Nonprofits need to grow up. Just like we do. From infancy to adulthood to demise, our nonprofit organizations are living organisms that follow a pattern. Best selling author and consultant Les McKeown took the time to understand how these stages applied to any organization including businesses, nonprofits, churches, and even families!
In this webinar, we applied his strategies to our sector and took a look at the entire nonprofit lifecycle, the four types inherent in any team, how to build a successful team, and what your organization needs to move from one lifecycle stage to the next.
Unlike people, organizations aren’t required to die. They can live on, theoretically, forever. But that rarely happens because of the people working in those nonprofits. Sometimes we don’t have the right people on the team yet and sometimes we have the wrong people on the team now. The wrong mix of people at particular life cycle stages can lead to stagnancy, decline, or even premature organizational death.
What’s important to remember and a key takeaway from the Predictable Success model is that any organization — any — can achieve predictable success. And it doesn’t take a certain set amount of time or money. But if cash on hand and years of existence don’t matter then what does?
The key is good leadership. Leaders that understand where in the nonprofit lifecycle they are and who is needed at those stages to move the organization to predictable success with move that organization into a homeostasis that allows it to scale.
On the left side (growth side) of the life cycle, we have three stages: Early Struggle, Fun, and Whitewater.
In Early Struggle, nonprofits are trying to find a sustainable source of donor or program revenue. Without it, they continue to starve. The Nonprofit Finance Fund reported in 2019 that more than 75% of nonprofits had less than six months of operating reserve accessible, while 10% had less than 30 days available. Wondering how they’ll keep the lights on, they operate within a hyper-scarcity mindset. Unlike businesses that fail, lots of nonprofits stay in this stage for years and years.
In Fun, the nonprofit has figured out how to grow (not scale) and this is where things seem to be clicking along really well for the organization. Suddenly funding is available, donors are taking our calls, partners want to work with us and we can characterize this stage as the one where we say YES! Yes to the new donor’s idea, yes to the grantor’s request, yes to new program ideas. There’s nothing wrong with fun. I’m not a fun-hater! So maximizing your time in fun is a great idea. But during Fun, we want to have more fun and that leads us to too much fun. In our nonprofits, that means growing complexity and demands on our organization and us as individuals.
We have officially entered Whitewater. Whereas fun was characterized by our ability to deliver consistency in simplicity, Whitewater is characterized by how we deliver consistency in complexity. For most of us (myself included), the answer is: not well. Fall donor retention rates are just one symptom of the Whitewater problem.
As I mention in the webinar, I have a friend named Beth who works for a great small nonprofit. She knows her donors really well, connects with them, stewards them really well. But for larger organizations, we have to triage our stewardship and this impacts our retention. Not everyone can get a new donor phone call, not every donor can get a visit or a tour, and as our relationships suffer at scale, so too does our retention.
On the decline side, we also have three stages: treadmill, the big rut, and death rattle. On the decline side, we have a short window of opportunity to get back to predictable success, which lies between Whitewater and Treadmill. In fact, most nonprofits swing between Whitewater and Treadmill and in and out of predictable success. That should be expected.
But in Treadmill, the systems and processes that we implemented to solve our complexity problems in getting out of Whitewater are now choking our organization’s growth.
In order to address retention, we focused on donors who give at a certain level to prioritize and we gate access to the executive director to manage their time better, for example. Our processes mean that it takes a lot of meetings and approvals to get a donor appeal out the door, or to send out a stewardship piece. Good ideas die on the vine because of the internal hurdles involved in getting traction.
The stage Les calls the Big Rut is also called the Big Lie. See, in Treadmill, the nonprofit is still self-aware enough that it knows it’s got a problem and can either try to fix it internally or get help before it’s too late. In the Big Rut — or the Big Lie — we tell ourselves (because we are actually convinced of it!) that everything’s fine. After all, nonprofits in the Big Rut are often raising a lot of money and running programs that are well attended, well liked, and probably profitable. But it’s all an illusion that covers up the real truth: the organization is on a slow, steady decline into irrelevance.
Sadly, not much can be done for an organization in the Big Rut. They’ll tell you that everything is hunky-dory so they won’t let insiders change what’s happening or involve outsiders at all. If you’re in the Big Rut, you can always try the strategies for treadmill but you’ll see key transitions out of the nonprofit during this time and that’s what spells certain doom. Mind you, that demise could take years, decades, even centuries. Les is working with one organization in big rut that has been in that stage for over a hundred years!
Inevitably, however, death comes for us all. Death Rattle is the final stage. I’ve seen a nonprofit go through this recently and while there were several attempts at emergency resuscitation, nothing was going to save it and they finally closed their doors. Honestly, if there’s a moment of clarity there at all, you need to just close up shop as quickly as possible to be fair to your donors and to your beneficiaries.
In a nutshell, that’s the cycle but I encourage you to watch the webinar to see the human elements that drive growth and scale in each stage and what you can do to move from the stage you’re in to the stage you want to be in.
For more tips from Cherian, check out his Q&A blog!
Cherian Koshy, a Network for Good Personal Fundraising Coach and host of our recent webinar on breaking the nonprofit growth deadlock, is a licensed practitioner of Predictable Success and works with nonprofits interested in scaling their impact. He can be reached via LinkedIn at Cherian Koshy or via Twitter at cherian_koshy