"The state of worrying where your next meal is going to come from – you have uncertain income or you have more expenses than you can manage and you have to juggle all these things and constantly being pre-occupied about putting out these fires – takes up so much of your mental bandwidth, that you have less in terms of cognitive capacity to deal with things which may not be as urgent as your immediate emergency, but which are, nevertheless, important for your benefit in the medium or longer term."
That’s research fellow Anandi Mani quoted in The Guardian on the hypothesis of a study showing the negative effects of financial worry on decision-making. In the study, two groups – one rich and one poor – were given two test scenarios. The first scenario presented an “easy” car repair costing $150, and the second scenario presented a “hard” $1,500 repair, and then both groups took IQ puzzle tests while pre-occupied with their scenario. Both groups performed comparably on the easy repair, but the poor group struggled in the hard scenario. The study found that “their average IQ was 13 points lower when they were thinking about serious financial troubles.”
The study concluded that constant financial worry and uncertainty undermines decision-making ability and has an isolating, destructive effect. Many who work in social services see this as a matter of course with their jobs. Many of us in the nonprofit sector experience it on a different, organizational level – where concerns about things like funding, the source of the next grant, individual donations and rising overhead fuel a scarcity mindset and a culture of head-down worry, leading to poor decision-making focused on the short-term.
It doesn’t have to be that way though. One of our worst instincts about money is to keep it to ourselves. When you are in an organization trying to do as much as possible with your resources, sharing how money comes into the organization and where it is going helps an organization to better. One of the simplest ways for this to happen organizationally is through transparency, or radical transparency as it has come to be known. This transparency can be as detailed as knowing the performance reports of one’s colleagues, but starts with everyone knowing where the money is coming from and where it goes.
For Pollen Co-Executive Director and former YNPN-TC Board Chair Jamie Millard, transparency means that everyone gets to, as she puts it, “see the full detailed budget with salary breakdowns. This enables everyone to be part of the decision-making process and to truly understand the full picture. It helps create ownership, buy-in, clarity, and I think a healthier habitat for honest conversations about compensation. It removes the "games" that are often played when we try and negotiate...which is just no way to treat people that you want to feel part of a team.”
To do this work and exist organizationally requires the trust to hold uncomfortable conversations. That’s one of several recommendations from this Nonprofit Quarterly case study which notes, “Today’s best leaders—among both staff and board—are those who ask the right questions. Meetings may be less comfortable, but they better serve an organization. And the questions that emerge from them will launch the necessary analysis and decisions.”
Tools exist to facilitate this kind of conversation and help with the process of transparency. Check out Nonprofit Assistance Fund’s posts on collective budgeting and their financial self-assessment tool to help build your own financial literacy and give yourself a new frame to operate from. And then, as my own Executive Director at Springboard for the Arts, Laura Zabel, writes, “Operate from abundance. Scarcity doesn’t feed you. Figure out what you can offer, maybe it’s money, or time, or space, or partnership or creative thinking - and then offer it.”
As an all-volunteer organization, YNPN-TC is a place to offer what you can. It is also a sandbox in which to play and experiment, to try things – including modeling the kind of transparency we’re talking about here. Volunteering, joining a committee, and coming to meetings are great ways to get involved in shaping your YNPN experience and get informed about how the organization functions.
We’re also working on new mechanisms for transparency in the organization around structure and costs, including publicly-available board minutes. Look for those soon. Let’s be open, so we can all make smarter decisions.