Ten Ideas to Strengthen the NonProfit Sector

In this posting I offer 10 ideas that non profit sector organizations might consider undertaking to strengthen themselves.. All of them may not be necessary to the same degree for your organization but this list of ten transformations does, I believe, contain at least several major changes your organization should at least think about. Here they are in no particular order.

1. Reach out and engage younger people
Forget what you know about  relationship management with Baby Boomers when reaching out to younger people – primarily the Gen-Yers, though the same is true with the Gen-Xers. These younger generations think differently, operate with different values, tend to connect volunteerism with where they donate money, and are much more likely to expect to have more of a say about how their monies are spent than Boomers.

If you are like most charities, your best supporters are Boomers who soon will age out of the workplace. With that evolution will come decreased donations for two reasons: first employment tends to generate more donations than living on a fixed retirement income, and if that isn’t bad enough, second, generally speaking Boomers are under-prepared for retirement, which will mean cutbacks in lifestyle and, consequently, charitable giving. If you are not developing marketing and relationship building strategies to engage younger people in your work, you may be headed for some very rough waters for a very long time.

2. The Internet is a significant key to your future success
That’s where everyone is, in particular younger people – the ones you need to get to know well as quickly as possible. Not only that, the Internet offers great potential for your organization to adjust to the changing nature of work as well as reach out to your supporters who are retiring.

Websites are not enough. Neither are your tradition e-zines. Both tend be used primarily as static online brochures and reports (websites) and little more than an electronic version of the old print newsletter. While there are exceptions, these tools are not used well to acquire, engage, and retain active supporters of who you are and what you do and accomplish. Also did you know that ezines published through third party vendors like Constant Contact often are only opened 25% of the time. Why? Because spam filters don’t let them through.

The Internet offers methods and relationship building tools that are high touch. Social media tools like blogs, wikis, social networks (whether a Facebook page or your own stand alone network), podcasting, video casting, and peer to peer information and file sharing. The plus is that most of these tools are very affordable (if not free) and relatively easy to use. The down side is that they are disruptive to an organization set in its ways.

In addition to undertaking social media strategies, the sooner non-profits start using the Internet to raise money, the better. While currently still a small percentage of what is given nationally each year to charities, the rate of annual growth in online fundraising is escalating at a rapid rate. The opportunity is there for the right kinds of charities to become as proficient at online fundraising as they are using traditional means.

3. Consolidate back end processes. Mergers are over-rated
Many voices in the corporate sector will tell you that non profits should merge in order to get rid of duplicate functions and programs. While there is no doubt there a benefits to some organizations merging, generally speaking a merger strategy is over-rated for a number of reasons.

 As a consumer, think about mergers you have experienced and ask yourself how many of them resulted in improved service to you, saved you money, made you a happier consumer? I have experienced, for example, two mergers of banks and in both of them, the new bank shortened business hours, did away with services I valued, and charged me higher fees for fewer services.
  
 Often mergers land the new organization in trouble due to the large scale cultural changes each player must make. Note the HP-Compaq merger of some years ago. Integrating the two large companies was a bigger challenge than anticipated; the merger appears to have diluted the strength of the combined brand when compared to the previous individual brands, and it did not really strengthen the new company’s position in the marketplace. This is a long way of saying that mergers for many non profits is not the way to go. Here’s why.

First of all a non profit’s bottom line is different from that of a for-profit business. Profits and shareholder gains are defined in the demonstrable differences a non profit makes in people and the community. And most often non profits have their impact at a very local level.

That local presence and relevance are difficult to provide in a centralized environment. Instead of mergers, non profits are better served by collaborating if not integrating back end business process and technologies. Not every non profit needs its own finance department or its own set of file and web servers. HR services need not all be based inside each organization. For larger non profits, information services could be centralized or regionalized.

Not only does this save money in order to direct more monies to impact, back end consolidations can lead to standardizations of technology, customer service programs, and data base management that increase the satisfaction of your constituents. They can also help create opportunities for more revenues in some cases through creating a common donor experience.

The challenge is not that we believe such synergy is not needed; the challenge is actually doing it. It likely means job losses, changes in supplier relationships, significant changes to internal functions and inter-department services, not to mention an increase in expenditures at the onset to make it all happen. Many funders call for this kind of change, but few are able to, or willing to provide the funding required to bring about such systemic change.

4. Rethink current board governance approaches
Boards that govern primarily as policy boards aren’t going to cut it like they used to. As brilliant as the guru of board governance, John Carver, is and as effective as he has been to improve board governance and performance, his system like all systems needs to adapt with the times.

A board solely focused on the “ends” of an organization naturally distances itself from operations (the “means” to the “end”). Critics of Carver et al offer that such distancing has a negative impact on the level of intimacy a board volunteer has or can have with the organization. It separates decision-making from deployment.

One of the major complaints of CEOs is that their boards are not sufficiently involved in fundraising, which under a board governance model is an operational matter. While I wouldn’t suggest a board de-emphasize its role with “ends,” non profit boards should consider operating more like networks than they do currently and through such networks offer opportunities for true engagement in the life of the organization.

This will be especially important to attract younger people to boards and will also increase the opportunities for the retiring boomers to increase involvement.
 
 5. Donors are becoming consumers of non profit services
It used to be that there was a clear-cut difference between those who supported charities and those who benefited from them. That is not to suggest that donors do not currently access programs and services offered by non profits. But the difference used to be that donors in general did not experience the same issues or conditions to the same degree as the recipients of their largesse. The differences between the Haves and Have-Nots seem less pronounced as they used to, with unemployment, underemployment, decreasing wages, rising health care and housing costs, and so forth continuing to impact more and more people.

This trend, along with the demographic changes we are experiencing (e.g. boomers retiring) imply the need for fundraising organizations to anticipate a number of things. First, the current trend of more money coming from fewer people will continue. While this can lead to more major gifts, it increases vulnerability. Second, total donations received from non-major gift givers will decline. Third, because the line between donors and clients is becoming increasingly difficult to discern, marketing, relationship building, and donor services need to have more of a consumer focus than has often been the tradition or practice.

6. Many Non Profits will have to do a whole lot more of less
This is due to a number of factors. First government funding will not keep up with the demands for resources at current levels. In fact, one can assume government funding will be decreasing even more than it has of late. Second, the largest non-government funder of human services, the United Way, has not experienced significant growth in revenues as a general rule for some time. Different communities produce varied results – and some United Ways are quite successful, but overall, revenue growth across the United Way Movement is in small increments each year, if that.

And of course, the rate of growth in the number of non profits continues to out pace the growth of the overall philanthropic pie. Corporate giving will continue to be a very small portion of overall charitable giving, but as an increasing number of businesses undertake their own corporate social responsibility agendas, they will focus on fewer causes that are more clearly tied to corporate philosophy and values around community involvement. Individuals who provide major gifts are also inclined to be more definitive about how their dollars can be spent than are donators of small gifts.

Those non profits that continue to spread themselves too thinly in terms of being able to support their current social programs run the risk of not only diluting the impact they provide, but also risk appearing less attractive to donors seeking to support focused organizations that deliver the specific results they want to see.

The successful non profits of tomorrow will be those that have fewer programs than in the years before, but in those fewer programs are doing more than they used to do to make a difference in community. This will mean initial downsizing in many cases, with potential growth becoming increasingly viable in the future as the economy strengthens.

7.  The Non Profit Sector needs to organize itself as a sector.
At the risk of upsetting labor friends, I am not talking about unions in this instance. I mean the sector needs a common voice of influence and must become better versed at leveraging its contributions to the economy and social fabric of community in order to strengthen its positioning in the marketplace.

Much like businesses that join a chamber of commerce, the non profit sector needs its own chamber replete with an advocacy function that includes relationships with other sectors, a best practice function, the facilitation of numerous networks of common interest, and a stellar program of media relations. Its role should include leadership and facilitation with respect to cross sector collaborations, back end consolidations, and in general serve as a think tank for the sector. Funders could collaborate around funding criteria, oversight approaches, systems integration, and so forth through a process facilitated by a “Chamber of Charities” in which they have membership. A “Chamber of Charities” could also serve as an accreditation body that was endorsed by local funders, something likely appreciated by donors.

 8. Nimbleness and speed are necessary attributes for future success.
Organizations able to turn on a dime, respond quickly to an emerging trend or strategy, quickly craft new directions and programs, or continuously question and adjust organizational structure are well primed for the future. While I am not a proponent of flat structures, my experience in the sector tells me that organizations are too often made up of territories called “departments” that too often place territorial interests and habits above organizational needs and aspirations.  

Nimbleness requires the moxie to change course without having to analyze and study things and then implement “answers” in slow, linear steps.  A nimble organization has a high tolerance for ambiguity and leaders who not only inspire ingenuity but understand that flexibility and speed carry risks too. Organizations can make mistakes going too slow or going too fast. But a slow, steady culture and climate of organizational change and innovation are not aligned well with today’s fast-paced, constantly changing environment. Since mistakes will always happen, I propose that it is better to stumble at times going too fast than to be left behind because the changes finally made still lack a good fit with the environment.

 9. Non profits need to not only market themselves but also the sector
Non profits are in the business of doing good. It is understandable why they focus on delivering programs and services to people who need them. Many non profits are good at marketing their cause but little effort is there in terms of marketing the non profit sector to the community. It is more likely that the general public experiences charities as presenting competitive interest in their pocketbooks. To a large extent this is true, even though non profits tend to steer away from cutthroat marketing or competitive practices.

While the general public likely understands such terms as the public sector or private sector, I do wonder to what extent they truly grasp the importance of the non profit sector and the critical roles it plays in community health and development.

10. Delivering and communicating results is vital to fundraising success
Years ago it was common to hear non profits suggest that what they do is hard to measure. After all, how can you quantify “helping?”  Unfortunately for too long the posing of that question led to either inadequate metrics and measurement of outcomes or resulted in just reporting on the numbers of people experiencing programs and services.  Over the last decade or so, that has begun to change. Outcome measurement is a familiar term with many, if not most, non profits, but I suggest the sector has a ways to go to become steady and consistent about being results focused.

A results-driven organization includes desired results in programmatic design, develops strategies to not only achieve them but also track and report on them, and then uses such results (metrics) to do two fundamental things: first, to communicate them to donors and the general public and, second, to use results as a touchstone for creating innovation and crafting new strategies.

Organizational scorecards or dashboards will become increasingly present and active inside organizations that are experiencing success in the future.

In closing
Yes I know. All of these ideas are only snapshots. And yes, implementing any of them means more work and a demand for resources from an increasingly diluted funding pool. That being said, obstacles ought not be allowed to dismiss what needs to be done to truly address societal changes and trends and undergo a transformation of how we think, work, and behave as a sector in the future. 

I hope the above ten transformations stir thinking and dialog within your organization. I welcome dialog with you and invite you to contact me by leaving a Comment or emailing me HERE.

One thought on “Ten Ideas to Strengthen the NonProfit Sector

  1. You have made some really good points. The company I am affiliated with has a program that will be able to tie any non-profit organization together and generate not only immediate funds, but they are able to generate long term residual also. This is a completely FREE program for the non-profit with no qualifications or anything! And they will benefit from each other. I truly hope that you can see the impact this will have on our communities across the country.

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    Like

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