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nonprofit strategy

When Should Your Nonprofit Cut Programs?

magnifyOne of the most difficult decisions a nonprofit leader faces is whether to cut a program. The program might be draining staff and offering few results to clients, but once a nonprofit launches a program it becomes almost instantly institutionalized. Even if the program eventually no longer makes strategic sense, it is almost impossible to convince board, staff and donors to end it.

But for a nonprofit to be most effective, its leaders must understand the financial and social impact of all of its programs and make strategic decisions accordingly. And the way to do that is with a Program Analysis Matrix.

Nonprofit leaders are driven by the desire to provide as many services as possible, so to shut down an established program seems so wrong. But nonprofit leaders must regularly analyze their portfolio of programs in order to understand how well each program contributes to the organization’s mission and financial sustainability.

When I assess a client’s financial model, one of the first things I employ is a Program Analysis Matrix that analyzes the social and financial impact of their entire portfolio of programs. I chart all programs and activities comparing each program’s ability to:

  1. Contribute to the social change the nonprofit is working toward (“Social Impact” on the x axis), and

  2. Add or subtract financial resources to/from the organization (“Financial Returns” on the y axis).



A Program Analysis Matrix looks like this:

Program Analysis Matrix

Each program that a nonprofit operates is placed in one of the four boxes depending on how well that program contributes to the social impact (or mission) the nonprofit is working towards and the financial sustainability of the organization. The four options are:

  1. Sustaining: the program has low social impact (it doesn’t appreciably contribute to the nonprofit’s ability to create social change), but does provide financial resources to the organization.

  2. Beneficial: the program has high social impact and provides financial resources to the organization—this is the best of both worlds.

  3. Detrimental: the program provides low social impact and drains financial resources from the organization—this is the worst of both worlds.

  4. Worthwhile: the program provides high social impact but drains financial resources.

This Program Analysis Matrix helps to surface issues that a nonprofit must address, for example when some programs are providing no benefits, or there are too many mission-related programs that don’t attract funding. Typically, a nonprofit has an abundance of “Worthwhile” programs that are integral to the mission and provide important social impact but are financially draining to the organization. In a situation like that, board and staff need to get strategic about developing programs that are “Sustaining” or “Beneficial” and provide a positive financial return.

Board and staff should work together to plot all current programs  in the matrix. Once completed, the matrix can help make the appropriate strategic decisions (labeled as “Strategy” above) about which programs to “cut,” “maintain,” “nurture,” or “expand.”

This analysis can help a nonprofit take a hard look at everything they are doing and start to make some hard decisions. A conversation about cutting programs is always incredibly difficult, but with the right data behind it, the conversation can be a logical, as opposed to emotional, one.

If you want to learn more about the Financial Model Assessment I create for clients, download the Financial Model Assessment benefit sheet here.

Photo Credit: Bart van de Biezen

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The Networks and Institutions Of Social Change

Berlin WallI’ve been thinking a lot lately about how networks and institutions must work together to create social change. As I mentioned earlier, social change happens when networks (loose connections of people and groups) organize themselves enough to pressure outdated institutions to adapt (like in the civil rights movement, global democracy movements, and the state-by-state legalization of gay marriage).

But when networks and institutions don’t connect, social change doesn’t happen (like in the Occupy movement). So networks must organize enough to influence institutions, and institutions must open themselves enough to let networks in. Social change requires that the two work in tandem.

David Brooks captured this theme in his recent New York Times column when he talked about the death of  the “Organization Man.” He claims that we are witnessing “a failure of governance around the world” because networks are being valued over institutions, as he puts it:

A few generations ago, people grew up in and were comfortable with big organizations — the army, corporations and agencies. They organized huge construction projects in the 1930s, gigantic industrial mobilization during World War II, highway construction and corporate growth during the 1950s. Institutional stewardship, the care and reform of big organizations, was more prestigious. Now nobody wants to be an Organization Man. We like start-ups, disrupters and rebels. Creativity is honored more than the administrative execution. Post-Internet, many people assume that big problems can be solved by swarms of small, loosely networked nonprofits and social entrepreneurs. Big hierarchical organizations are dinosaurs.

Networks are king and institutions are left by the wayside, resulting in chaos. Effective social change happens when networks infiltrate institutions enough to help them adapt.

This is echoed in Jane Wei-Skillern & Sonia Marciano’s groundbreaking Stanford Social Innovation Review article in 2008, “The Networked Nonprofit.” They argued that nonprofit institutions must connect to and become more like networks in order to effectively create social change:

Most social issues dwarf even the most well-resourced, well-managed nonprofit. And so it is wrongheaded for nonprofit leaders simply to build their organizations…By mobilizing resources outside their immediate control, networked nonprofits achieve their missions far more efficiently, effectively, and sustainably than they could have by working alone…Unlike traditional nonprofit leaders who think of their organizations as hubs and their partners as spokes, networked nonprofit leaders think of their organizations as nodes within a broad constellation that revolves around shared missions and values…According to our research, nonprofits that pursue their missions through networks of long-term, trust-based partnerships consistently achieve more sustainable mission impact with fewer resources than do monolithic organizations that try to do everything by themselves.

But it is not just a one-way street. For social change to take hold, institutions must connect to networks and networks must connect to institutions. The Occupy movement is a great example of what happens when a network doesn’t connect to institutions. The movement eventually died because, as The Economist put it, the Occupy Movement “did not become the sort of mass movement that could deliver legislative and regulatory change.”

For real change to happen we need networks and institutions to work together. Networks are fluid, innovative, energetic and quick-moving, while institutions are well-resourced, legitimate, and powerful. So the challenge for social change leaders is to get outside your four walls, figure out where the networks and institutions lie, and forge real connections.

Photo Credit: Berlin Wall, RIAN Archive

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How To Recruit The Nonprofit Board You Really Need

board recruitmentThere is a fundamental error that nonprofit leaders make when recruiting new board members. And that is to be vague about the kind of board members they need. Nonprofit leaders often think in very general terms about the makeup of their board while ignoring their nonprofit’s specific needs. It then becomes almost impossible to get new recruits (let alone old board members) active or engaged because they are unclear about the unique role they should play in the organization.

A board matrix is a tool that many nonprofits use to analyze what traits their current board has and where the holes lie. Often the traits used include very general things like:

  • Gender diversity
  • Racial diversity
  • Geographic representation (for national and regional organizations)
  • General sought-after skills like marketing and fundraising expertise
  • Access to vague networks, like “connections to people with deep pockets”

But this is the wrong way to think about who your board members should be.

To recruit the board you really need, you have to connect the skills, experience, and networks of your board to the specific goals of your long-term strategy.

Here are the steps to get there:

  1. Divide Your Strategic Plan Into Board Vs. Staff Roles
    Take a hard look at each goal of your strategic plan and ask what the board needs to do versus what the staff needs to do to make that goal a reality. For example, if your nonprofit runs an in-school literacy program and your first goal is to grow the number of students by 50%, you probably need your board to open doors to school district decision-makers so that you can grow to additional schools and secure more district support. So at least one or two of your board members must have connections to school district leaders.

  2. Analyze Current Board Members
    Once you’ve made a list of what you need from your board for each of your goals, add those elements to the top of your new board matrix. Make sure these are very specific skills, expertise areas, and networks. So for the example above, they would include things like: “Connections to School District Decision-Makers,” “Experience Growing Organizations,” and “Ability to Understand and Articulate Literacy Data.” At the end of the process, you should have 10-15 skills, expertise areas, or networks that your board must possess. Now list all of your current board members along the left side of the matrix and mark the characteristics that each member has.

  3. Recruit To Fill The Specific Holes
    Once you’ve completed the matrix, you may see areas where your board falls short. Now you know exactly what kinds of board members you need on your board. Give this list of missing skills, expertise, and networks to your Board Recruitment Committee so they can find the specific people necessary to fill those holes.

  4. Give Each Board Member a Unique Job
    Once you are clear about what you need from your board to deliver on your strategic plan, give each board member (current members and new recruits) a unique role to play. People function best when they are very clear about their specific role. If each individual member knows exactly what piece of the strategic plan is theirs to carry out, they will be much more engaged and active. So get specific: “We need you to secure meetings with district-level staff,” or “We need you to look at our growth model and ask hard questions.”

If you want a board that works for you, get specific about the kind of board you really need. To learn more about building a groundbreaking board, download the 10 Traits of a Groundbreaking Board book, or the How to Build a Groundbreaking Board webinar.

Photo Credit: Library of Congress

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5 Questions Every Nonprofit Leader Should Ask

nonprofit leaderOne thing the nonprofit sector desperately needs is more people asking hard questions. A lot of time is spent skirting issues or sugar coating situations. If nonprofit leaders instead forced some challenging conversations, with hard questions as the impetus, the sector could become more effective.  And the place to start is with a nonprofit leader questioning herself.

I’ve written before about questions to ask your board, and questions to ask your nonprofit, and questions to ask before you pursue a new opportunity, but there are also some key questions a nonprofit leader should ask herself.

On a fairly regular basis a nonprofit leader should ask:

  1. Am I Leading or Managing?
    A manager shuffles resources around, waits to be told what to do, and focuses on checking things off her list. But a leader crafts a larger vision for her organizationarticulates what her nonprofit is  trying to accomplish, and then marshals all the resources at her disposal (board, staff, funders, partners) toward that vision. And when some of those resources won’t align to the vision (board members who aren’t performing, donors who want to veer off course) she confidently tells it like it is. A manager will deploy resources, but a leader will ensure that the deployment results in social change.

  2. How Can I Address My Weaknesses? 
    A great leader recognizes when he is falling short and where he needs complementary abilities. A leader who doesn’t know how to fundraise hires a rockstar Development person, or gets fundraising training. A leader who struggles with strategic decisions finds a leadership coach. A leader who can’t build an effective board, asks fellow nonprofit leaders for counsel. Most importantly, if there are costs associated with addressing his weaknesses, a leader raises the money he needs, instead of doing it on the cheap.

  3. Am I Selling Myself (and My Nonprofit) Short?
    I see so many nonprofit leaders not fighting for what their organization really needs. From not articulating the true costs of their nonprofit to funders, to allowing the board to shirk their fundraising responsibilities, to addressing capacity constraints with a band-aid, to burning out from long hours with not enough staff, nonprofit leaders are constantly giving their organizations, and themselves, short shrift. A true leader finds the confidence to stand up for herself and her organization and demand what is truly required to achieve the vision for change.

  4. Which Other Leaders Should I Align With?
    It amazes me how many nonprofit leaders exist in a bubble. They may collaborate with others on a programmatic level, but they are not regularly analyzing the larger marketplace in which they operate (emerging competitors, new technologies, changing needs) and figuring out with which other leaders impacting the field (policymakers, organization heads, advocates, influencers) they should forge alliances. Social change requires much more than any single organization can accomplish. It is critical that nonprofits become fully networked in their area of social change. A nonprofit leader makes that happen.

  5. Am I Still The Right Person for The Job?
    This is such a hard question. But if you simply don’t have the skills (or the energy) to lead the right road ahead, then you must step aside. Don’t hold your organization and the vision back because of your ego. If you are a true leader, you have assembled a whole army of board, staff, supporters and allies that can continue to move forward in your wake. It’s not easy to recognize or admit, but if you really care about the cause and want to see real change happen, then you should regularly be assessing this.

A true nonprofit leader drives the vision, marshals resources, forges alliances, inspires support, and, ultimately, leads the charge toward social change. Because now more than ever we need real social change leaders. People who are willing and able to find the best way forward and the confidence, smarts, and humility to lead us there.

If you want to learn more about nonprofit leadership, download the Reinventing the Nonprofit Leader book.

Photo Credit: iwona_kellie

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The Value of Quiet for the Nonprofit Leader

QuietAs summer draws to a close and my own downtime ends, it occurs to me that there is a real need, in our increasingly always-on world, for leaders to find time for quiet reflection, to reconnect with their core.

And particularly in the nonprofit world, where a leader is constantly bombarded with suggestions – from funders, board members, staff, fellow leaders, Facebook friends – it is critical that she find regular solitude to analyze and plan the best way forward.

Indeed true leadership lies not in finding the lowest common denominator among a disparate group of supporters, volunteers and staff, but rather in analyzing all options and then driving the most effective way forward (even if it is unpopular). Real leadership is not about giving the people around you what they want. It is about doing what is best and what is right. And often you find that path through time alone to think.

Perhaps thoughtful, reasoned leadership has taken a hit in recent years. Our push toward social technology has created a culture of extreme extraversion and constant noise. Dave Eggers 2013 novel, The Circle, describes a world where companies like Google and Facebook have taken over. He offers a chilling view of social media taken to the extreme with destructive group think and no room for solitude.

Don’t get me wrong, I’m a big proponent of social media, but I also think there is tremendous value in regular, silent retreat.

And I’m not alone. Amid the broad adoption of an increasingly social way of life, we are, in certain pockets, beginning to realize that quiet has its place as well. Some politicians, finally turned off by the constant screaming of our increasingly partisan political system, have begun turning toward inner reflection to find a better way. Steven Pressfield describes the importance of getting away from it all and “letting the well fill up overnight.” And even social media mavens, Beth Kanter and Arianna Huffington have both recently begun promoting solitude and reflection.

Could it be that we are realizing that while new tools to make us more social have their place in the work of social change, individual reflection is also quite necessary. While crowdfunding and crowdsourcing and crowdthinking all have an important role to play, there is also tremendous value in a leader spending time, alone, to process the world around her and then emerge with a plan.

Nonprofit leaders are often working on large, intractable social problems. Those problems require the right way forward, not the most popular way forward. As a social change leader you must claim your very real need to turn off the noise. Amid the quiet you may just discover the necessary path. And perhaps also, the will to lead us there.

Photo Credit: Sebastien Panouille

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Moving Beyond the Starving Nonprofit

Volunteers_of_America_Soup_Kitchen_WDCEver since last year’s release of the Letter to the Donors of America it seems there is an increasing drumbeat against the “Overhead Myth,” the idea that nonprofits must keep their overhead and administrative costs as low as possible. The fact that we are now openly talking about overhead as a myth is very encouraging.

But I think it will take a good deal of time before donors actually embrace the idea that nonprofits should stop starving their organizations of the resources they need to create and execute effective programs.

To move donors along, nonprofit leaders must lead this conversation with their own donors. Those nonprofit leaders who need more money to build a stronger, more effective and sustainable organization behind their work should educate themselves, their board members, and their donors about capacity capital.

“Capacity capital” is a one-time infusion of significant money that can be used to strengthen or grow a nonprofit organization. Capacity capital is NOT the day-to-day operating money nonprofits are used to raising and employing. Rather, capacity capital is money to build a stronger, more sustainable organization.

A nonprofit could use capacity capital in many ways, for example to:

  • Plan and execute a program evaluation
  • Plan and launch an earned income stream
  • Create a strategic financing plan
  • Hire a seasoned Development Director, or other revenue-generating staff
  • Purchase a new donor database
  • Improve program service delivery
  • Upgrade website, email marketing, and/or social media efforts
  • Launch a major gifts campaign

But raising capacity capital is not like traditional fundraising. It involves determining how much capacity capital you need, creating a compelling pitch, deciding which prospective funders to approach, and educating those prospects about the power of capacity capital. In so doing, you are not only raising the money you so desperately need, but you are also leading your part of the nonprofit sector away from the overhead myth.

Capacity CapitalThe Launch a Capacity Capital Campaign Guide can show you how to raise capacity capital for your nonprofit.

Here is an excerpt from the guide…

 

Section 1: Create a Capacity Building Plan

You cannot raise money without a plan for how you will spend it. Funders need to be convinced that you did your homework and have a clear, actionable, measurable plan for how you will invest capacity capital dollars to result in a stronger organization that can deliver more impact.

To get there, start by answering these questions:

  1. What is holding our nonprofit back from doing more and being more effective?
  2. What could we purchase to overcome these hurdle(s)?
  3. If we were able to purchase these items how would we use them and over what time frame?
  4. What can we reasonably expect to be the changes in our effectiveness and/or impact because of these things we purchased and implemented?

With your answers to these questions, put together a plan.

Start by creating 1-3 goals around the hurdles you identified in #1 above. For example, you may have identified in #1 that you don’t have adequate staff to raise enough money to achieve your mission.

So your capacity plan goals might be:

  1. Create an overall money strategy to raise $450,000 per year.
  2. Hire a Development Director to implement the plan.
  3. Secure the technology and materials necessary to raise this money (database, website, etc.)

Or, if you are a much smaller nonprofit, your goals might be more modest:

  1. Create an overall money strategy to raise $100,000 per year.
  2. Train the board on their role in fundraising.
  3. Upgrade our website to attract online donations.

Once you’ve developed your goals, make a laundry list of activities and purchases necessary to make each goal a reality. In some cases you may need outside help to determine how to get there. For example, you may not know how to put together an overall money strategy to raise $450,000, so you may have to hire a fundraising consultant to help you create that strategy. Also note roughly how long each activity will take.

So, your list of activities with a timeline for each might look something like this:

Goal 2: Train the board on their role in fundraising

  • Discuss and get buy-in from board on a fundraising training (October)
  • Find a date/location (October)
  • Research fundraising trainers (November-December)
  • Hire a trainer (January)
  • Hold training (February)
  • Follow up with each individual board member on the next steps resulting from the training (March-April)

Once you have listed all of the activities to achieve each goal of your capacity plan, highlight activities that would require new purchases. Research a ballpark figure for what each one would cost and then attach that figure to those highlighted items, like this…

 

To learn more, download the Launch a Capacity Capital Campaign Guide. And if you’d like more guidance, you can also view the Raising Capacity Capital Webinar.

Good luck!

Photo Credit: Franklin D. Roosevelt Presidential Library and Museum

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5 Ways Great Strategy Can Transform a Nonprofit

Nonprofit StrategyI’ve been working with several clients lately to create a strategic plan, and I love the moment when the real value of the strategic plan and the process of creating one becomes blatantly obvious.

It’s the point at which board, staff, funders start to see the possibility that the plan holds for the nonprofit and the social change they seek. They get really excited about bringing that future to fruition.

But that only happens when you create a really smart, thoughtful strategy — a good strategic plan, instead of a poor one.

Smart nonprofit strategy can completely transform an organization, in at least 5 fundamental ways. It will:

  1. Create Momentum
    It’s not the final plan that energizes people, rather it’s the process of analyzing the external environment in which a nonprofit operates, making some hard decisions about where to focus resources, articulating the value the nonprofit provides, connecting the dots between individual actors and the larger vision. If done well, the work done during the strategic planning process really energizes board and staff. And when they start talking with people outside the organization (funders, volunteers, stakeholders) about the plan, those outsiders become energized too. To really tap into people’s potential you must inspire them to larger heights and help them understand their role in reaching those heights. A great strategic planning process does that.

  2. Attract Deeper Funding
    The difference between a nonprofit just scraping by and a nonprofit with a sustainable future is strategy. If you want to attract larger, longer-term funding, particularly from major donors, you simply must have a future strategy in place. People and organizations that make large gifts to a nonprofit are in effect investing in the future of that organization. And if you can’t articulate your future plans in a thoughtful, compelling way, funders won’t make that larger investment.

  3. Filter Future Decisions
    If you create your strategic plan correctly it becomes a tool for analyzing and making decisions about future opportunities. Most nonprofits are regularly fielding new opportunities (new funding streams, new programs to develop, new alliances to forge), but without an overall strategy it’s difficult to know which opportunities to pursue. A great strategic plan doesn’t tie an organization’s hands, rather it becomes a tool — a lens — through which you can thoughtfully analyze future decisions and make the best moves for your organization. One of my clients uses growth criteria we developed during their strategic planning process to determine when and where to add new sites. These criteria ensure that they are growing in a strategic, not reactive, way.

  4. Become a Management Tool
    When done right, a strategic plan can drive the operations of the organization and the activities of the board and staff. At the board level, you can regularly track progress on the goals and objectives of the strategic plan through a dashboard (like the one at top of this post). At the staff level, you can monitor the activities and deliverables of the plan through an operational plan. An effective strategic plan doesn’t sit on the shelf, but rather is a living, breathing guide to the daily work and decisions of the organization. It’s not a final product, it’s a way of life.

  5. Realize More Change
    At the end of the day you operate your nonprofit in order to address a social issue, to see some sort of change to a social problem. But the only way you will truly create that change is if you have a strategy that puts all of your limited resources (money, staff, board, volunteers) to their highest, best, most focused use. A great strategic planning process forces you to do the analysis, conduct the research, make the hard decisions, and track your progress so that at the end of the day you actually are making a difference.

Honestly, I don’t know how you operate a nonprofit without a strategy in place. In an increasingly competitive, resource-strapped world great strategy is less a luxury and increasingly a necessity.

If you want to learn more about what a strategic planning process looks like, check out my Strategic Planning page.

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Why Do Nonprofit Leaders Get in Their Own Way?

men hurdlesCan we talk about crazy for a minute?

I’ve recently witnessed some behavior from nonprofit leaders that made my jaw drop:

  • A board chairman convinced the rest of his board to turn away a donor who wanted to give the nonprofit a significant amount of money to fund organizational capacity (strategic planning, coaching, fundraising training) because he felt the nonprofit already knew how to do the work internally for free.

  • An executive director who was really struggling with wrangling her board and developing a strong financial model bravely asked a close foundation donor for advice and support. When the foundation offered to fund some leadership coaching, the executive director rejected the offer for fear her board would think she didn’t know how to do her job.

  • A board charged their nonprofit’s Development Director with increasing revenue in a single year by 30%. When she asked for a donor database to help more effectively recruit new and renew current donors the board said “No” because they felt she should already be able to do that without the aid of new technology.

More often than not it is nonprofit donors who hold back efforts to build stronger, more sustainable nonprofits by not providing enough capacity capital. I talk about that all the time (like here, here and here).

But sometimes, and more shockingly, nonprofit staffs and boards stand in their own way.

It takes courage for a nonprofit leader to admit that she doesn’t know how to do something and needs help. I am reminded of a fascinating interview I heard on NPR earlier this fall with Leah Hager Cohen who recently wrote the book, In Praise of Admitting Ignorance. She describes the freedom that comes from admitting when you simply don’t know how to do something. That moment of honesty can lead to transformation, as she says, “I think those words can be so incredibly liberating…They can just make your shoulders drop with relief. Once you finally own up to what you don’t know, then you can begin to have honest interactions with the people around you.”

I would love to see nonprofit leaders take this advice to heart. Once you have the courage to admit (to your board, to your donors, to your staff) that you don’t know how to do everything, you just might finally get the help you so desperately need.

Nonprofit leaders have been given the Herculean task of: developing and managing effective programs, managing a diverse and underpaid staff, crafting a bold strategic direction, creating a sustainable financial model, wrangling a group of board members with often competing interests, and recruiting and appeasing a disparate donor base. All with little support along the way. It is easy to see why the position of nonprofit leader is such a lonely one.

So instead of continuing to bear that enormous burden, take a step back and admit that you simply don’t know how to do it all. You need help, guidance, advice, support, organization building. If you are lucky enough to have funders, board members or others outside the organization that want to help, admit (to yourself, to your board, to your donors) that you need that help. And don’t let anyone (including, and especially, yourself) stand in your way.

If you’d like to learn more about the leadership coaching I provide nonprofit boards and staff click here, and if you’d like to schedule a time to talk about how I might help move your organization forward, let me know.

Photo Credit: Wikimedia

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