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How Scarcity Thinking Holds Nonprofits Back

By Nell Edgington



birdsThere are many things that hold the nonprofit sector back, not the least of which is a lack of money. But perhaps a bigger impediment is the scarcity thinking that may actually contribute to that lack of money.

Most nonprofit leaders, their staffs, board members, and even funders automatically think that resources will always be scarce. It is such a profound psychological impediment because if your assumption is constant deficiency, then you will never try for more.

But shifting this nonprofit mindset from never having enough (scarcity), to endless potential (abundance) could transform the sector.

MIndsetScarcity thinking is dangerous because it demonstrates a destructive fixed mindset. Carol Dweck’s pivotal 2006 book, Mindset: The New Psychology of Success, describes two ways that people view their abilities, a fixed and a growth mindset, and I think her approach holds great insight for the nonprofit sector.

A person with a fixed mindset believes “that your qualities are carved in stone,” whereas a person with a growth mindset believes “that your basic qualities are things you can cultivate through your efforts.”

Dweck describes the benefits of the growth mindset:

[In the growth mindset your] traits are not simply a hand you’re dealt and have to live with…In [the growth] mindset, the hand you’re dealt is just the starting point for development…People in a growth mindset don’t just seek challenge, they thrive in it. The bigger the challenge, the more they stretch…Sometimes people with the growth mindset stretch themselves so far that they do the impossible.

Isn’t that exactly what we need more of in the nonprofit sector, more seeing the hand you’re dealt as just a starting point, more doing of the impossible?

The growth mindset ultimately leads to “an ever-higher sense of achievement” and “a greater sense of free will.” Wouldn’t that improved sense of achievement and greater sense of free will be transformative to the nonprofit sector?

Nonprofit leaders can drive this shift by moving their organizations and supporters from a fixed to a growth mindset, in several areas:

And the list goes on. The point is that there is tremendous opportunity in the simple act of shifting your thinking. By removing the shackles of a fixed mindset you can set your nonprofit, your board, your staff, your funders and ultimately your social change goals on a path toward what you once thought was impossible. That’s powerful.

Photo Credit: astridle

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About the Author: Nell Edgington is President of Social Velocity (www.socialvelocity.net), a management consulting firm leading nonprofits to greater social impact and financial sustainability. Social Velocity helps nonprofits grow their programs, bring more money in the door, and use resources more effectively. For more information, check out Social Velocity consulting services and clients.


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10 Comments to How Scarcity Thinking Holds Nonprofits Back

David W
March 13, 2015

Your argument is well reasoned and well written. I’d love to agree with you. Most of the Board members with whom I am associated would agree with your concept of envisioning a future and then seeking adequate funding. I am more of a wet blanket. Show me the money and I will approve a current year’s budget at that level (except perhaps 1.5% for an emergency fund and 3.5% for depreciation). But budgeting with unsecured income seems organizationally suicidal to me. 😉

Nell Edgington
March 13, 2015

David,

Thanks for your comment.

The reality is that nonprofits raise more money when they have a compelling vision for the future and a strategy to get there. Part of that strategy to get there is figuring out a long-term financing plan. And the first step in a long-term financing plan is to project revenue and expense over a longer term period than the typical one-year horizon that nonprofits do.

The issue is that money for a nonprofit is a vicious or a virtuous cycle, depending on your approach. If you come from a scarcity mindset and refuse to project any revenue beyond what you can already count today, then you will not be able to generate enough excitement, urgency and investment from your board, let alone the broader community of funders. But if instead you come from an abundance mindset and figure out exactly how much it will cost to accomplish your goals and then make a compelling case to funders, you will be able to raise much more. I see it all the time. This is a financing (as opposed to a fundraising) approach to running a nonprofit.

I encourage you to read Carol Dweck’s book and consider the growth mindset as an alternative approach. Good luck!

[…] How Scarcity Thinking Holds Nonprofits Back | Social Velocity […]

[…] There are many things that hold the nonprofit sector back, not the least of which is a lack of money. But perhaps a bigger impediment is the scarcity thinking that may actually contribute to that lack of money. (Social Velocity) […]

Klay Dyer
March 24, 2015

Nell,

Printed, posted, and shared this commentary widely. Having transitioned into the nonprofit sector from a startup/innovation space, I have found scarcity thinking to be prevalent in ways I would never have anticipated and articulated in ways I might never have expected. Interestingly, my Board was easiest to move: show them a budget that acknowledges but does not count on unsecured income, and the buy-in to a new approach for revenue generation is much easier. Culturally (both within an organization and across an organizational ecosystem), however, the shift is harder to set and maintain.

Nell Edgington
March 24, 2015

Klay,

Thanks for the comment. I’m glad to hear that you were able to convince your board of a new approach. The more nonprofit leaders who take that brave approach the more cultural change I think we will see.

Konyka
March 26, 2015

Great article! Thank you. Very helpful paradigm shifts to operate under.

[…] Nonprofits whose board members expect resources to be scarce are more likely to struggle financially and underachieve. To avoid this, board members should think of charity as social change, think of fundraising as financing and focus on energizing their staff. Social Velocity Blog (03/12) […]

[…] Source: How Scarcity Thinking Holds Nonprofits Back | Social Velocity […]

[…] How Scarcity Thinking Holds Nonprofits Back […]

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