Book: Forces for Good: The Six Practices of High-Impact Nonprofits
This book, Forces for Good: The Six Practices of High-Impact Nonprofits , was fantastic and it will definitely influence some decisions that are made for Lontananza, now and in the future. These are just my Kindle highlights, so hopefully they have enough context to make sense, if not just ask me in the comments and I’ll be happy to fill you in!
Part One: Introduction
Can We Thrive in Tumultuous Times?
[These high-impact nonprofits] spent as much time focused externally on changing systems—by influencing government policies, shaping markets, building fields of practice, and nurturing social and organizational networks—as they did on their own operations. They cared less about management practices per se than they did about their ability to influence others and to build entire movements to create more lasting change.
it’s important to meet short-term needs, even as we aspire to longer-term social change.
Nonprofit leaders increasingly realize that their real power lies in the ability to build platforms for connections; to share ideas and information; to influence others to spread innovative models; to connect the dots across issues, industries, and sectors even as they provide services for their clients and help meet immediate needs.
Organizations aiming to solve some of the complex problems facing our world shouldn’t dwell only on scaling up or spreading any single social innovation; the best organizations are networked nonprofits that drive collective impact and thus are able to achieve greater results than any one player could achieve alone.
It’s the end of charity as we know it, and the beginning of high-impact philanthropy.
A New Way of Thinking About Nonprofits
In a nutshell, organizations seeking greater impact must learn how to do the following:
Work with government and advocate for policy change, in addition to providing services
Harness market forces and see business as a powerful partner, not as an enemy to be disdained or ignored
Create meaningful experiences for individual supporters and convert them into evangelists for the cause
Build and nurture nonprofit networks, treating other groups not as competitors for scarce resources but as allies instead
Adapt to the changing environment and be as innovative and nimble as they are strategic
Share leadership, empowering others to be forces for good
even if nonprofits do all these things, they will still fall short unless the other sectors of society meet them halfway.
Business, government, and concerned citizens must be open to working with these nonprofit institutions—and to becoming forces for good themselves. And donors should change their definition of what it means to be great, eschewing less meaningful metrics like overhead ratios and instead funneling resources to those groups that have the most impact. This is what separates the best from the rest.
We don’t have time for incremental change—we need dramatic change if we are to solve the complex global problems that plague us today.
The stakes are high on all sides, and we must rise to the challenge. Doing anything less would squander this momentous opportunity to advance the greater good.
Part Two: Achieving Impact
The Six Practices of High-Impact Nonprofits
The secret to success lies in how great organizations mobilize every sector of society—government, business, nonprofits, and the public—to be a force for good.
greatness has more to do with how nonprofits work outside the boundaries of their organizations than how they manage their own internal operations.
Great organizations work with and through others to create more impact than they could ever achieve alone.
create tremendous change. In physics, leverage is defined as the mechanical advantage gained from using a lever. In the social sciences, it translates into the ability to influence people, events, and decisions.
They influence and transform others in order to do more with less.
great social sector organizations do these six things:
1. Advocate and serve.
bridge the divide between service and advocacy, and become good at doing both.
2. Make markets work.
great nonprofits find ways to work with markets and help business “do well while doing good.” They influence business practices, build corporate partnerships, and develop earned-income ventures—all ways of leveraging market forces to achieve social change on a grander scale.
3. Inspire evangelists.
Great nonprofits see volunteers as much more than a source of free labor or membership dues. They create meaningful ways to engage individuals in emotional experiences that help them connect to the group’s mission and core values. They see volunteers, donors, and advisers not only for what they can contribute to the organization in terms of time, money, and guidance but also for what they can do as evangelists for their cause. They build and sustain strong communities to help them achieve their larger goals.
4. Nurture nonprofit networks.
high-impact organizations help the competition succeed, building networks of nonprofit allies and devoting remarkable time and energy to advancing their larger field. They freely share wealth, expertise, talent, and power with their peers,
5. Master the art of adaptation.
mastered the ability to listen, learn, and modify their approach in response to external cues—allowing them to sustain their impact and stay relevant.
6. Share leadership.
We witnessed much charisma among the leaders in this book, but that doesn’t mean they have oversize egos. These CEOs are exceptionally strategic and gifted entrepreneurs, but they also know they must share power in order to be a stronger force for good. They distribute leadership throughout their organization and their nonprofit network—empowering others to lead. And they cultivate a strong second-in- command, build enduring executive teams with long tenure, and develop highly engaged boards in order to have more impact.
Maximizing Social Change
Just as they are driven to achieve broad social change, they have an unstoppable desire to create lasting impact as well. They don’t want simply to apply social Band-Aids, but rather to attack and eliminate the root causes of social ills.
It is this relentless pursuit of results in the face of almost insurmountable odds that characterizes social entrepreneurship—as opposed to nonprofit management.
Drayton, the founder of Ashoka, says, “Social entrepreneurs are not content to merely give a man a fish, or even teach him how to fish; these entrepreneurs won’t stop until they have revolutionized the entire fishing industry.”
At its core, social entrepreneurship is an externally focused act. It’s all about results, not processes.
Greg Dees: they create social value; they relentlessly pursue new opportunities; they act boldly without being constrained by current resources; they innovate and adapt; and they are obsessed with results.
Martin Eakes says, “I need to have impact more than I need to be right.”
Chapter Two: Advocate and Service
Service Meets Advocacy
conduct programs on the ground and simultaneously advocate for policy change at the local, state, or national level.
Providing services helps meet immediate needs, such as feeding the hungry or housing the poor; advocacy helps reform larger systems by changing public behavior or creating governmental solutions.
advocacy refers to activism around an issue like the environment or education reform.
It can involve many activities, from mobilizing voters to pitching media stories to influencing elected officials and the political process.
Sometimes the goal is to change laws or public policy; other times it is to change public behavior. Policy advocacy, also known as lobbying, refers to specific efforts to change public policy or obtain government funding for a social program,
most groups started out as direct service providers, at some point they all realized that if they wanted to create more significant systemic change, they needed to influence the political process.
A Virtuous Cycle
simultaneously doing both creates a virtuous cycle.
the two together can create impact that is greater than the sum of the parts.
Nonprofits that provide services create local solutions, which can then inform their policy positions. They can see what’s working on the ground and what’s not, modifying their approach as necessary.
when engaging in advocacy, nonprofits sometimes discover new policy solutions that can be implemented through their programs.
When they are successful in passing new legislation, groups gain the credibility that comes with having the government support their positions.
sometimes, by advocating for federal or state funding, they receive additional resources to support the replication of their programs.
What’s Holding Nonprofits Back?
An organization also has to walk a tightrope of building the skills necessary to engage in advocacy, while continuing to provide services (or vice versa).
when an organization’s attention to perfecting its own programs overwhelms its focus on achieving long-term social change, it enters the “social entrepreneur’s trap.” This is when a nonprofit “seeks to improve or expand its own programs at the expense of not leveraging the organization’s expertise and other capabilities for field- building, policy-making and broader societal change,” writes Michael Brown
Although there are times in every organization’s life cycle when it must build internal capacity or shore up its programs, nonprofit leaders should not do so at the expense of engaging in other activities that advance their larger cause.
engaging in advocacy may not always yield direct benefits for their own organization—but nevertheless advances their larger cause.
Five Principles for Successful Policy Change
1. Balance Pragmatism with Idealism
embody the paradoxical concept of “practical idealism.”
They are all guided by strong ideals, but few of them are ideological purists. They would rather win than be right.
nonprofits temper their idealism with pragmatism. Yet they won’t go so far as to completely sell their souls— they are able to strike a balance between achieving results and maintaining their integrity. It’s a delicate and never-ending dance.
They are pragmatic above all because they are focused on creating solutions rather than on simply drawing attention to problems.
“We offer a solution to significant problems that people want to solve,” says Dorothy Stoneman, president of YouthBuild USA. “Rather than protest the way things are, our strategy was to offer solutions and work in a sophisticated way to influence Congress.”
These groups have figured out how to work within the system to change the system, and have found ways to create answers to social problems that appeal to the political center.
EDF, for example, finds “the ways that work” in order to make progress toward its larger goals.
make a point of working within the current economic and political reality.
To achieve maximum influence with a majority, as measured by the number of supporters alone, you must appeal to a broad political center rather than take a polarizing position. Put another way, the circle of supporters for a radical group will usually be smaller than for a centrist group that appeals to both sides of a debate. Stray too far in one direction, and a nonprofit risks alienating individual volunteers, donors, or corporate supporters, thereby diminishing the long-term impact it can achieve.
2. Practice Principled Bipartisanship
are also adept at remaining bipartisan in their advocacy efforts—not just in rhetoric, but in reality. They put their issue above party politics and will work with whoever can help them achieve their goals. “We take the requirement to be bipartisan seriously, because we are required to do it, but also because it is necessary to do it,” says Cecilia Muños
The Congressional Black Caucus motto, “no permanent friends, no permanent enemies, just permanent interests,” captures this bipartisan mentality.
3. Preserve Credibility and Integrity
There’s a fine line between being pragmatic and maintaining integrity.
able to walk this line, knowing when to compromise on their ideals for a pragmatic win and knowing when compromise might actually undermine their credibility.
credibility is paramount to their success. They must remain true to the data and the facts, rather than bend information to support their case. Otherwise, they may win a short-term battle but lose the larger war.
“We put science at the core of everything we do and stay true to that no matter what,” explains Jane Preyer, “It’s about credibility. Even if what the science says is unpopular, we stay true to it.”
4. Hire Policy Experience
When these nonprofits decide to engage in advocacy, they have to build—or buy—the skills to carry out those activities. Often this means cultivating relationships in Congress or state legislatures, and hiring staff or consultants who have deep backgrounds in advocacy and lobbying.
But these organizations don’t rely solely on professional lobbyists and media experts to advocate on their behalf. In each case, top leaders are highly engaged in policy reform as well.
5. Find Funding for Advocacy
The legislative process is often slow, and the outcomes are difficult to attribute to individual organizations.
each of these organizations developed sustainable revenue streams—without strings attached—to support their advocacy work.
Combining Service and Advocacy
Advocacy touches on the myriad activities with which a nonprofit is involved. It necessarily entails greater risk and uncertainty, and requires a high level of adaptability on the part of the organization’s leaders
And lobbying has implications for everything from how a group raises money to how it works with other nonprofits in its field.
great nonprofits involve individuals not only as volunteers and donors but as evangelists for their cause. They build strong communities of supporters that can lend the power of votes and the conviction of public voices to their advocacy efforts. And they reach out to powerful leaders in business and government who can exert their influence on behalf of the nonprofit’s cause.
Instead of seeing other groups as competition, these nonprofits share resources, knowledge, and talent with their peers, building strong alliances. They then mobilize these networks to participate in grassroots advocacy campaigns and push for legislative reform.
Though it can be more complicated to manage both service and advocacy, and though policy advocacy does entail some risks, the rewards can be significant.
simultaneously running programs and pursuing policy change create a reinforcing cycle for most organizations. The more they do of both, the greater the impact they can achieve.
high-impact nonprofits leverage the power of government, wielding it as a force for greater good.
Chapter Two Highlights
Policy advocacy is a powerful force for social change. High-impact nonprofits understand that they cannot achieve maximum results without advocating for policy reform or without accessing the power and resources of government. To achieve large-scale change, government needs to be part of the solution.
The best nonprofits both advocate and serve. They couple policy reform with programs or direct services to create more impact. By operating programs on the ground, they gain a firsthand view of the problems facing their constituents and can test new models to inform their proposed policy solutions. And by engaging in policy research, analysis, and reform, organizations can influence legislation and identify new opportunities for programs. Ultimately the two activities reinforce each other.
Don’t be afraid to jump into the political fray. Many direct service organizations are hesitant to engage in policy reform. They fear that funders will stop supporting them, that advocacy impact is hard to measure, or that they don’t have the skills to manage lobbying. But great nonprofits overcome these challenges.
It’s never too late to advocate.
Follow a few principles for success.
Balance pragmatism with idealism. They work within the political system by focusing on centrist solutions that appeal to the broad majority of the American people, rather than advocate for extreme positions.
Practice principled bipartisanship. They will work with—and publicly credit—both sides of the political aisle for policy victory, but they also maintain their integrity around the interests they represent.
Preserve credibility and integrity. They take care not to compromise basic data, scientific facts, or analysis. Organizations that exaggerate claims to garner attention may win short-term battles, but lose the larger war.
Hire policy experience.
Find funding for advocacy. Not all funders want to support advocacy, so it’s good to find flexible sources, such as earned income or individual donations.
Chapter Three: Make Markets Work
EDF doesn’t take money from its partners. Rather, it retains rights to any innovation that comes out of the partnership. “The innovation can’t belong to the company,” says Gwen Ruta. “Whatever comes out of this, we’re going to knock on the competitor’s door and ask them to do the same thing.”
It is strategic about partnering with high-profile corporations that can serve as early adopters of a new social innovation—which it can then replicate throughout an entire industry, creating even more positive social change.
Doing Well and Doing Good
These nonprofits harness market forces and leverage the resources and power of business to have more impact than they could alone.
They understand that business is a powerful institution in society—one that can sometimes be a force for evil, but that can also become a force for good.
tapping into the power of self-interest is more effective than appealing to altruism.
finding ways to help companies do well while doing good, and are proving that social responsibility and profit aren’t mutually exclusive.
“This new paradigm pairs visionary companies that see how the social context in which they operate affects their bottom lines with a new breed of social entrepreneurs who understand how business principles can enable them to fulfill their social missions more effectively,” wrote Shirley Sagawa and Eli Segal
embrace the power of the private sector through some combination of [Three Ways to Leverage Business below]
go far beyond traditional models for working with business—while retaining their distinct missions and values.
They don’t seek to act like a business so much as leverage the power of business.
The whole is greater than the sum of its parts. These organizations are able to harness the best of both the social sector and the private sector to become a more powerful force for good.
Three Ways to Leverage Business
1. Change business practices.
change business practices to make companies more socially responsible, and in so doing, they often change entire industries.
Often the company benefits just as much as the nonprofit’s cause.
Most of these nonprofits make a compelling business case, not just a moral case, about how changes can bolster the bottom line.
This strategy uses powerful financial incentives to help companies do the right thing. It changes how they operate, and in the process can alter the course of entire industries.
Nonprofits can take two approaches: they can work to minimize a company’s negative impact, such as on the environment or workers (what economists would call reducing “negative externalities”); and they can help companies become a force for good, helping them reach underserved markets or create economic assets for low-income populations. In either case, the nonprofit helps make markets work more effectively for everyone.
2. Partner with business.
Partnerships can mean everything from simply accessing corporate donations and volunteers to creating more strategic corporate sponsorships or even operational alliances.
As they develop more corporate partnerships, they can become increasingly strategic in these alliances over time.
3. Run a business.
Nonprofits also serve markets by running earned-income business ventures. They charge for a product or service, and that income is then channeled back into the charitable mission of the organization, increasing its own financial stability.
Unlike foundation or government grants, or large individual donations—many of which are earmarked for specific programs—income earned through a legitimate business can be allocated any way the organization sees fit.
These three pathways are not mutually exclusive, nor are the boundaries between them hard and fast.
the nonprofit works with corporate partners to change their practices, but without taking any money, as they believe it could create a conflict of interest.
Managing the Risks
Following are some general risks that come with the territory of working with business, as well as tips on managing them.
Fear of Mission-Drift
For any nonprofit seeking to partner with business or run its own earned-income operation, perhaps the biggest risk is that it will be distracted from its charitable mission.
must constantly guard against this kind of mission-drift.
Perception of Selling Out
nonprofits should be cautious about whom they partner with—and in particular, their partner’s motives—so that they can’t be accused of being manipulated for PR benefit.
Finding the Right Partner
Partnerships require trust, whether the alliance is more philanthropic, marketing oriented, or operational. Both parties must be sure that the partnership is a good fit and that their goals and motives are aligned.
Organizations should perform due diligence on potential corporate partners, doing as much research as they can to make sure their motives, goals, and integrity are aligned,
Tensions with Other Programs
There may be a tension between corporate partnerships and a nonprofit’s other activities—policy advocacy in particular.
manage expectations around these potential conflicts,
Where there’s risk, there’s also opportunity.
Chapter Three Highlights
It’s hard to change the world without changing business. High-impact nonprofits recognize that the private sector has substantial resources and wields enormous power. These groups see business as an ally, not an enemy, and they help companies become forces for good.
There are three ways to harness market forces. Great nonprofits figure out how to leverage free-market systems for social impact.
They work with business to change corporate practices and make companies more socially responsible.
They partner with business to access more resources for their cause, in the form of donations, volunteers, or cause-marketing.
Some organizations run their own businesses to generate earned income.
Nonprofits bring valuable assets to the table. The best groups understand that they have as much to offer business as companies have to offer them. And effective cross-sector alliances create wins for both partners.
Manage the real risks. It’s difficult to work effectively with business. Risks include the potential to be co-opted by corporate interests, the perception of “selling out” among peers or the public, and all the dangers inherent in any joint venture or effort to run a business. But high-impact nonprofits see more opportunities than obstacles.
Earned income can be a boon, but it’s not a silver bullet. Many of the groups we studied have found ways to run businesses. The fortunate ones benefit from robust revenue streams; others are unusually creative about finding ways to generate income. However, earned income is not for every nonprofit. Some models don’t lend themselves to generating revenue.
Chapter Four: Inspire Evangelists
Turning Outsiders into Insiders
Groups such as Habitat excel at engaging individuals from outside their organizations—as volunteers, donors, advisers, supporters, and evangelists.
They go beyond building a community among their internal staff and clients: they actively mobilize the public for greater social change.
As they grow, they continually expand the boundaries of their organization outward, drawing new individuals into their community or network of “change makers.”
providing a voice for public concerns, a vehicle for civic engagement, and the bedrock of participatory democracy.
as they mobilize individuals and social networks, they magnify their impact.
volunteers and members often give money. Large numbers of individual donors can provide a relatively stable, sustainable, and flexible funding base,
A large base of individual donors allows the financial freedom to invest in capacity and to remain innovative and adaptive, because funding is not all committed to specific programs.
Individuals also help nonprofits increase their power and influence. Individuals, en masse, represent both voters and consumers, with the power to move governments and markets.
organizations often have a built-in base they can use to exert pressure on their elected representatives.
When an organization collaborates with a business—either to change its practices or to engage it in a partnership —it has more leverage at the negotiating table if it represents a lot of people in critical markets.
It can mobilize supporters in a consumer boycott to protest poor business practices, or encourage members to purchase products from companies that support a cause.
Citizens not only have power in numbers but also have influence in their local communities or society at large.
Some of these influencers donate their expertise as board members or advisers. A few of them are “super- evangelists”—powerful leaders such as Jimmy Carter, who use their influence nationally or internationally to help a nonprofit accomplish more. As CEOs of corporations, they help broker partnerships; as politicians, they support legislative or policy changes; as celebrities or prominent social figures, they draw media attention and inspire others to act. Support from super-evangelists can help create tipping points, propelling organizations to achieve much greater impact.
These individuals also receive something in return: they are connected, inspired, and transformed in the process of working for a cause. The nonprofit helps reinforce their innermost values and convert their beliefs into action, whether this means voting, volunteering, donating, demonstrating, or attending a civic function. People are no longer passive consumers, but instead are cocreators of community.
“Believing is belonging,” writes Patrick Hanlon. “When you are able to create brands that people believe in, you also create groups of people who feel that they belong. This sense of community is at the center of psychologist Abraham Maslow’s famous hierarchy of human needs. . . . It is an essential human truth that we all want to belong to something that is larger than ourselves.”
the theory is even more applicable to nonprofits. As they engage others, these purpose-driven organizations meet an individual’s need for belief and belonging—and they help create healthier communities in which to live and work.
people will help more if they are not seen merely as a means to an end, but as empowered equals.
“Outsiders are much more likely to help a nonprofit achieve its larger goals if they are not just treated as free labor or deep pockets, but as valued members of a community,” said scholar Joel Podolny. “Ultimately, the community should be treated as an end in itself.”
There are substantial network effects to this process of building a community. As more members join and become evangelists for a cause, they tap into their own social networks, recruiting friends to the organization. The circle keeps expanding outward. Large-scale involvement brings media attention to the organization, increasing its brand recognition, which leads to even more recruits. Ultimately, the ever-expanding cycle of conversion and engagement can create larger ripple effects on society as a whole.
The Rules of Engagement
Even more important than the quantity of these relationships is the quality. In marketing parlance, they are “sticky” relationships.
create opportunities for people to actively participate and to experience what the nonprofits do. They make it an organizational priority, carefully crafting a strategy of engagement and deliberately committing the time and resources to create meaningful relationships.
And they invest in sustaining these large communities of supporters who share their values and advocate for their cause.
build large communities—or networks of evangelists—engaged on their behalf.
Each of the four rules builds on the other, creating a series of ripples expanding outward.
Rules of Engagement
Communicate Your Mission, Vision, and Values
a clear and compelling expression of an organization’s mission, vision, and values.
As they articulate their mission and values to outsiders—and inspire others to act on their vision—these organizations are able to appeal to people’s emotions at an almost unconscious level. Such connections inspire others to engage with the organization to express their own beliefs and values.
It’s not just about having compelling marketing materials, a snazzy Web site, sophisticated databases, or successful direct-mail campaigns. Some great nonprofits have all of these, but many don’t. Rather, communicating values is more about telling a story, connecting your work with the beliefs of supporters, and inspiring others to join the tribe.
other evangelists in this visionary role, these groups inspire outsiders to move from belief to action, and they give them opportunities to participate.
built a community around its beliefs, and its brand followed. “The brand has been built at the grassroots level by engaging people in our work,” says Chris Clarke
it’s not about marketing per se; it’s about the message. The network itself—and the opportunity to participate and make a difference—becomes the draw. People want to belong to a community that shares their values, and where they have an opportunity to give back.
they don’t necessarily narrow their audiences.
“What marketing tells you is that it’s all about segmentation,” says Jim Balfanz, “But in the social sector we have to create common ground. We’re trying to build a field and work toward something that needs to be part of the fabric of democracy.”
seek to connect people across society’s divides. They work for fundamental beliefs about the greater good, such as social justice, democracy, freedom, or diversity.
creating a culture of common ground.
communicated its values through compelling stories, rituals, and symbols.
The symbolism operates at a conscious and unconscious level.
Joseph Campbell. “Myths are things that are truer than truth, public dreams we share when we are awake. Rituals are the way we access those public dreams.”
documented its “founding stories,” or myths that illustrate its core values—idealism, democracy, participation, optimism, and service. These stories are available in a published booklet and on the Web site, and include inspirational quotations from Robert Kennedy, Martin Luther King Jr., Mother Teresa, and Mahatma Gandhi.
Its ubiquitous “Starfish Story,” for example, recounts a tale of a little girl who found thousands of starfish washed up on a beach. She began throwing them back into the sea one at a time, despite the seeming futility of her act. Eventually, local villagers joined in, until all the starfish had been thrown back. The meaning of the story, as City Year interprets it, is that “idealistic acts, even highly symbolic ones, have the power to inspire others to act, and sometimes in numbers significant enough to make a major . . . impact on the problem.”
Together, these myths, rituals, and stories communicate City Year’s vision and values on multiple levels and inspire others to join the tribe.
Ilene Jacobs. “Somebody who doesn’t have a passion for one element of the story might have a passion for another part. There are so many appealing hooks that draw people in and engage them.”
Create Meaningful Experiences
Successful nonprofits don’t just express their values in a pitch—they give outsiders a chance to experience what they do.
Great organizations engage outsiders through experiential and emotional events that allow them to take part in creating social change. They help people understand the organization, feel more connected to its values, and become active participants.
People are enthralled with the opportunity to get their hands dirty. The interaction between the beneficiaries and volunteers is priceless; you work side-by-side and hear their struggle. It develops a momentum of its own with each new home.”
other ways to contribute their talents. “It’s the simplicity of participation,” says Share Our Strength board member Mike McCurry. “They have figured out how to mix philanthropy and pleasure.”
Although it wasn’t part of their model, they actively sought opportunities to involve others in what they do.
All these experiences combine to create deep relationships. “Once you touch, feel, witness, and experience what City Year is all about, it is hard to walk away from it and not be impressed,” says Lisa Morrison-Butler,
It holds a variety of regional and national events—including speaker events, conferences, and training sessions— that are open to members and the larger public.
also offers a tool kit for conservatives to take action in their local communities, as well as a variety of other ways for individuals to become more involved with the conservative cause.
Cultivate Evangelists
Once people have had a positive experience with an organization and are convinced of its impact, they are much more likely to act as an ambassador on behalf of the cause.
Whether the nonprofits call these individuals evangelists, ambassadors, champions, or even guardian angels, all of them have figured out how to leverage powerful relationships for greater impact.
“When you commit yourself to making a difference in the world and share your passion and idealism with others, ‘guardian angels’ will emerge to help you,” says Alan Khazei. “There are many people just looking for opportunities to be a part of something larger than themselves, and to make a contribution to others. Often, at times when you least expect it and most need it, these guardian angels will appear to donate computers, volunteer their time, introduce you to someone who can support your work financially, or take you out to lunch to keep you going.”
High-impact groups are particularly strategic about identifying, converting, and cultivating powerful individuals, or super-evangelists. They figure out who would be a good ally or ambassador—on the basis of that person’s values or an interest in the nonprofit’s cause—and deliberately recruit him or her as a board member or general supporter.
have at least one, and often more, of these super-evangelists as advisers or spokespeople. They are not just celebrity faces associated with a cause. Most of them are deeply involved in the work of the institution and make it a high priority.
These super-evangelists are often able to take an organization to the next level. By virtue of their political, social, or economic power, they can create organizational momentum.
They attract attention, create legitimacy, and serve as powerful role models to others. Press and media attention follow, along with money, members, and volunteers.
Evangelists such as Carter can also tap into their own social networks, opening doors for an organization in politics or making critical introductions to other influential leaders.
Build a Beloved Community
Once groups have inspired people with their values, engaged them in emotional experiences, and turned them into evangelists, they are able to expand on these relationships to build entire communities—social networks—committed to the organization.
invest significant time and effort in sustaining these communities over time. Some are more adept than others at using technology: they have Web sites, send out e-mail updates, and actively use social media tools. However, technology is not a silver bullet.
must provide opportunities for face-to-face connection. Individual members of the community need to remain connected at an emotional and experiential level in order to stay actively involved.
use annual conferences or events as a way to convene their larger community and bring diverse stakeholders together.
More than just an inside gathering for staff or affiliates, conferences are often an opportunity for funders, volunteers, donors, site leaders, and other supporters to share knowledge and to network with each other. The entire tribe comes together, further reinforcing a feeling of community.
“A lot of what we do all year long shows up at the conference—it’s our signature event,” says Gerald Bornstein, “We bring in the affiliates, and we use it as a training opportunity, a networking opportunity, and a time to communicate our vision. We also give corporate America and politicians the chance to interact with our members. We communicate, we connect, and we celebrate and enjoy each other’s company—it all comes together in the conference.”
Another way successful nonprofits nurture their communities over time is through active alumni programs.
cultivating leadership for the larger field can be a strategy for social change in itself. Leaders go on to create and run other organizations working for a similar cause—or to be powerful evangelists in business and government on the organization’s behalf. Alumni can form the core of a group’s community, and they continue to give back to the organization—in time, money, or influence—long after their active participation has ended. They are the evangelists who, by virtue of their own deep experience with the nonprofit, continue to reach out and bring others in.
the groups recognize alumni as an integral part of the organization’s programs; they treat alumni as equals and encourage them to self-organize; and they use technology and social media to increase the value of the community.
Whether they are engaging past participants as active members of the community or creating experiences to convert outsiders to insiders, each organization has been able to develop a larger community that is self- sustaining.
"the solution is to make the network itself the ends rather than means, to treat the network not as a tool for information or resources but as a community defined by a common set of values,” says Joel Podolny, “The community itself becomes the agent of change.”
Those involved become integrated into a larger community with shared values and beliefs, and are motivated to participate more deeply as donors, volunteers, and activists. As the organization grows, it attracts more attention, which brings in more resources—ultimately building a kind of perpetual motion machine. It’s viral marketing, or self-organizing, at its best. “The momentum builds on itself, and it becomes more about guiding it than pushing it,” says Habitat’s Stephen Seidel.
Ripples for Change
not always the easiest path to follow. It takes much more time, energy, and initial investment than not involving others. And it’s not always clear exactly how the strategy will pay off, or when. But these nonprofits do these things just the same, because they know that ultimately this approach can create a powerful lever for social change.
high-impact nonprofits seek to change society on a similarly wide scale, one person and one community at a time.
Chapter Five: Nurture Nonprofit Networks
Rather than simply shore up resources for its own organization, the Exploratorium actively helped other nonprofits copy its model. “We have a philosophy of sharing to the point of giving it away,” says Debra Menaker
by giving away its model and building a global network of interactive science centers, it could reach more people and have greater impact.
“The future is not in large organizations; the future is in the network, and servicing other organizations.”
Adopting Network Mindset
These high-impact nonprofits work with and through other organizations—and they have much more impact than if they acted alone.
the enormous amounts of time and energy these groups spend sharing funding, expertise, leadership, power, and credit with like-minded allies. They build networks of other nonprofits in their field—with either formal or informal affiliations—and they work in coalitions to achieve collective goals.
At times they make significant short-term organizational sacrifices to move the larger cause forward—they put their long-term vision and desire for impact above their own self-interest. And they do all this while managing and growing their own organizations.
What they don’t do is focus exclusively on building their own empires or hoarding resources. Instead, they increase their impact by giving knowledge and resources away.
these nonprofits all exhibit a collaborative mind-set and a set of behaviors that increase the ability of the whole to achieve more than any individual part.
At its most basic, a network is a group of related things that work together to achieve a larger goal.
By acting collectively, these organizations also have more power and influence over government and business. Because they represent many voices, they can exert greater influence on public policy or corporate behavior, because they have more members in their networks and therefore a larger platform for distributing their ideas, programs, or services, they have more opportunities to engage and influence individuals and the public at large.
They can also scale their impact more quickly, more efficiently, and with less direct expense than they could if they were simply to grow their own organizations site by site.
How to Nurture a Nonprofit Network
Grow the pie. High-impact nonprofits often fund other organizations in their network or field, regardless of formal affiliation. Sometimes they lead collaborative efforts to gain resources for the network; sometimes they individually raise funding that they redistribute; and sometimes they help other organizations improve their own ability to fundraise. They are more focused on growing the pie for the larger cause than they are on grabbing their own slice. They want to increase resources for their cause because it increases their overall impact.
Sometimes they grant funding without having any formal affiliation, freely giving money away without getting anything in return other than greater impact,
In other cases, the central nonprofit requires some brand affiliation, or adherence to standards, in exchange for financial support. In yet other cases, the organization indirectly helps like-minded allies by sharing valuable donor lists, assisting with proposal writing, or building fundraising skills.
“I didn’t set out to create a program to be taken to scale; I set out to create a movement of young people taking charge of their lives and changing their communities.”
Share knowledge. These nonprofits actively share their knowledge and expertise with other organizations through research, publications, and replication manuals, and build the skills of their allies through training programs, conferences, and workshops. By increasing the efficiency and effectiveness of members of their networks, they are able to have more influence as a collective.
Develop leadership. The majority of these organizations develop leadership for the larger network, field, or movement, nurturing talented employees and developing the next generation of leadership. They magnify their impact indirectly, increasing both the personnel capacity of other organizations and their own social connections within the network.
Although some of these organizations do not have explicit leadership development programs, they nevertheless see such development as a key component of their talent management strategies. They may recruit, hire, train, and develop a senior leader within their organization, only to have that person leave for another nonprofit. Indeed, because groups often reach a limit to their own growth, often the only way to move up is to move out. But when these nonprofits lose a leader to another organization, they are simply gaining an ally in the field.
Work in coalitions. Once these groups have built formal or informal networks, they often go beyond their inner circle to form larger coalitions and mobilize their network for collective aims. They work in coalition with others, playing both lead and secondary roles, and they share the credit for their successes.
“We work in coalitions when they are effective, but we also don’t hesitate to go our own way and drop out of a coalition if justified,” says Annie Petsonk
Networks Are The Future
nonprofits, which are more decentralized, are united around communities with shared values, and practice more distributed leadership. They are the ultimate peer-to-peer networkers, working through others to transform government, business, or public behavior.
a network strategy is not without its challenges. At times it requires organizations to make sacrifices and choose pathways that they otherwise would not pursue. And it requires taking a longer-term, bigger-picture view to see beyond immediate self-interest or ego to what will ultimately create more benefit for the whole.
a network strategy is a more highly leveraged approach to achieving social change.
by scaling a network, nonprofits distribute the costs, scale more quickly, and have more immediate power through collective action. Networks wield additional public influence over large institutions; they create more ways to engage individuals at the local level; and they offer a larger distribution platform for services or ideas.
Chapter Five Highlights
High-impact nonprofits adopt a network mind-set. Great nonprofits collaborate rather than compete with their social sector peers. They don’t see other groups as competition for scarce resources. Instead, they understand that only by working collaboratively with like-minded allies can they have more impact.
To build the larger field, share resources and empower others. Successful organizations help other organizations succeed by sharing hard-to-attain resources—money, special knowledge, training, and a growing pool of talent.
Give credit where credit is due. The best groups look for ways to share credit and shine the spotlight on other organizations. They join coalitions and decide when to lead and when to play a secondary role—and put equal effort into both. Often the most influential player in a coalition is the one that operates from behind the scenes.
Chapter Six: Master the Art of Adaptation
create internal systems that help staff evaluate new ideas and conduct more rigorous reviews of existing programs. Under the system, staff members now write business plans for new program ideas, which the senior management team periodically reviews.
a bit of discipline can serve as an effective counterbalance to unbridled innovation.
The Cycle of Adaptation
[They are] highly adaptive—able to perceive changes in the environment and develop new approaches in response.
When they perceive a gap between their vision and their results, they aren’t afraid to modify their approach to be a greater force for good.
“For an organization to be more than the sum of its programs, it needs the ability to ask, listen, reflect, and adapt.” -Christine Letts
a nonprofit’s ability to develop adaptive capacity is essential to increasing its effectiveness and therefore its impact.
the nonprofits we studied have discovered how to walk the fine line between creative innovation and structured execution. They exhibit the ability to listen, innovate, learn, and modify their approach—they have mastered what we call the “cycle of adaptation,”
mastering the cycle of adaptation is critical to success.
Precisely because they exist at the intersection between markets and governments—which are constantly changing—successful nonprofits must continuously adapt in order to remain relevant.
What Drives Innovation?
Groups listen closely to their constituencies and stakeholders, including clients, donors, volunteers, and partners in all sectors of society. They are able to track changes in customer needs, and they perceive new opportunities for solving social problems as they solicit feedback.
“It’s dynamic, not static,” says Al Brislain, former vice president. “You have to adapt to the environment around you. You can’t impose your reality on your environment.”
A process of introspection can lead an organization not only to introduce new programs but also to eliminate old ones.
the organizations that are most aggressive about evaluation shed old programs nearly as often as they create new ones, freeing up resources to pursue fresh opportunities and improve high-potential offerings.
Listen to the Environment
Adaptation begins with listening for external cues in the environment and looking internally for opportunities to increase impact.
These skills are enhanced in organizations that focus on working with and through other sectors of society to achieve greater change. For instance, maintaining a large network of formal affiliates and informal nonprofit allies helps a group stay in touch with the grass roots, as does working through local sites or regional offices. Working with business helps it stay attuned to changes in the market.
Experiment and Innovate
One important means of encouraging innovation is to deliberately recruit staff with diverse professional experiences.
Evaluate and Learn What Works
Equally important to innovation is the process of learning what works and what doesn’t.
Local YouthBuild affiliates report monthly to national headquarters about how participants are doing on a number of dimensions. If something isn’t working well, YouthBuild USA can respond quickly—and track opportunities for long-term improvement across the network.
Another strategy for improving programs is to study and copy comparable organizations’ best practices.
closed its accounting books every day, as opposed to the monthly norm, giving the firm real-time financial knowledge.
Modify Programs
Whether launching a new program or adapting an existing one, many of these organizations are exceptionally good at capturing, codifying, and then sharing knowledge to modify their programs and improve performance. They use their larger networks—whether they comprise formal affiliates, regional offices, or informal allies—to benchmark best practices and identify what’s working at the local level.
every one of the organizations we studied makes annual gatherings for all staff and for local sites and affiliates a top priority.
These conferences are often multiday events during which local sites, or affiliates, present new models or best practices, and national training is conducted. The organization as a whole can focus on strategy. These gatherings are an opportunity for the groups to constantly modify their plans in light of new lessons learned, or changes in the larger environment.
“it’s a unifying thing. It helps us know what is going on in the larger organization. We highlight successes, lessons learned, models, and examples.” says Jane Preyer
What Not To Do
it’s as much about what not to do as it is about which ideas to pursue.
A mistake that highly creative, chaotic organizations often make is trying to sustain too many programs at once and not prioritizing among them. Running myriad programs consumes precious resources: they suck in talent,
Being spread too thin can quickly impede a group’s ability to achieve greater impact.
The challenge for every nonprofit is to find the sweet spot between exploring new opportunities and shoring up the best existing programs. This means balancing discipline and freedom, and honing the ability not only to innovate but also to evaluate, learn, and modify plans based on new data.
Chapter Six Highlights
Great nonprofits constantly adapt and modify their tactics. Because successful organizations leverage the power of other sectors—government, business, other nonprofits, and the general public—they must be unusually receptive to outside signals, agile enough to change course, and flexible enough to respond to new opportunities.
Find the balance between stifling bureaucracy and unbridled creativity. Less successful nonprofits may excel at generating new ideas, but they can’t fully execute on them because they lack structure. Other organizations become mired in bureaucracy and are unable to change. But high-impact nonprofits strike the balance between structure and innovation.
Master each step of the cycle of adaptation:
Listen. Stay tuned to external cues from the environment and to ideas generated within the organization, and perceive opportunities for change.
Experiment and innovate. Develop new ideas for programs (product innovation) and constantly improve your existing programs and how you deliver them (process innovation).
Evaluate and learn. Rigorously assess what works and what doesn’t work; share information across your network.
Modify. Alter future plans based on the results of evaluation. This can include changing the overall direction of the organization or sharing knowledge across existing sites to improve all programs.
Chapter Seven: Share Leadership
He has a unique combination of charismatic yet egoless leadership. He gives power away, rather than hoards it.
Feulner and Truluck had built an institution of leaders, starting with a powerful executive team of eight vice presidents, many of whom had been with the nonprofit twenty years or more.
Heritage was governed by a highly engaged board, with many members who have served for decades.
The Power of Collective Leadership
strong leadership doesn’t only exist at the very top of high-impact nonprofits; rather, it extends throughout the organization.
CEOs of high-impact nonprofits share a commitment that goes beyond their own egos, and they use their leadership to empower others.
has an empowered executive team and a strong second-in-command.
almost all have large, enduring, and engaged boards. They have distributed leadership throughout their organization, and often throughout their larger network of allies and affiliates as well.
Because they focus so much on influencing players outside their organizational boundaries, they need to manage hundreds of relationships and access many networks. Further, working across sector boundaries to advocate for policy change, partner with business, build a network, or engage thousands of individuals takes many different skills—not all of which can be found in one person. And the problems these groups are trying to solve are complex, requiring large-scale systemic solutions involving many stakeholders.
a collaborative model is more effective in such a complex environment. “Complex social problems, like improving the public schools, are fundamentally different from technical problems, and the effective exercise of leadership depends on understanding this distinction,” write Ron Heifetz. “Adaptive problems are entirely different . . . many different stakeholders are involved, each with their own perspective[, and] no single entity has the authority to impose it on the others. The stakeholders themselves must create and put the solution into effect.”
leaders in the social sector lead through influence, not authority, and must convince others to act by force of their convictions alone.
the top leader sets the tone for the whole organization.
“The point of the collaborative leadership paradigm is not that leaders are unnecessary,” writes leadership scholar Greg Markus. “Rather . . . organizations are more likely to thrive within complex, continuously changing environments when leadership comes from many places within the organization, drawing upon the complementary assets of group members and not confusing leadership with formal authority.”
only by giving power away and empowering others do these groups develop networks and movements large enough to catalyze widespread social change.
One Style Doesn’t Fit All
They not only put the interests of their organizations ahead of their personal egos, they often put their overall cause ahead of their organization’s interests
“Wendy is the magic bullet at Teach For America,” says Kevin Huffman. “People outside the organization tend to label her as a visionary, but that damns with faint praise. She is astonishingly efficient and effective at both the people and project level. She gets things done at a very high level, and sets a higher bar for the office. It’s different from any place I’ve ever worked.”
Unlike Kopp, Shore is less interested in managerial details and more externally focused. He is described as an inspirational leader who spends much of his time building relationships and persuading others to act—whether by writing a check, hosting a dinner, or entering into a multimillion-dollar cause-marketing partnership. “Bill is just an amazing asset because he can speak about the cause and write so well,” says sister and cofounder Debbie. Adds Chuck Scofield: “He is a connector of ideas and people. He’s an innovative and creative thinker. He is inspirational—he’s the reason I’m still here.”
“relentless, dogged, and determined,”
The only way to get to the top in the social sector is to give power away.
Two at the Top: The Second-in-Command
All these organizations now have the equivalent of a chief operating officer (COO) working closely with the executive director. It really is two at the top—whether this second-in-command is called a COO, an executive vice president, or senior vice president, the role is similar. This second leader is more often an internal manager, focused on operational issues, while the executive director is more often the external leader, concerned with vision, strategy, issue leadership, relationship building, or fundraising.
Letting Executives Lead
It’s not just “two in a box,” but a whole team at the top. Often this shared leadership extends beyond the headquarters of the organization to include the executive directors of local sites, in the cases where the group has formal affiliates.
These executives are not only loyal but also empowered to speak and act on behalf of the group. They have both authority and accountability for their divisions, and make decisions such as hiring and firing without executive director approval.
“One of the ways Raul [Yzaguirre] and NCLR were effective was [in creating] the vice president tier—it was very critical,” says Marco Davis. “There was a core of vice presidents who really knew what they were doing, and had a great relationship with each other. So Raul could let them go—they were able to excel and make day-to-day decisions.” This structure also freed up Yzaguirre to focus on developing new program ideas, building external relationships, fundraising, and executing high-level strategy.”
Great Leaders Last
among the groups we studied, the leaders had stayed, on average, twenty years
By nonprofit standards, these executives are well compensated, but they could all earn more in the private sector.
they stayed because they are so passionate about their cause—their role is not just a job, but a calling. “The novelty doesn’t wear off,” says Fred Krupp, president of EDF. “If what you really want to do with your life is have an impact on things that matter, then what I am doing is so satisfying.” These leaders all share a relentless focus on results and a desire to have real impact—which often takes decades, not years.
Leadership continuity keeps them headed down their path to success.
Founder’s Syndrome and Succession Planning
Succession planning is an important, but often neglected, issue within the field.
The fact that these high-impact organizations have all recruited a new executive director from outside is somewhat surprising, given their bench strength. We attribute this to the fact that high-impact nonprofits often need a charismatic, externally oriented leader to speak on behalf of the organization and appeal to outside constituents, whereas the COO and executive teams often perform a more managerial function.
The Invisible, Invincible Board
most of the executive directors we interviewed maintained that their relationship with the board was critical. It is “true but not new”: if the board isn’t effective, it can sink an organization, but if things are going well, the board rarely gets credit.
great nonprofit board—it plays a significant role leading the organization, but it does so from behind the scenes.
The high-impact boards we studied are fairly large in size, and they have a handful of long-tenured members. The executive directors share power with their boards—neither one is really on top or has ultimate control of the organization. The boards are highly engaged; they work well with the executive leadership and have evolved as the organization has grown, although their governance models and roles vary depending on the context in which they operate.
ranging from twenty to forty people
high-impact nonprofits must engage so many stakeholders, both internal and external, to have impact. They need broad boards that represent a range of skills, backgrounds, and social networks. “It has to be a mix: you have to have people with money and people representing the community,” says the Exploratorium’s Delacôte. “A board has to be a mirror of the society in which it is functioning.”
“They are really dedicated. There’s something about this place that feeds them—the activity, the mission, the vitality of the place. People aren’t here for a personal agenda or for the distinction.” -Virginia Carollo Rubin
The executive directors and top teams have all found a way to actively share leadership with the board to further their mission. In most cases, the organization is equally led by the executive director and the board—each has a critical but different role to play.
in these high-impact nonprofits, the board balances its power with that of the executive director and senior staff, or works in partnership with them, rather than dominating.
executives have a strong and supportive relationship with their boards.
Most play a fundraising role
and board members help the nonprofit access resources either directly or indirectly, through social networks.
most of these executives say their board is quite involved in helping set high-level strategy and in advising the top executives on critical issues. For this reason, they are often deliberately diverse, rounding out the skills or backgrounds of the senior team, with a mix that often includes people with legal, marketing, or finance expertise, or experience and networks in government or business.
Many boards have also gone through transitions as the organizations themselves have evolved.
strong leadership requires that an organization maintain a delicate balance of power among the executive director, the executive team, and the board.
F. Van Kasper, chairman emeritus and board member of the Exploratorium, says, “You have people [on the board] who have bought into a mission statement that is strong, and they are very committed. So it can create a very dedicated staff and board environment. I think that consistency of the two working together has really provided for the success of the organization.”
Leadership Matters
leadership is needed not just at the executive director level but also among senior managers, board members, and site staff.
All the organizations in our research cited lack of talent as the second most significant barrier to growing their organization and expanding their impact, just after lack of funding. And studies show that the social sector is facing an impending leadership crisis. Just as demand is growing, supply is falling, due to the number of baby boomers retiring, a high rate of burnout among nonprofit executives, and the failure of most organizations to develop human resources within their organizations.
They go out of their way and invest time, money, and significant energy in sharing leadership throughout their organizations.
“To expand leadership capacity, organizations must not only develop individuals, but also develop the leadership capacity of collectives (for example, work groups, teams, and communities). They must develop the connections between individuals, between collectives within the organization, and between the organization and key constituents and stakeholders in its environment.”
Chapter Seven Highlights
Great nonprofit leaders share power. Wise CEOs recognize that they must share power if they are to unleash and magnify the potential of their organizations. They learn to let go to have greater impact.
Let many leadership styles bloom. There is no one type of leader who is most successful at creating a high- impact organization. Instead, many different styles can succeed (charismatic, humble, strategic, detail oriented) if leaders are willing to put their cause, and their organization, above their own egos.
To relinquish control, hire a COO. Many CEOs either start with or eventually hire a second-in-command. Regardless of his or her title, this person usually focuses more on internal management, so that the director can focus more on external leadership.
Empower your executive team. The best nonprofit leaders build their bench strength by creating strong executive teams and giving these top managers real authority and accountability for the organization’s success. This approach helps retain top talent over time.
Great leaders last. Many of the executives at these nonprofits have been with their organizations much longer than the sector average, or even the typical CEO. Longevity and leadership continuity help these nonprofits succeed.
Develop a succession plan. Great leaders also know when it’s time to go. Create a transition plan with the board that prepares for that day. Get ready for the change by cultivating leadership within the organization and preparing to hire a new director from the outside.
Build a big and strategic board. Although the trend these days is toward smaller boards, the nonprofits discussed in this book all have relatively large and diverse boards. But quality matters, too. Board members should be highly committed and should bring a diverse range of skills, perspectives, and social networks to help the organization and its cause.
Chapter Eight: Sustaining Impact
Crossing the Chasm
All nonprofits face barriers to finding ongoing funding and to investing in their own infrastructure and organizations.
“Most companies eventually become self-funding,” says Eileen Jacobs, a City Year board member and former business executive. “But nonprofits don’t have that luxury. Most nonprofits do not have huge endowment funds; they have to sell their story year after year. Having to raise money to live day-by-day is tough.”
There is also a disincentive for nonprofits to invest in the critical organizational elements—people, infrastructure, and systems—that make success sustainable.
The social sector has inherited an erroneous belief that every penny should go directly to programs rather than overhead, as if programs could deliver themselves. As a result of these dynamics, most nonprofits have a more difficult time reaching the minimum scale that they need to achieve their goals, let alone maintaining the same size or even building a broader platform for future impact.
Great nonprofits know that they must continually close the gap between their outward-looking vision—their constant desire for greater impact—and their need to invest in themselves.
Three Critical Elements to Sustain Impact
In addition to focusing externally, however, they also need to be able to deliver on their promises.
At the same time that they work externally to increase their impact by applying the six practices, they must also invest internally to sustain their impact. It’s not “either-or”; it’s “both-and.”
Reaching for ambitious goals and building organizational capacity can be mutually reinforcing: by working with and through other sectors, nonprofits can also find the financial resources necessary to sustain themselves. External partners—government, business, individuals—often provide money, in-kind donations, credibility, volunteer labor, and other critical resources.
successful groups can influence government as both a means to funding and as an end in itself—to achieve policy change. Similarly, they can work with businesses to obtain resources for their cause and to influence business practices. They can engage individuals and work through nonprofit networks to raise funds; they can also mobilize these networks to achieve grassroots or cultural change.
High-impact nonprofits recognize that there are three critical elements needed in order to maintain and deepen their impact over time: people, capital, and infrastructure.
1. People: develop a people strategy and invest heavily in top performers. Every one of these organizations cited their staff as a critical success factor. Although all nonprofits rely heavily on employees, we discovered that great nonprofits have developed particular capacities for hiring, developing, and retaining top talent that can serve as examples for other organizations.
2. Capital: find the right sources of funding. None of these groups could keep going without having one or more sustainable funding mechanisms—the critical input that fuels their outputs or impact. Their sources of support may vary, but successful groups integrate fundraising with their strategy, and they find ways to diversify these sources over time to reduce their financial risks.
3. Infrastructure: invest in overhead, despite the pressure to look lean. All the groups have reached a point in their growth at which they needed to invest heavily in information technology, buildings, or management systems and build their own organizational capacity. They’ve found creative ways to raise capital for these needs.
People: Invest in Top Talent
When asked what keeps them at their jobs, many top managers cite a passion for the mission, the ability to make a difference, and the other committed people with whom they work. The same goes for midlevel and junior staff. Most often, people initially gravitate toward nonprofit work for purpose and passion. But intrinsic motivation is not always enough to retain people, particularly over long periods of time.
have learned to do a few things right with respect to their senior staff, and these policies tend to trickle down to midlevel managers and entry-level positions as well.
Focus First on What, Then Who
in the nonprofit world, it’s actually “first what, then who.” All the organizations we studied are guided first and foremost by their mission, and this purpose is the primary reason a person will take the job. These groups look for new hires with a passion for their mission, and a strong cultural fit. In other words, they already know where the bus is headed; they’re looking for good people who are going in the same direction.
This is not a place where people come for a paycheck. If this is not a calling, and you’re not primarily motivated by the mission, get off the bus and leave us a seat.”
“The skills matter, but they matter less than the passion, because you can learn the skills,” says Cecilia Muñoz. “The focus and commitment you can’t learn—that’s what makes good advocates.”
Pay to Play
Although nonprofit leaders don’t take their jobs because of the money, in order for them to stay (particularly those raising families or those without a second income or independent wealth), it is important to establish a base salary that at least makes the financial equation palatable.
It is one thing to take a low-paying job just out of college to follow your bliss, and another thing entirely to support a family or face retirement on a $40,000 salary, particularly in major urban areas.
Unlike the stereotypical nonprofit, these organizations don’t burn out their talent with entry-level wages. It’s both mission and then money that matter, in that order.
executives who are very dissatisfied with their compensation are twice as likely to leave within a year as executives who are satisfied.
We discovered that successful groups are willing to compensate generously to attract and retain top talent. They “pay to play.”
aim to compensate at the higher end of the nonprofit pay scale, relative to other organizations of the same size and in similar fields and regions.
They didn’t all start out that way—most paid the paltry salaries that characterize any start-up—but over time, they have moved to the top tier.
These nonprofits also offer competitive benefits, which enables them to keep their best performers. They don’t constantly rely on young people who are willing to work for lower wages but who don’t have the experience or expertise necessary to generate substantial impact.
Although senior-level salaries are still lower than in the private sector, compensation at these organizations is competitive among their peers.
Offering respectable salaries makes a difference.
For example, vice presidents at many of the groups discussed in this book earned $130,000 or more per year
In addition to paying well, some of the groups have moved to performance-based pay.
The Heritage Foundation was an early pioneer of the approach. “We [were] one of the first think tanks to set up a goal system,” says Philip Truluck. “Other groups come out and ask how they can be as great as we are. Well, goals are set and goals are measured. We are still one of the few [nonprofits] that set up a bonus system.”
Create Non-management Career Paths
Although all the organizations we examined have promoted internal people into management, many have also created nonmanagement career paths for star senior staff: economists, scientists, policy researchers, analysts, or other experts.
“we tried to create career paths that weren’t automatically management. If you are a great researcher, then you can stay here. I wish I had pinpointed that beforehand,” says Truluck
In many ways, these groups are structured more like a university—with a division between administration (management) and faculty (subject experts)—than like a typical business.
In fact, a number of them, particularly those that have a strong research, analysis, and advocacy component, have PhDs on staff
Their ability to keep subject experts, along with talented managers, means that they have high retention rates in the senior ranks. We believe that this is a fundamental factor for sustaining impact at extraordinarily high levels
“In my case, it’s because I’ve been able to get involved and have had enough learning opportunities that have allowed me to maintain my engagement.” -Robert Semper, director of the Center for Learning and Teaching at the Exploratorium.
Let Go of Underperformers
It is hard for any manager to let go of a committed individual who has a passion for the cause but who is underperforming or isn’t a good fit.
Because nonprofits are mission based and tend to be more “touchy-feely” than businesses, they can often fall into the trap of hanging on too long to people who aren’t working out. Organizational effectiveness suffers: efficiency remains lower than it could be, and talented staff members can become demoralized when they see underperformers being indulged.
More important, with limited resources and ambitious goals, these groups need strong staff to achieve the level of impact to which they aspire. Anything else just won’t cut it.
have mastered the art of firing.
“You perform or you’re out,” says Kevin Huffman. “People who don’t hit their fundraising goals here don’t last long in their roles. If a regional director is not performing, or they are not a good fit, they are counseled out. . . . Every person at Teach For America has defined goals and a sense of accountability.”
People like working for a successful organization that is having real impact. They feel they are making a difference, they are surrounded by interesting and motivated colleagues, they are likely to be paid well and find new challenges as the organization grows, and hence they are more likely to stay. Because good people stick around, the organization continues to do well. It’s a self-reinforcing cycle.
Capital: Find the Right Sources of Funding
don’t treat fundraising as a stand-alone function of management; it is highly integrated with their programs, their mission, and their strategy.
The best organizations have a financial strategy that is aligned with their larger vision for creating social impact
not just because they are good sources of revenue but because they can help solve the problems these nonprofits are trying to address.
Government: Mobilizing Public Funds for Social Impact
lobby the government—at the federal, state, and local levels—for appropriations and contracts. They pursue policy change because they believe that their programs are important enough to receive broad public support.
changing public policy can be both a means of obtaining funding and an end in itself.
some nonprofits engage in policy advocacy but do not accept government funding because to do so would represent a conflict of interest.)
Government funding probably gives the quickest bang for the buck, as it requires less of an initial investment to obtain than other sources.
Government grants or contracts also are often substantially larger than any other single funding source.
“To even begin to meet the need, the feds have to be in the picture.” -YouthBuild USA’s Tim Cross.
Relying heavily on government funding also has its risks, however.
Individual Donors: Capitalizing on Citizen Support
built large individual donor bases and rely primarily on those sources to sustain their organizations and impact.
engaging volunteers, members, and individual donors in their mission has been critical to their strategies for increased impact.
also excel at engaging individuals in experiential activities and at inspiring evangelists.
Its broad, diverse individual funding base has resulted in large part from Heritage’s ability to build a highly influential conservative movement and to engage individuals in its cause, its funding base has allowed Heritage to turn down money that comes with strings attached and has given the organization enormous strategic freedom.
Habitat did not choose the most efficient or cost-effective way to build houses for the poor. But its vision was always much larger than just building homes; it wanted to mobilize volunteers to work alongside the recipients of the home, and in the process, build an antipoverty housing movement.
Although building a large, renewable individual donor base certainly has its rewards, doing so requires a significant investment of resources. Most of the nonprofits that rely on individual donations have larger development staffs, with larger budgets, than those organizations that rely on government or foundation support.
Corporations: Applying Private Dollars to Social Change
many use corporate funding to supplement their income.
Earned Income: Driving a Double Bottom Line
some were making real efforts to increase their sources of earned income, in ways that were clearly in sync with their mission and strategy for impact.
Foundations: A Mainstay for Many Nonprofits
Foundation support can be useful for a variety of purposes, including research, launching new ideas, and evaluation of existing programs.
If your organization has a clear strategy, a strong track record of success, and a mission compatible with the goals of the foundation, at least a few institutional funders seem willing to invest for the long haul.
Infrastructure: Invest in Overhead
Within the social sector, organizations are discouraged from investing in the very things they need in order to build their own capacity and sustain their impact: systems and infrastructure.
they’ve been both persistent and creative about funding necessary things like buildings, computers, and additional staff to manage their rapidly expanding programs.
ran “growth campaigns” to invest in the critical systems and teams they needed to keep up with program growth.
They often structured campaigns as one-time events rather than folding them into annual operating costs, which helped keep their overhead ratio low as well as generate momentum and excitement among funders.
They needed to invest in the basics to shore up day-to-day operations and close the chasm between their ambitious goals and their ability to deliver.
strategic about linking these critical capacities with its ability to both sustain the current level of impact and have greater impact in the future.
used some of this funding to build a robust operating reserve, so that it had enough cash on hand to cover six months of operating costs.
the deliberateness and discipline with which they approached growth campaigns. Their leaders realized that they needed to step out of the day-to-day fundraising grind and focus on the bigger picture in order to build a sustainable organization.
Although it does cost money to maintain technology, the ongoing costs are much less than the initial investment and can be manageably folded into the operating budget.
using the funds to buy a building, invest heavily in infrastructure, and set aside a financial cushion to subsidize ongoing operations.
it takes money to make (or raise) money. “It’s going to be a lot easier—our plans will allow us to demonstrate how we can be credible and effective.” -Janet Murguía,
The problem with using these metrics [GuideStar Rating] is that they fall into the trap of measuring financial inputs or ratios as a proxy for success, rather than measuring impact, or the amount of change accomplished with that investment.
Worse yet, they assume that nonprofits can implement programs without any infrastructure or support. They may encourage donors to support groups that spend too little on people, IT systems, or management, which can lead to weak organizations at best, or accounting trickery at worst.
[Top nonprofits] don’t spend too much time worrying about these metrics. They spend what they need to sustain their impact.
A Platform for Future Impact
those that are still growing rapidly, it is like playing a never-ending game up of catch-up. As they grow and expand, they must build their organizational capacity to fill in the gap between their expectations and their effectiveness.
demonstrated that they can sustain their current levels of impact, if not increase them over time.
they have to attract talented people, empower them, and compensate them adequately; that they have to invest money to raise money; and that they must build sufficient organizational systems to remain effective. And they do all these things despite powerful countervailing forces.
“It becomes a self-fulfilling prophecy, whether you operate with fear or you operate from the place of, ‘This is our plan, and we are going to execute against it,’” says Kopp of Teach For America. “You really can control your own destiny.”
Chapter Nine: Putting It Into Practice
Great nonprofits are catalysts; they transform the system around them to achieve greater good.
It can be overwhelming just staying afloat, let alone having more impact. So Stop. Stop and think.
What are you trying to achieve? What is the real change you want to see in the world—and how does what you’re doing today lead to more impact tomorrow? Are you focused on the most important activities, or are you letting constant crises drive your agenda?
It’s all too easy to let the urgent become the enemy of the important, and the perfect the enemy of the good.
You can’t neglect your organization, but neither should you let it eclipse your larger purpose: to have impact.