A Strategic Response to Threats in the Nonprofit Sector
While I published this post originally in 2011, it message resonated today. Nonprofit strategy becomes more important at times when nonprofit agencies are under the threat of uncertainty from political and economic change.
I was cleaning my office the other day and came across a hand-sketched overhead transparency, from seven or eight years ago, that I used as the basis for a keynote address that I presented at a conference of youth mentoring nonprofits. The conference theme was capacity and sustainability and the overhead transparency referenced five “Environmental Threats” facing nonprofit organizations. The list of threats predated the most recent economic earthquake (and ongoing aftershocks) and it is scary to see how relevant and magnified these threats continue to be. In this post I want to review the nonprofit environmental threats though the lens of the strategic potential that each one contains.
1. Economic Restructuring: It almost seems like stating the obvious to write that we are in the middle of one of the most dramatic restructuring of our economy that we have seen in decades. One only needs to look at the growing disparity gaps that is creating a tsunami of declining wealth, as evidenced by double digit real unemployment, increasing poverty, and growing housing and food insecurity. The damage is evidenced most profoundly in already marginalized communities and is driving unprecedented demands for the basic services that the nonprofit sector provides. Coupled with this economic decline and stagnation is the failure of our elected officials, at all layers of government, to create rational public policies that adequately sustain the physical, social, and cultural infrastructure of our county. The fiscal stability of many nonprofit agencies is additional collateral damage caused by the restructuring. To survive and thrive, many nonprofits are fundamentally rethinking the way programs and services are funded and sustained. The economic threat requires all nonprofits to invest the time and energy into creating, not just a fundraising plans, but a revenue development plan, which focuses on the total capital requirements required to support agencies and builds tenable long-term funding models.
2. Political Indifference: The second threat that faces nonprofit organizations is political indifference. We are facing a radically polarized political environment where there is a relentless pressure to cut domestic spending with little tolerance for increasing tax revenues. In this environment, domestic spending is slashed repeatedly in a “death by a thousand cuts” scenario. If there was ever a time that demanded political engagement from the nonprofit sector, it is now. As nonprofit leader turned congresswoman Donna Edwards was recently quoted as saying, “This is not a time for sitting on your hands. It’s a time to be involved and be active and to care about what’s happening, not just in your community, but what’s happening in our country.” Nonprofit leaders have the moral obligation to advocate for the communities they serve as nonprofits know, from the day-by-day experience, the human impact that are in the faces and stories connected directly to budget cuts. It is no longer acceptable for nonprofit leaders and board members to hide behind the false, sweeping generalization that acting politically jeopardizes the legal status of their nonprofit agency. These times, demand a politically engaged nonprofit sector.
3. Community Fragmentation: In this hostile environment, there is also a tendency for community fragmentation. At the surface, this fragmentation can bee seen in the polarized political debates that are pitting those with resources against those without. On a secondary level, fragmentation can be a seen within the nonprofit ecology. Many organizations talk about coordinating services, collaborate on projects, and often serve together on issue-focused community coalitions. However, when the conversation nears the waters of service efficiency, duplication and effectiveness, collaboration tends to fragment. Such fragmentation threatens to undermine the sum total of services provided to the community. Without thoughtful discussions related to providing high quality services, with high efficiency and measuring our collective impact, we do a disservice to our clients, communities, and donors. It takes courage to build nonprofit community because it forces us to look at sharing resources, consolidating programs and services, and perhaps even restructuring organizations through partnerships and mergers. Such courage is needed now more than ever.
4. Unfocused Message: A fourth environmental threat to the nonprofit sector is that we tolerate an ambiguous and unfocused message about our work and our collective impact as individual agencies and collectively as a nonprofit sector. Polling data repeatedly demonstrates that the community has an unclear understanding about the nonprofit sector. In part, this ambiguity is tied directly to the nonprofit sectors’ struggle to communicate a clear message about the critical role that nonprofit organizations play in contributing to the social, cultural and economic health of our communities. As we move forward in coming years, most nonprofit agencies will find success to the degree that they develop and execute a clear, intentional, and visible, communication strategy. In short, if the community does not know your agency or what you contribute to the quality of life in the community then why should they care about your success?
5. Lack of Meaningful Impact Data: In my opinion, the lack of meaningful impact data is the greatest threat to any nonprofit agency. The clarion call for accountability and performance is a call that is becoming louder on from foundations, government grantmakers, and even individual donors. We now live in an emerging context of “impact funding,” where decreasing resources are aggregated and targeted to address significant needs that can be leveraged and scaled (external link). In this environment, nonprofit agencies need clear and compelling data to compete, thrive, and effectively serve their communities.
These five threats create an environment that fuels public skepticism of the work of nonprofits. In an environment of scarcity, a politically indifferent and fragmented network of nonprofits, with an unfocused message and a lack of demonstrative impact, will slide from relevancy towards irrelevancy. Yet turning this page upside down, a new image appears. It is an image of nonprofit organizations with a strategic opportunity to dismantle these environmental threats.
While economic restructuring may feel like standing on the shifting ground during an earthquake, nonprofits engaged, with a collective political voice, carrying a focused and clear message about the needs and values of a strong sector, can take limited control during the disaster and take the lead in the rebuilding effort. From this aspirational viewpoint, I personally believe that better days are ahead for nonprofit organizations. With vision, focus, discipline and strategy, nonprofit organizations have the opportunity to seize the day, even in the midst of environmental challenges.
Photo Credit: Marius Olbosan