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Four Dimensions of Nonprofit Growth

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News Update: Beginning July 1, 2012, Facilitation & Process, LLC will be a full time consultancy practice based in Portland, Oregon. The goal of the expansion is to better serve clients in the Northwest region and nationally. more information here

After a five-month writing hiatus, I am re-launching my blog with a focus on the practices of building innovation in the social sector of nonprofits, government and philanthropy. This is the first blog in a focused series on nonprofit organizational growth. One of the common inquiries that I receive is from nonprofit leaders who are seeking to create a strategic plan for growth. In my initial conversations with such clients, I often ask, “what kind of growth are you seeking” and for “growth for what purpose?” Not too infrequently, a conversation follows where the nonprofit leader and I work to clarify the organizational needs related to growth. To that end, it is useful to think about models for nonprofit growth.The intention of this post is to think together about the major categories of growth that your nonprofit needs to consider in a strategic planning process (below, I provide some links to additional resources).

Operational Growth: The first growth that your nonprofit needs to ponder related to your existing programs and services and growth that may be required to do the same work more effectively, efficiently, and at  higher quality.  This growth conversation starts with clarifying the true operational costs of your programs, services, and overhead. The fundamental question is to think about your current operations and determine if your agency is actually generating enough revenue to adequately cover the true operational costs. There are a growing number of surveys and studies that document how many nonprofits underestimate the true cost of operations. Often this underfunding of operations works to your organizations detriment. Understanding true operational growth starts with assessing the cost of programs and services, infrastructure investments and staff compensation. Examples of such an internal inquiry might ask to what extend does your compensation of employees include living wages, health insurance, retirement or professional development expenses? This inquiry also asks to what extend your technology infrastructure supports performance? Are your organization computers current, do your databases and networks support productivity and clear, accurate reporting? Probing further might ask if you are investing in resource development, social networks and donor cultivation? Completing this self-assessment should be an objective analysis of financial metrics such as trends in cash flow, net unrestricted assets, and debt burden, among others fiscal measures. Assessing operations may help your nonprofit identify the strategic growth agenda to the guide your organization –namely growth of existing operations.

Capitalizing on an operational growth plan requires carefully considering how to increase revenues. Strategies might include renegotiating contract with funders, building secondary revenue streams to compensate for grants that underfund services, or creating operational efficiencies to reduce other expenses (such as renegotiating lease or lowering IT costs through reengineering systems). A clear operational growth plan also serves as the basis for seeking capacity development grants that bring short-term capital to your organization to assist you in creating new or strengthened long-term operational revenues.

Program Growth: Once fully funding operations, your organization can consider the growth of existing programs and services. Understanding the true cost of services defines the base of the formula for growing existing programs and services. Program growth has the goal to serve more clients, often though expanding hours, opening a satellite office, or adding staff. The program growth strategy has two drivers of  1) a compelling social need that is 2) coupled with strong evidence that your programs and/or services effectively address the needs. Together these twin drivers create a case for program growth. Serving more people with your programs and services that produce outcomes is a compelling argument for program growth.

Growing programs is a strategy that capitalizes on your agency’s existing development strengths. Your organizational donors likely understand your business model and value proposition. Expanding programs becomes the process of deepening and expanding relationships with your current donors and cultivating new relationships with like-minded or similar donors.

Program Expansion: A third model for nonprofit growth is to expand the number and types of programs and services that are offered by your organization. Program expansion takes your organization into new areas of operation. Expanding programs and services is not taken lightly as it often reflects an agency needing to build new program skills, competencies, and systems, as well as creating stable revenue streams to support the new endeavors. Careful assessment, planning, pilot testing, and gradual expansion require time, energy and resources. The calculation, related to the program and/or service expansion, that your organization must make, is how will the expansion of programs and services magnify the social impact relative to the cost of the undertaking?  In the long-term calculating a social return on investment will be required but, at the point of strategy,  it is equally important to think about opportunities created by expansion versus the opportunity cost of pursing expansion.

Expansion is a growth opportunity that requires the development of new revenue streams to pay for the start-up costs and the ongoing operating costs of the program. Thinking about the business model is critical for program expansion. I have known several nonprofit agencies that added programs and/or services without sufficient thought to sustainable revenues need to sustain the expansion.  Subsequently, these agencies found themselves in the precarious position that overt time they were fragmenting their revenue base in ways that stymie the effectiveness and growth of all of the agencies’ programs and services. Program expansion is the equivalent of developing a new business or product line and your nonprofit must  plan carefully to preserve rather than cannibalize the revenues required to sustain the other programs and services of your agency.

Program Replication: A fourth category of nonprofit growth is to replicate a program model outside of one’s immediate geography. Replication differs from program growth primarily based on scale and geography. While some think of replication and “franchising” a program approach, there are actually a number of models for replication and scale. The core of replication is based on your program or service that creates a social impact and that can be implemented in another location and that can produce similar positive outcomes in the new location. The model for growth through replication requires that your nonprofit agency understands the critical characteristics of implementation that leads to success success and how you will exert enough “control” over the process of replication. Control is required to balance fidelity of the core characteristics of the program or service.  with the freedom to adapt the program to the context of the new site. In some cases, replication will require a tightly controlled fidelity model and in other cases, replication might allow for greater degrees of freedom to adapt the critical characteristics of the program implementation.

Planning for program replication is an intensive process that requires a nonprofit to demonstrate a strong foundation of success. Preparing for replication also requires an agency to clearly identify: 1) the process of implementation (including what is critical and what is adaptable in that process), 2) the cost of replicating the program, and 3) how your agency will insure implementation quality of each replication site. The long-term challenge of replication includes developing a consistent brand as well as managing the relationships and fidelity between implementation sites.

Financing program replication are similar to program expansion in that it requires the development of clear cost structures, start-up capital strategies and long-term operating revenue strategies. Replication also requires a nonprofit to think through “licensing” and/or implementation criteria to be required of each replication site. Finally  your agency will need to create an assigned value for the replication model that is based on the criteria. This value can often be monetized  as a revenue stream for your nonprofit.

In the couple of pages found in this blog post, it is impossible to create an in depth exploration of nonprofits growth models. However, it is hoped that by considering the typology of growth that your nonprofit can start the conversation among your staff and board and create the foundation for what growth means to your organization. As outlined above, being clear about how your organization plans to grow will influence your options for strategy, funding and operations. In subsequent blog posts I will explore how to move forward with your growth strategy. Until then, your thoughts, ideas and comments are welcome.

Mark

Facilitation & Process, LLC designs customized approaches that are tailored to your needs. Organizations that benefit most from working with us are those who are tired of the same old solutions and are ready for the fresh, imaginative and objective. We offer a range of supporting services including performance assessments, facilitation, strategic, capacity, business & social impact planning, board & staff development and retreats, and developing meaningful community engagement. Contact us for a free initial consultation.

Nonprofit Strategic Thinking & Strategic Programming

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Here is an interesting exercise to try.  Go to the Google Image Search tool and type in the words “strategic planning model.”  In .33 seconds one will have over four million images that depict the process of strategic planning in a wide variety of geometric shapes such as flow diagram, pyramid, circles, stairs, clusters, road maps, and a combination of all of the above.  — Okay, you might not see the last diagram but you get the point of the exercise when you begin looking at the content of the varied diagrams.   Strategic planning is a concept that came of age in the mid-1960s and has been the largely implemented as a linear process that includes some variation of the sequence:

1. Articulate a vision, 2. write, rewrite a mission, 3. conduct an environmental scan using unscientific tools, 4.  choose priorities & set goals, 5.  develop action steps, timelines, roles and responsibilities, 6. draft a formal plan, 7.  pronounce it very good and 8. repeat the process every three years.

As strategic planning models became routine and accepted as a standard of practice, those who excelled in project management and repositioning content developed a consultant industry of strategic planners who emerged to bring expertise to “help” organizations create high impact plans.  The secret that few consultants want to admit is that strategic planning is often reduced to a cookbook that illustrated with overused “fill-in-the blank” prescriptions that result in an unimaginative plans.  Quite often, strategic planning is a simplistic reordering and renaming of existing strategy and approaches. Such a focus diminishes the value of strategic planning. This premise of the declining value of traditional strategic planning was identified over a decade ago in the seminal Harvard Business Review article titled, “The Fall and Rise of Strategic Planning” by Henry Mintzberg.  Mintzberg’s main criticism is that strategic planning often stymies strategy. He argues that “sometimes strategies must be left as broad visions, not precisely articulated, to adapt to a changing environment” (p. 112).

Since the appearance of Mintzberg’s article (and subsequent text that reverses the title ), strategic planning has been broadened somewhat to include the concepts loosely termed adaptive planning, opportunity management, or “real-time” strategic  planning.  In essence, the “innovation” of the adaptive strategic planning models is to build into the process  strategies that allow organizations to be responsive to sudden shifts in the operating environment.  Yet the methods employed to get to this more “flexible strategic plan” still reflects the pedestrian process described above.  In other words, the revamped strategic planning model looks more like this:

1. Articulate a vision, 2. write, rewrite a mission, 3. conduct an environmental scan using unscientific tools, 4.  choose priorities & set goals, 5). develop action steps, timelines, roles and responsibilities, 6.  insert opportunity matrix 7. draft a formal plan, 8.  pronounce it very good and 9. repeat the process every three years.

The economic meltdown of recent years that still haunts many nonprofit organizations has been a wake-up call is that business in no longer usual.  The rapidly changing environment require more than a strategic planning process focused on rearranging the deck chairs and adding one more lifeboat christened “opportunity management.”  As Mintzberg suggested over a decade ago, we must liberate strategy from the confines of a constrained and defined planning process and foster a culture that encourages strategic thinking at every level of an organization.  Strategy needs to be unbound from pedestrian and conventional thinking, which many strategic planning consultants fail to recognize and build into their practice.

Let me illustrate.  I was recently reading the retreat notes from what was billed as an adaptive planning process that written by a consulting group, which a nonprofit agency had contracted with.  It is stunning how pedestrian the results were.  Day opens with the typical icebreaker, pages of brainstorm lists are then sequenced and the conclusions are listed as key….yawn…. findings.  these included …yawn… diversify your funding, increase your communications, and invest more in …yawn…(excuse me)…  capacity…  No wonder strategy and strategic planning are undervalued, if not ridiculed by so many nonprofit leaders.

Force marching an organization through a strategic planning process is not the same thing as stepping back and asking the hard questions related to how nonprofit operations are organized around solid business thinking that is resilient and tenable over the long term.  For example, going back to the …yawn… adaptive strategy notes review, one of the most non-strategic statements of the document was this:

“Key Finding #2 – Financial stability/funding is the greatest challenge facing XYZ agency as it plans for its future.” Open-ended answers provided by staff and board focused on identifying XYZ’s greatest challenge included, long-term sustainable funding, limited funding resources, identifying alternative funding sources, lack of diversity in funding.”

This statement is non-strategic on two levels.  At face value, this key finding lacks any basis for action. Every nonprofit’s greatest challenge is to develop long-term sustainable revenues.  So what.  Where is the strategy?  Second, pulling up the most recent IRS Form 990 for the agency shows a revenue pattern that is represented in this graph. This agency not only weathered the downturn but doubled revenues in five years. Indeed, portraying revenue as the greatest challenge for an organization with this revenue profile borders on malpractice.

To me, strategy would be to ignore the economic angst of the board and staff and build on the organizational strength of the funding model.  Indeed, during a period where many nonprofit agencies were hammered by steep revenue declines, this nonprofit held its own. As a facilitator of such a process, I would be asking the questions, how do we replicate, or at least maintain, the stable revenues patterns that we held through the economic crisis.  How do we build upon the revenue spike of 2009?  What drove the break-out revenue for that year?  What lessons can we learn from how we brought in the additional revenues?

I almost titled this post, “What is Needed Now?” because I am convinced that this is the single most important question that nonprofit leaders must be asking today. For me, the answer to the question, “what is needed now” is not strategic planning but strategic thinking that is supported by clear and strategic program plans. The fact that strategy needs to be a cultural value does not negate the need for strategic planning and the development of clear strategic written program plans. The shift that needs for agencies to think strategically and support strategy with programmatic planning.  This is not a mere nuance but it means abandoning the two million images of a senseless strategic planning model and embrace, focused planning based on strategic thinking.

Elsewhere I have written about the layers of planning and approaches to nontraditional strategic planning and will not belabor the point here. Rather I want to point to three areas where focused planning needs to occur.

Core Social Impact Strategies: A clear and focused organizational model and theory of change, leverage, and scale is the core strategy for an agency.  Without a shared conceptual approach to how an organization fulfills its mission nothing else matters.  Previously, I have explored social impact (here) and social innovation (here) in more detail.

Revenue Strategies: There has been a tremendous amount of recent research that goes beyond the irrelevant and oversimplified model that all agencies need diversified revenue streams and that the board of directors should play a major role in revenue development.  Revenues  strategy should include a customized strategy carved from the careful study of autonomy, reliability and the opportunity costs of diversification. Such strategy planning also includes thinking about investment capital, earned income, and policy approaches to revenue development. Having a clear revenue plan is a second core document (more here).

Operational & Capacity Strategies: Often undervalued in strategy is a clear articulation of the operational capacity that is really required for successfully creating significant social impact. Such strategy requires the consideration of capital investment, breaking the tyranny of starving overhead costs, investing in technology, staff development, building outcome measurement systems, and expanding key staff and external partnerships (more here).

Other common areas that require strategic thinking and planning  include communications and marketing, program evaluation, and board development, to name a few.  The point of this post is not to list every possible strategic planning focus but to point out the fallacy of trusting the arcane strategic planning process while missing the opportunities for strategic thinking and focused programmatic planning.  As the current year ends, and a New Year opens with equal uncertainty, the role of strategy becomes more important than ever.

As Mintzberg, concluded, “Three decades of experience has taught us about the need to loosen up the process of strategy making rather than trying to seal it off by arbitrary formalization (p. 114).”  We are yet a decade and a half beyond Mintzberg’s words and yet many nonprofits continue waste time and resources executing ill-conceived strategic planning sold to us by some book or consultant group. As we reflect on the year past and look forward to the year future, let us commit to thinking strategically first and allow formality to unfold driven by need.

As always, your thoughts are welcome.

 

A Strategic Response to Threats in the Nonprofit Sector

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picture of chess strategyI 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.

  • 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.
  • 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.
  • 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.
  • 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?
  • 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.

As always, your thoughts are welcome.

m

Postscript: It is to this end of creating smart strategies and lasting impact that I began my consulting practice nearly two years ago.  Since that time, my firm has partnered with a number of agencies to create and operationalize bold strategic directions in a hostile environment.  I invite you to learn more about us and our services and should you need a partner in success, contact us for a free consultation.

 

Leading with Strategy – Even in a Crisis

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At the heart of the work that I do with nonprofits, philanthropy and government is to help organizations find the connection between facilitation and process.  Most often that connection is at the point of strategy.  Strategy is the critical element for, among other things: a) strengthening the core of social sector agencies, b) thinking creatively about innovation and growth, and c) managing through times of challenge and crisis. The focus on strategy is often the “antidote” to the tyranny of oversimplification in all three of these categories.   In this post I want to focus on the latter challenge of thinking strategically in a time of crisis. This post is also an extension of the theme that I began in my last article about creating a culture of courage.

In a recent blog that appeared on the Chronicle of Philanthropy ‘s website titled: Bankruptcy Isn’t a Solution to Nonprofit World’s Woes, the Philadelphia Orchestra was held up as a “poster child” of an agency where bankruptcy was the wrong solution to a fiscal crisis. In this article, the author argued that debt restructuring rather than bankruptcy was the correct and more appropriate solution to the crisis.  The point of the article was to declare bankruptcy as bad strategy.  However by focusing myopically on the debt of the orchestra, the author  oversimplifies the complexity of the crisis.

In the case of the Philadelphia Orchestra, a cursory Google search reveals a number of articles and commentaries suggesting that along with debt, there were other internal and external issues contributing to the crisis that included tension with the musicians who opposed the bankruptcy,  ticket sale declines dating back to last season, fiscal pressure caused by pension obligations, as well criticisms of a lack of leadership accountability.  One thing is clear, the fiscal crisis of the Philadelphia Orchestra did not appear “ex nihilo” but was years in the making and it is an oversimplification of the crisis to suggest that the solution was simply choosing the best option for debt restructuring.

I would argue that, similar to the orchestra, that  most organizations in fiscal peril are in that place because of a composite of internal and external factors in the social-citizen sector ecosystem. With the exception of grassroots and small nonprofit organization, fiscal crisis is rarely caused by a single event. Rather, fiscal crisis is often the culmination of ongoing failures in the organization’s strategic capacity. In the case of the Philadelphia Orchestra, publicly leading with bankruptcy rather than strategy was just one more  organizational leadership failure. Leading with bankruptcy rather than strategy was the self-inflicted cause of intense public criticism leveled at the Orchestra’s top decision makers.

The purpose of this blog is not to dissect the bankruptcy decision of the Philadelphia Orchestra but focus on the what it means to lead with strategy in a time of crisis.  To this end I would suggest the following attributes of leading with strategy:

  • Lead Beyond Crisis Thinking: Over a year ago, I wrote a blog about crisis thinking where I outlined the importance of focusing on mission, vision, outcomes as well as participatory leadership as the keys to moving beyond crisis thinking. My contention was (and is) that collectively reflecting on the core of an organization’s purpose and achievements is the prerequisite step to unleashing transformative creativity.
  • Lead Systemically: Managing from strategy requires a systems view of the nonprofit agency and the local “ecosystem” in which the agency operates.  In other words, by mapping the patterns of the external ecology (i.e., local economy, grant-maker funding patterns, the political landscape) and the internal ecology (i.e., employee moral, program quality and innovation) directly effect an agency’s ability to design broad solutions to a crisis.
  • Lead with Transparency: The most critical attribute in managing in a crisis is to be relentlessly committed to transparency.  Internal staff and the external community deserve absolute transparency and honesty. Transparency discloses how the agency got into the crisis with candor and responsibility.  Without transparency a crisis in confidence linger as a cancer even if the presenting problem is resolved.
  • Lead Restoratively: The concept of restoration is a causal chain.  First and foremost, restoration presents a wholistic solution to manage and prevent recurrence of the crisis.  Crisis requires leadership repair, which, in turn leads to the repair of confidence.  Crisis evokes fractured relations with board, staff, community, funders and clients.  Leadership repairs. Without a focus on restoration, the crisis ripples to a secondary “confidence crisis” that can cast a lasting shadow over an organization.

While this post has been written from the perspective of managing while in crisis, the principles outlined are perhaps best understood as a primary or secondary prevention strategy applicable to a broad cross-section of agencies.  The leadership qualities described in this post, applied as prevention are diagnostic and beg the question, “how durable would your strategic leadership be in the time of a crisis?”  For most, the answer lies in the degree to which the agency actively cultivates the qualities of strategic leadership in the absence of crisis.  After all,  leading with strategy is simply the discipline of good leadership.

As always, your thoughts are welcome.

Fostering a Nonprofit Culture of Courage

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When working with nonprofit agencies on strategy, I often find myself making four principle statements — Be authentic, be intentional, be large, and be radical.  I find myself repeating these principles because in this continuing anemic economic climate, many nonprofits are still operating out of a conservative posture.  Strategy is often focused on preserving core programs, adding one more fundraising event, working harder to expand donor databases or thinning operating costs.  Risk is too often reserved for opportunistic grants that come along or an unexpected bump in a revenue stream.  Yet,  don’t get me wrong, I do not believe that  conservation is  inherently bad or evil.  indeed, skillfully applied managing from a conservative perspective has buffered many nonprofits from the negative economic effects over the last couple of years.

At the same time while conservation may temporarily preserve the status quo, in the face of an every growing demand for nonprofit services and solutions, a conservative strategy is untenable in the long-term.  Senior nonprofit executives and nonprofit boards engaged in operational planning may find comfort in budgeting to “known” revenues but “revenue-driven” budgeting may undercut growth and undermine the long-term health of an agency.  Under-investing in administration and infrastructure, leveling or reducing salaries and benefits, underfunding reserves, or a host of other conservative fiscal moves, can amount to the proverbial “death by 1,000 cuts,” where the cumulative effects temporarily deferred, may suddenly manifest as an organizational crisis or  an  inability of the agency to meet the organization’s mission.

This post is part of an ongoing series related to strategic planning.  As a precursor to strategic planning, I believe that an agency needs to cultivate a culture of courage.  So here is one take on the outlines of  principles that embody organizational courage.

Be Authentic: More than once I have interviewed an executive director or board chair who has confided that the constant adapting to changing funding streams shapes and reshapes in subtle (and not so subtle) ways, the organizational mission and vision. One exasperated director shared, “Some days I’m not even sure if I am walking into the right building.”  While mission-drift often starts unintentionally, such incremental creeping is prevented by a myopic focus on authenticity.  Every program, every funding decision, every grant application,  must be guided by a clear mission and vision in the context of the compelling need(s) it seeks to address.  Authenticity provides the focus an agency needs to envision a future that is greater than the current economic reality.

Be Intentional: Too often boards of nonprofit organizations get mired down in the operational details of the current agency operations.  The mundane and immediate, such as a year-to-date 10% revenue shortfall, adding a new policy or procedure to the organizational canon, or figuring out how to improve the computer network, while all important, can impede and intentional strategic focus.  When a focus on the operational becomes a cycle routinely eclipsing the strategic, it becomes harder to be intentional about the future.  To be successful an agency needs an intentional focus on strategy that is clearly palatable throughout the organization.

Be Large: With a conservative mindset, many nonprofit organizations are constantly engaged in fundraising, grant writing and trying to keep together a patchwork of revenue streams.  Messaging to the community and potential funders is “we are worthy of support because we are doing good things on virtually no overhead.”  Large, turns such thinking upside-down.  Large re-frames the message from “we are worthy “ to “there is a compelling community need and we are catalysts to effectively address that need.”  Fundraising becomes resource development and in a coordinated strategy, an agency seeks investors interested in creating a social return on investment. Being large supports the  assertions of being a catalyst with clear and measurable outcomes as well as benchmarks for quality and continuous improvement.  There is little question about the presence and leadership of the organization in the community.

Be Radical: While being conservative can preserve the core, being radical can expand the core.  Yet, radical needs to be defined.  While radical may carry the perception of risk or polarization, radical is simply the ability to ask the hard and profound question “what if?”  The “what if” questions spawn radical ideas that can be translated into strategy and action.  Questions like: “In the context of the compelling need, our mission and vision, what if we could do things differently to create a larger impact?” or “If we were to fundamentally rethink our relationship to our community and our supporters, what new models for service delivery would emerge?” need to be asked. Creating a culture that thinks radically is one that expands the agency’s horizon even if when the current economic clouds partially obscure the view.

Authentic, intentional, large, and radical are four terms that illustrate a strategic organizational culture that is applied rather than an abstraction.  Such terms provide a base that an executive team and board can use to measure progress and be accountable to. By operationally defining a strategic culture, an agency enters into the process of strategic planning from a position of strength, opportunity and aspiration, which are prerequisites of a results-driven process.  So it bears repeating – Be authentic, intentional, large, and radical.

As always, your thoughts are welcome.

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