by Josh Jacobson

The Glass is Half Empty: My Humble Beginnings with the Blue Chips

When I launched Next Stage in late 2013, the stated goal was to work with “small-to-midsize organizations” looking to “get to the next stage.”  The reason for this focus was as much a passion for social entrepreneurs as it was the solution to a challenge – larger organizations were simply less interested in the firm’s approach to organizational development.  And frankly, I was less interested in working with them as well. It was a two-way street.

Early in my consulting career, I often worked with large, well-established organizations that said they were interested in strategic planning, but rarely altogether committed to the process.  Too often, it was clear that the organization’s leadership already knew what it wanted to do, and hiring a consultant was the last step in making sure the rest of the board heard it from an outside voice.

I started Next Stage because I felt strongly that I couldn’t continue working in that environment, taking fees out of the nonprofit sector without feeling I was having some defined impact. More often, I was creating strategic plans that “gathered dust on the shelf,” or else simply kicked the can on the big strategic needs for lack of leadership will-building. I had my first real-deal Charlotte “come to Jesus” moment one night, staying up until dawn writing my version of the Jerry McGuire manifesto.  Those early scribblings became the basis for Next Stage.

I give you this background because I have stated bias when it comes to blue chip organizations (what we call large nonprofits with expansive missions), as I have seen many of them from the inside and they often frustrate me.  But not because of malfeasance or a lack of solid outcomes, but for the missed opportunities.  There are so many ways to “leverage their bigness” to be even more impactful, but it requires a culture shift that is both daunting and absolutely necessary.  I love them for their sturdiness, but I also believe that sturdiness breeds complacency and risk intolerance, which are the death of forward progress.

<deep sigh> I wear this all on my sleeve because I know how critically important it is that we maximize the potential of our blue chip institutions, to harness their resources and aim them at the toughest social challenges our city faces day-in and day-out.  We need them to think about the long game and make bold moves in service to our community’s needs.

The Glass is Half Full: Promise for the Future

The good news is that the answer lies in our hands, as the constituents of these organizations.  Large blue chip institutions are usually resistant to change less because they are wired that way and more often because they believe their donors and volunteer leaders want them to be.

So much has changed in recent years on this front, and we can thank Dan Pallotta for that.  His transformative original TED Talk is required viewing for anyone, and his ongoing advocacy through the Charity Defense Council has informed a more recent TED Talk entitled “The dream we haven’t dared to dream.”  He was just in Charlotte for a talk on “Unleashing the Potential of Nonprofits.”

Before his original talk in 2013, nonprofit assessment websites like Charity Navigator focused more prominently on percentage of overhead and fundraising costs than they did on whether the organization was actually moving the needle on their cause.  These tools created a culture of seeing spending by nonprofits as bad, of believing that pushing the envelope through innovation as a poor use of contributions.  These tools trained donors to demand direct impact for every dollar contributed and to demonize dreaded “overhead.”

The net effect was to constrict our largest charities, never allowing them to leverage their assets to try new things and be allowed to fail. And yet, this is an essential strength of large businesses like Microsoft and Coca Cola.  We expect our corporations to have robust research and design functions, but scoff at the idea that our local charities would do the same. Why?

And this is why I am optimistic, because the answer to “unleashing the potential of nonprofits” is in our hands. We hold the key to our future, and if our largest blue chip organizations are empowered to do what they are capable of doing, the results could be game-changing.

The Checklist: Blue Chip Organizations

So, are you pumped up? Did my pep talk get you excited about the potential of our largest and most influential nonprofit institutions? I hope so! Because we need you to be advocates to bring about the sort of change that leads to sizable positive outcomes.  Donors and volunteers can use the following five evaluation areas:

  • Budgeting for R&D – Big surprise. Next Stage believes that all nonprofits deserve the right to try new things in all facets of their business models.  We believe in building pilots to test concepts, learning from those pilots as a means to inform next steps.  We believe an organization should be encouraged to try something new and fail, because the learnings from those failures are just as important as the successes.  We believe R&D is not a “nice to have” budget line item but a mandatory one.
  • Mining Data – The fuel for R&D is when the organization can mine its own data to learn and inform future activities.  Large blue chip organizations are typically awash in data, all living is separate databases and rarely viewed as an enterprise platform.  Tell that to Red Ventures or Bank of America. Smart blue chip organizations see their own data as a unique asset and go beyond what is required by funders in normal assessment to find the hidden learnings that could unlock future potential. Does your favorite blue chip institution employ anyone with the word “Data” in the job title?
  • Diversity of Funding – Some of the largest nonprofits in Charlotte are surprisingly on shaky ground, and it is almost always due to over-reliance on a single source of funding.  For many that is government fee-for-service contracts, and as recent history demonstrates, they can be dramatically curbed or unrenewed.  Still other organizations look to a handful of foundations or a few influential donors to do the heavy lifting.  This makes an organization less likely to rock the boat and more likely to be satisfied in just stewarding their largest sources of funding.  A strong blue chip organization has robust earned revenue and a sturdy base of support from many individuals as the capital to drive evolutionary activities.
  • Authentic Partnering with Emerging & Niche Organizations – Funders and donors want nonprofits to collaborate, but that can be difficult to achieve when one organization is so much larger than another.  “My way or the highway” thinking tends to have a chilling effect on the potential for nonprofit collaboration.  And yet, emerging and niche organizations can often serve in the R&D function for the blue chip organizations, allowing them to try new things without the threat of being judged harshly for it. This means setting up a different sort of financial relationship, with the larger organization providing more than just lip service and meager investment.  A smart blue chip organization actively seeks relationships with smaller organizations to test assumptions and challenge the status quo.
  • Courage of Leadership – To achieve all of this takes real guts.  Courageous volunteer and staff leadership is steeped in an emotional connection to the cause and recognizes that the risks are worth the rewards if it can radically change the lives of people in need. More than ever, we need nonprofit leaders who can set ambitious long-term vision and build the will of others to go on that often challenging journey.  For the best blue chip nonprofits, the easy path is most likely the wrong path if it fails to meet an ambition to one day put itself out of business.

We believe in the potential (and the sheer size) of the largest blue chip nonprofits to dramatically move the needle for all of us as Charlotteans.  Do you?  Please share your thoughts on Facebook:

Next week, Caylin Viales will share her thoughts on charitable foundations, our final category in the Community Social Impact Portfolio.

Just starting this series? Read the previous installments here:

Overview: The Community Social Impact Portfolio
Emerging Organizations
Niche Organizations
Imported Organizations
Blue Chip Organizations

JoshJosh Jacobson is Managing Director of Next Stage Consulting, a Charlotte-based firm focused on organizational development and fund development for the nonprofit sector. Next Stage Consulting provides organizations access to affordable, high-quality consulting services to help them “get to the next level.” Josh is a Certified Fundraising Executive (CFRE) and is President Elect for the Charlotte Chapter of the Association of Fundraising Professionals.

Image Copyright: Evan Carmichael