Skin in the Game

One of the harder lessons we have learned in starting this ministry is the importance of the portfolio ministry to have meaningful “skin in the game” when we take on a consulting project. By that I mean a genuine personal stake in the outcome of the project and a sharing of the risk associated with the project. Anything short of this is setting the project up for failure, or at the very least, not maximizing the results.

In the for-profit investment world, this “skin” usually takes the form of the entrepreneur’s personal funds invested into the company alongside the investor’s. The investor’s thought being that if the entrepreneur doesn’t think it is worth investing in, why should they? In the non-profit world, this “skin in the game” can take several forms. On one extreme is payment for services and on the other is a firm understanding that the project is vital to the organization’s survival.

The Pay for Services Model

As someone who has done and seen others do “free stuff for the church,” I can appreciate the tendency it has to end badly. Doing “free stuff” leaves the church in a position where they have no investment in the success of the project. Michael Boyink, of Boyink Interactive, expressed well the deep frustration felt by volunteer web designers who felt that their services weren’t valued simply because the church didn’t pay for them.

Because when a church gets a website for free, it evidently has no value. Things with no value get replaced or reimplemented on a moment’s notice, on staff whim, or as soon as the person leading the effort is called away.

And if the alternative is another “freebie” to the church offered by a volunteer, there is no changeover cost involved. No initial cost + no changeover cost = no reason to invest any due diligence into the situation to determine if the move is wise.

In this scenario, the web designer has assumed all of the risk. The church, not paying for the services, has no stake in the outcome and the decision to replace his hard work with another free site is easy and costs nothing for the church. Michael’s suggestion of payment for services gets the church to put “skin in the game.” If there is a cost to the service, the church is more likely to value the results of the service (Table 1). This aligns the risk of the church (cash invested in the website) and the risk of the web designer (hours invested into the site) and makes it more likely for the project to have a successful outcome.

The Survival Model

All organizations want to survive. The organizational will to survive is almost as strong as the human will to survive. This is why government programs that start on a temporary basis rarely go away (read: Social Security). If an organization needs a project to survive they are well incented to make the project succeed (Table 2). This model even works in situations where the stakes are not quite as high as survival. If the organization is absolutely convinced that the project will allow them to succeed, they have a stake in the outcome.

The Middle Ground

The Gottlieb Foundation will never charge for our services and the majority of the projects we see are not “turn-around,” or failing, organizations. How then, do you get the risks aligned for the project to succeed?

The middle ground we found was a formal “contract” that outlines the expectations of both parties and serves as a firm commitment to see the project through. While this is a token amount of risk, it is often enough to align our commitments and priorities. If we use outside services (market research, etc) we insist that the portfolio ministry pay something meaningful. This means different things to different organizations. For some it could mean paying for all of it and for others less than 5% is meaningful.

Outcomes are never good on a project that starts with the ministry wanting to “try out” our services. This rarely makes it past the point where real work is involved. We assume risk when we take on a project and expect the ministries to assume some as well.

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