how to listen, argue, analyze, and persuade.

During the second semester, each team of students identifies a problem they want to tackle. Projects have dealt with a wide variety of food and water, energy, and health issues. One team last year worked on a project to benefit Goodwill of North Georgia. At the end of the semester, they can “pitch” their proposal for funding to continue working on their concept into their upperclassmen years.

A lot of my interest in Grand Challenges stems from what we’ve learned at Goodwill in central Indiana in recent years about how so many of our major social problems are interrelated. And yet, in our society we still tend to try to treat those problems in isolation one from another. Is it any wonder we’re not seeing better results? In our organization, though, we are now taking and further developing some truly holistic, often whole family approaches that we believe offer real potential for helping reduce generational poverty and some of the social problems that are associated with it.

So, for me, it’s encouraging to see universities offering opportunities for students to learn practical, multi-disciplinary approaches to solving societal problems. That, plus the contact I am privileged to have with a lot of young people who are similarly inclined, makes me optimistic about the future.

In my opinion, this generation of young people is going to have major positive impact in this country and many other places around the world. I look forward to seeing what they’re going to accomplish.

Goodwill’s evolution – an organic process

For years, I’ve considered the most unique aspect of Goodwill to be the way and the extent to which we blend business and a social mission. More recently, though, perhaps equally unique is the extent to which we are leveraging our resources and capabilities with those of others to create new opportunities that benefit people and communities. I’ll explain.

A lot of social problems have become worse over the last forty years despite massive increases in public spending and a huge proliferation of not-for-profit organizations. Part of the problem lies in the “silo” structure of the public sector and the fragmented nature of the not-for-profit sector. In many cases, organizations are doing very good work addressing pieces of a larger problem, but seldom have we been connecting the pieces well. As a result, we have not been solving the big problems.

A lot of our work at Goodwill is now focused on connecting pieces. Some of those exist within our own organization and some involve other organizations that have complementary capabilities. We see numerous examples of this, as Goodwill retail employees and Nurse-Family Partnership (NFP) moms enroll in an Excel Center or begin working toward a certification through a class taught by Ivy Tech or Vincennes University.

More examples: We have Eskenazi Health referring expectant mothers to NFP and also hiring graduates of The Excel Centers. We see Indianapolis Day Nursery Association offering employment to NFP moms, helping them work toward certifications, and providing high quality care for their children. And we see graduates of Goodwill-operated schools becoming employed with help from TalentSource, Goodwill’s job preparation and placement service.

The extent to which Goodwill is evolving into an array of networks that link services across organizational boundaries in a holistic, often whole family manner is unique. This approach brings high quality services together to make more effective use of existing community resources and result in greater lasting impact. With sufficient scale, this approach can play a role in reducing generational poverty.

The way we are evolving into this array of networks is not the result of a brilliant grand plan. Rather, it’s an organic process that is ongoing, and it’s largely a product of three primary factors:

  • A lot of smart, talented people who bring to their work not just their knowledge and skills, but also a strong commitment to what we are about – in other words, they bring their heads and their hearts.
  • A culture characterized, in part, by a constant desire to find ways to improve and further increase our long term impact in the lives of people and the communities where we operate. It’s also a culture in which people generally work well with each other.
  • Strong relationships with a lot of people in a lot of other fine organizations across all the sectors.

It’s also important to note that everything we do is built on a solid financial foundation that depends largely on the oldest part of Goodwill – our retail system, which provides jobs for 1300 people whose options are limited by disability or other significant barrier and that is, in turn, dependent on donations of used goods from and purchases by hundreds of thousands of central Indiana residents.

This organic evolutionary process results in a Goodwill that is constantly changing. We try things, we learn, we adapt as the world around us changes, and we evolve as an organization. It’s the approach we take to continue increasing long term impact and help reverse some of the negative trends we’ve seen in our society over the last forty years.

Some Implications of Becoming a Large Organization

Over the last decade, we’ve had enormous growth in our organization. We now have over 3,000 employees, nearly two-thirds with limited vocational options because of a disability or other barrier. We also have over 3,100 students in the ten schools we operate and 450 first-time moms and expectant moms enrolled in Nurse-Family Partnership. Our total revenues this year will be approximately $130 million. For a not-for-profit, we are a big organization.

Our size has many positive aspects. We have been able to attract a higher level of managerial and professional talent than was possible before, and this has enabled us to become substantially more productive and decrease the percentage of our revenue we spend on overhead.

Even more importantly, our heightened capabilities have also made it possible for us to greatly enhance the scope and quality of our mission-related services and develop new approaches that have substantially increased our long term impact in the lives of people and in the communities in which we operate. The work we are doing today is by far the best in our history.

But there’s also a downside.

The bigger and more visible we are, the bigger target we become. In addition to having a lot of employees, students, and people served in various other parts of our organization, we now have 2 million donation transactions and 5 million customer transactions a year. Bottom line: We have a lot of opportunities to make people like us or mad at us. And nearly all of them have access to social media.

We are also a complex organization that has been changing rapidly – especially over the last five years. Regardless of how much we’ve done to tell our story, most people have no idea of much of what we do. Perception always lags reality.

Moreover, while we have a lot of wonderful people doing terrific work, our organization is composed of 3,000 human beings, and not one of us is perfect. All institutions have flaws, and despite all the good work we do and all the improvements we have made, there is nothing we do that can’t be improved even more.

We always hope that those who talk or write about us – for example, through social or mass media – will treat us fairly. Our positives far outweigh our shortcomings, and we hope for perspective, a sense of context, and balance. If someone publicly calls attention to a flaw or a mistake someone in our organization has made, we hope they will give proportionate attention to the good things we do. We also know, though, that in this day and age such hopes are usually unrealistic. As negative emotions tend to be stronger than positive emotions, negative stories seem to attract a lot more attention – viewers, listeners, readers – than positive stories.

So what must we do? Obviously, we need to find more effective ways to increase awareness of our mission-related services and impact. But there’s more. With greater size comes greater responsibilities, and we must hold ourselves to an ever higher standard. While continuous improvement has been one of our Five Basic Principles for 20 years, we have to do more to improve every aspect of what we do. There is never any room for complacency. We must constantly work to raise our game.

And regardless of how others – individuals or media outlets – might treat us, we must continue to treat others as we would want to be treated. We must keep our focus on the work to be done, acknowledge and correct our mistakes when we make them, and continue to uphold our values and the basic principles by which we operate. And we will continue to become ever better stewards of all our resources as we work to help improve lives and strengthen communities. Because – even if others don’t recognize it – that is who we are.