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Hull House

How Nonprofits Can Face the Challenge of Change

mary pickfordThere was a really interesting article in the Chronicle of Philanthropy recently about a Los Angeles nonprofit for aging Hollywood actors that was in danger of closing its doors but is now raising hundreds of millions of dollars. It’s a rags to riches story that demonstrates how nonprofit leaders who embrace change when change is necessary can completely transform an organization.

Arguably the Motion Picture & Television Fund (MPTF) is not your average nonprofit organization. Set up in the 1920s by Charlie Chaplin, Douglas Fairbanks Sr., and Mary Pickford it asked actors to donate spare change to help fellow actors down on their luck. MPTF later expanded to become a $100 million organization that serves 150,000 needy actors with healthcare, housing, and retirement services. And although MPTF enjoys a budget with a few more zeros than the average nonprofit, their approach to change can serve as a model for other nonprofits.

In the early 2000s MPTF lost its way. Financial hardship forced the organization to consider closing one of its retirement centers which drew the ire of celebrities like George Clooney. But unlike other nonprofits that lose their way and have to eventually close, Hull House being the most recent and troubling example, MPTF turned things around.

Here’s what the MPTF story teaches nonprofits about embracing the challenge of change:

  • Remove What Stands In Your Way
    In order to survive it’s critical that nonprofits do something not easy for the sector: recognize and address the obstacle. Whether it’s an unmovable executive director, a deficient board, a broken financial model, or a distracting funder, a nonprofit must face the challenge head on. MPTF realized that they needed new leadership and replaced the fund’s president in 2010. Hull House’s board, however, refused to address changing the organization’s financial model despite seeing glaring financial issues for several years.

  • Force Honest Conversations
    When George Clooney voiced his dismay at MPTF’s decisions, new MPTF president Bob Beitcher approached Clooney and listened to his concerns. Beitcher explained that they were facing closure of the center because of financial dire straits. Over time he turned Clooney’s concerns into passion for the organization and eventually convinced him to c0-chair MPTF’s capital campaign. Hull House board and staff, on the other hand, kept conversation light. The staff sugar-coated financial reports and the board failed to ask hard questions. It is essential that nonprofits tackle difficult conversations in order to emerge stronger.

  • Create a Financial Runway
    MPTF had a practice of keeping several months of operating reserves on hand. Hull House, by contrast, lived on the edge — to the point of holding negative $2.3 million in net assets in June of 2007, long before the recession really hit. So when it did, they were in big trouble. Nonprofits (and funders!) must get over the taboo against operating reserves. You simply cannot survive, let alone create social change, if you don’t have the financial runway to do so.

  • Connect Mission to Money
    MPTF now enjoys a large donor base, but that wasn’t always the case. In order to get there they articulated to specific potential donors why their work was so critical and why they should get involved. They are currently raising millions of dollars because they have connected the dots for a specific target audience between their need for investment and the impact they are creating. Nonprofits need to articulate what they are trying to change and then find donors for whom that change is attractive.

The closure of such a stalwart and venerated nonprofit institution like Hull House should have been a wake up call for the nonprofit sector. If it could happen to Hull House, it could happen to any organization. But it doesn’t have to. Instead of blaming the recession, the board, fundraising, or anything else, nonprofits need to embrace the challenge of change.

If you need help addressing a challenge facing your nonprofit, let me know.

Photo Credit: Mary Pickford, 1924 from fotopedia

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10 Great Social Innovation Reads: February 2012

February was the month to learn from other’s mistakes — from Komen to Hull House there was some great analysis about what went wrong and what can be learned. The other thing emerging in February was new social media darling, Pinterest, as an opportunity for nonprofits to tell their story visually.

Below are my ten picks of the best reads in social innovation in February, but as always, please add what I missed in the comments. And if you want to see other things that caught my eye, follow me on Twitter, Facebook, LinkedIn or Pinterest.

  1. The biggest news in February was Susan G. Komen Foundation’s repeated strategy and PR blunders when they pulled funding from Planned Parenthood, then reinstated the funding. Kivi Leroux Miller offered tips to recover from a PR scandal. Nancy Schwartz broke down Komen’s “busted nonprofit brand” and Beth Kanter described the 5 stages of a social media PR disaster.  And when things finally settled down a bit, Komen stumbled again with their attempt to reassure donors.

  2. Always a great resource, the Nonprofit Tech 2.0 blog provides 50 Fun, Useful, and Totally Random Resources for Nonprofits

  3. “As modern businesses search for a soul, who better than Millenials to help find one?” This month there were two articles about how the Millennial generation approaches work and ultimately how it will change how we all work: 13 Ways The Recession Has Changed How Millennials View Work and The Crisis of Meaning in the Millennial Workforce.

  4. Tom Watson launched a new column in Forbes focused on social entrepreneurship, and his inaugural post took an interesting spin on the endless “what is social entrepreneurship” conversation by finding parallels between Steve Jobs and Occupy Wall Street.

  5. Sometimes Dan Pallotta gets it really right, and that is especially true with his post arguing that a huge missed opportunity for philanthropist is to invest in the fundraising capacity of nonprofits.

  6. In the Harvard Business Review blog Nilofer Merchant argued that technology is fundamentally changing how organizations operate. This applies to nonprofits as well, and we should all take note.

  7. If you, like most people, struggle with creating content for your blog, this infographic makes it so much easier.

  8. Writing in the Washington Post, Antony Bugg-Levine, head of the Nonprofit Finance Fund, argued that nonprofits must embrace breakthrough innovations like restructuring their approaches to social problems and using capital to build organizations, “The sooner we confront our new economic reality and support visionary thinking and organizations, the sooner we can begin to rebuild a sustainable safety net.”

  9. The collapse of one of America’s oldest and most successful nonprofit organizations late last year, Hull House, provides a cautionary tale to other nonprofits that may not be employing good financial management, argued Rick Moyers.

  10. An interesting debate loomed at the end of the month because of a study by the Center for Philanthropy at Indiana University that found nonprofit managers lack key financial knowledge. But Kate Barr and Ruth McCambridge took issue with the study’s methods arguing that the study missed the mark.

Photo Credit: aithom2

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10 Great Social Innovation Reads: January 2012

I can’t believe that January is already over, it was a complete blur. Nonetheless there was lots to read and ponder in the past month in the world of social innovation. Below are my ten picks of the best reads, but as always, please add what I missed in the comments. And if you want to see other things that caught my eye, follow me on Twitter, Facebook, LinkedIn or Pinterest (I’m starting to really love this new one!).

  1. Socialbrite has created a mega calendar of 2012 nonprofit & social good conferences. Perfect for planning your year ahead.

  2. In their Fast Company article, It’s Time To Start Judging Nonprofits Like For-Profits, Alexa Clay and Jon Camfield tell donors “Do not be turned off by high overheads. They’re healthy. They mean the organization has a longer-term view on its role in making change.” Amen to that!

  3. Crowd-sourcing meets behavioral economics meets iPhone apps. A new approach to getting people to eat better. Love it.

  4. FastCompany profiles the business pioneers who really understand and embrace the new chaos in which we all now operate. This should be required reading for any leader (for-profit or nonprofit).

  5. I love it when we can use history to understand current trends. Phil Buchanan, CEO of the Center for Effective Philanthropy, reviews historian Oliver Zunz’s new book, Philanthropy in America. In so doing, Buchanan describes 7 “new” philanthropic concepts that really aren’t so new.

  6. Jason Cohen from A Smart Bear always has a way of finding hope in the entrepreneurial process. Although this post is focused on “traditional” entrepreneurs, I think it holds for social entrepreneurs as well: Entrepreneurship is a torturous chaos, until it isn’t.

  7. I have always said that in order to be a truly effective social change leader, you must be able to fully wield the financial sword. Kate Barr from the Nonprofit Assistance Fund in Minnesota breaks it down in the Executive Director’s Guide to Financial Leadership

  8. January saw a pretty impressive mobilization of people via social media to protest against SOPA (the Stop Online Piracy Act) and PIPA (Protect Intellectual Property Act). Dowser helps us understand what it means for online protest more broadly.

  9. In an increasingly competitive and resource-strapped environment it is even more critical that nonprofits be able to demonstrate the impact of their work. Here is a great example of how a Michigan arts collaboration demonstrates the economic impact of the arts in their community.

  10. Hull House, one of the oldest and most impressive American nonprofit organizations closed its doors in January. The Bridgespan Group explains the implications.

Photo Credit: ilovememphis

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5 Ways to Scale

Key to the entire social entrepreneurship movement is the idea of scale.  If we are truly going to solve a social problem, right a disequilibrium, or fix a crumbling institution the solution has to grow to scale.  It cannot stay small and secluded; it has to grow until it has changed the underlying system.  But scale can be a nebulous thing.  What does it mean, what does it look like, how does it happen?

Peter Frumkin, head of the RGK Center for Philanthropy and Community Service at the University of Texas at Austin and leading nonprofit management and philanthropy thinker and author, came up with a model for understanding the various forms scale can take.  His 5 Models for Scale provides a nice framework for understanding the broader implications of what scale is and what it can look like.  He defines scale as “creating a lasting and significant impact” and defines the five platforms  from which scale can emerge as:

  1. Financial Strength: Scale comes from the financial strength and sustainability of a large and enduring institution (usually universities and museums).  Through endowments and deep donor relationships these institutions can weather most, if not all, economic situations and potentially exist indefinitely.  Scale here is not about outcomes or inputs, but rather about the institution itself and its ability to endure.
  2. Program Expansion: Scale is a function of the increasing number of clients served.  By growing the number of program inputs (clients) by several multiples, a program can achieve scale.  This form of scale happens in one location, not to be confused with Multi-Site Replication (below).
  3. Comprehensiveness: Scale here is achieved when a set of activities and interventions occur within one organization or a closely integrated collaboration of organizations.  For example, when the food, housing, education, childcare and healthcare needs of the homeless are all addressed through one integrated solution, in the case of Jane Addams’ Hull House.
  4. Multi-site Replication: Scale in this case expands a program to other sites in the city, region, country or world.  This replication can be instigated either from within the organization (through franchises and chapters) or from outside of the organization through independent efforts of funders or other interested parties.  This form of scale often requires the vision and commitment of a single individual to make it a success, for example with Teach for America or KIPP (charter schools).
  5. Accepted Doctrine: In its final form, scale does not involve growth or expansion of an organization or program, but rather an idea.  Scale occurs when a way of thinking or addressing a problem or field changes.  A particular organization or program does not control scale in this case, but rather a new model or way of addressing a problem reaches a “tipping point” where it suddenly becomes the norm.

Each model has its benefits and drawbacks.  For example, the Financial Strength model doesn’t necessarily mean that change is occurring, rather an institution merely persists.  The Program Expansion model, too, doesn’t guarantee impact, rather scale is about increasing the number of inputs.  The Accepted Doctrine model is difficult, if not impossible, to control and mold to a particular outcome.  And, as mentioned above, Multi-Site Replication relies heavily on a key individual, a very clear understanding and articulation of what makes the current model successful, and an ability to replicate that success.

I think this framework is a useful way to understand the various forms that scale can take.  It all goes back to the notion that in order for social entrepreneurship to be a successful movement, we have to understand what it is that we are doing and how we are doing it.  If broad and sweeping change in various areas of need is the ultimate goal, we have to be smart and strategic about how that change is happening and what form of change makes the most sense.  Impact, change, scale can take many forms depending on the problem being faced and the best solution(s) for it.  I imagine that as the field of social entrepreneurship continues to evolve other forms and understanding of scale will emerge.

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Thursday, April 9th, 2009 Nonprofits, scale, Social Entrepreneurship 6 Comments

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