Emerging Organizations

Last year, I overheard a conversation at work.  A friend of mine was asked by someone I didn’t know to name some of the prominent social entrepreneurs working in Charlotte. Without hesitation, a list of names were rattled out.  The people mentioned were all stellar folks and worthy of inclusion.

But my name wasn’t mentioned.  Perplexed, I asked my friend why that was.

“Well, I guess I think that you work with social entrepreneurs, but that you’re a consultant. You’re just… different.”

I’ll admit, I was a bit wounded.  In my mind, the work of Next Stage has always had purpose and meaning with social benefit at its heart.  The firm was founded to be an alternative to “for hire” consulting that was more interested in collecting fees than ensuring client success. But as I settled down later, I realized that there was some real truth to what was said.  While Next Stage had a mission and a set of defined values, we were missing two elements that every social entrepreneurship company needs: long-term vision and an organizing philosophy. These must-have elements, which Next Stage had preached to its clients, were unexamined in our own business model.

Earlier this year, I made an important decision about the direction of Next Stage and set about making it happen. A critical piece was the hiring of Caylin Viales, who has brought her tremendous talent and passion for social impact to the redefinition of what Next Stage could be.  Last week, another important component was launched – the public announcement of our philosophy regarding the Community Social Impact Portfolio.  Located near the end of that post, Next Stage commits to “orienting all of its work toward these five classifications” and “reorganizing its service lines to align with this philosophy.”

We do this because we see the role Next Stage plays in the community differently now.  We are making a commitment to the overall health of Charlotte’s industry of social impact.  In working individually with 501c3 nonprofit organizations directly, our commitment is not only to the client that hires us but also to the broader community that has a vested interest in the success of all nonprofits.  We feel a big part of our role is about “playing the orchestra, and not just the instrument.”

Because Next Stage is a social entrepreneurship company, and we are just as committed to improving our community as the nonprofits that trust us to help them achieve success.  The difference is that our mission isn’t focused on one positive social outcome – it is focused on all of them.

The Emerging Organization

It is perhaps because of how we perceive our identity as social entrepreneurs that we have been so attracted to helping emerging nonprofits.  Organizations thrive or die in their first ten years of existence, and much of that is related to the existence of a passionate founder.

I am unabashed in my love of nonprofit founders. They are the “special sauce” in the emerging nonprofit business model, capable of defying odds to make the impossible possible.  Through their eyes, every mission is brought to life and is emotionally captivating.  They will their nonprofits into being, imbue it with their personal brand, and then… what?  What happens next? Happily ever after?

Unfortunately, no. Too often, exhaustion gives way to frustration, and before long someone who could have been a game-changer is not even involved anymore. The nonprofit that had so much promise just a few years before is a shell of its former self.  Or not even in business anymore.

It is a sad fact that many start-up nonprofits don’t see their tenth year. Statistics proving this are difficult to come by since nonprofits don’t have to tell the IRS when they’ve “gone belly up.”  But evidence abounds. While there are many great success stories, there are perhaps just as many examples of new nonprofits sputtering as the decade anniversary approaches.

My firm is typically contacted when an organization has begun to understand that it needs some help to achieve a degree of sustainability.  We are often very successful, and the organization is placed on a pathway to ensuring long-term success.  But sometimes the challenges are too great or the organization too resistant to change.

We believe passionately that emerging nonprofit are badly needed to challenge the status quo.  Start-ups are typically less risk adverse and are able to pilot new strategies that contribute positively to the industry.  As an organization matures, it can lose that “special sauce” of the nonprofit founder, who stays up late until the job is done and knows the background of every person served.  They are often very open to volunteer engagement and encourage the community to come alongside their programming to help ensure success.  There are lots of reasons start-up nonprofits should be a dynamic component of the Community Social Impact Portfolio.

At the same time, remember the statistics from the last post about the proliferation of nonprofits in Charlotte (e.g. 3,600 public charities)?  As a community, we need to be smart about how we encourage social entrepreneurs, and more mindful of what a successful start-up business model looks like.  As I heard a donor say once, “I’d rather give my money to an organization with somewhat less impact that I know will still be around ten years from now, than an organization with tremendous impact that flames out from a poor business model.” In this way, nonprofits should view their donors (especially Millennial and X-Gen donors) as less “buying services” than “stewarding long-term solutions.”

The Checklist: Emerging Organizations

As a part of this series, Caylin and I will be suggesting a five-point checklist for each of the five areas highlighted in the Community Social Impact Portfolio. This checklist will roll into a tool that will be made available at the end of this series for donors and funders, along with worksheets for organizations to use when considering organizational strengthening.  This week, we look at the top-five evaluation areas when considering the health and worthiness of an emerging nonprofit for support:

• Differentiated Mission – An emerging organization with an expansive mission statement is very likely biting off more than it can chew.  Successful start-up organizations are razor sharp on what they do and how they fit in to the already-established network of community organizations. To know that a mission is differentiated, a needs assessment should be conducted that documents the problem as well as the other organizations and supports in the marketplace.  People interested in getting involved with a nonprofit should start with its mission, and if it is poorly formed or not well stated, the likelihood for success is greatly diminished.
• Distributed Leadership – The potential for burnout in the nonprofit sector is a constant companion, and nowhere more so than with the nonprofit founder.  Many start-up organizations are setup with what is called “heroic leadership,” where a handful of people are doing all of the heavy lifting.  While that may be necessary in the very early stages, the organization needs to be shifting as soon as possible to a “distributed leadership” model, where volunteers (and later contractors and staff) are owning defined responsibilities. An organization that is overly dependent on a handful of individuals is at risk, and its leadership should at the very least have a long-term succession plan in place.
• Documented Policies & Procedures – This may seem like a boring checklist item, but our experience suggests that an organization without documented policies and procedures is highly unlikely to “get to the next level.”  There are many reasons why this is missing, and most of them end with “…and who has the time to do any of that?”  A model of distributed leadership can never be fully implemented if the organization lacks a framework for how work gets done.  As consultants, we always ask to see the Organizational Handbook (or Board Handbook) at the start of an engagement.  It is one of the top predictors of future success.
• Evidence/Documented Results – The fact is that anecdotal evidence doesn’t cut it in an increasingly competitive nonprofit marketplace.  Emerging organizations push back on the idea that they can have documented evidence “with so little budget,” and we would argue that this excuse is not sufficient. It means the programming was not designed with a way to measure the impact to begin with, and a start-up organization cannot afford to run programming that has no defined assessment criteria.  Program fidelity is a must.
• Quality Marketing Efforts – A certain local marketing professional and I share the belief that one of the biggest reasons nonprofit organizations fail is that they spend so little on marketing.  No other business model could possibly expect to be successful spending as little as nonprofits do.  For the emerging nonprofit, we look more at the savviness in the marketing effort than the dollars spent on it. Does the nonprofit understand segmentation?  Is their messaging human-centered, and are they creative in how they tell their story?  An all-volunteer effort is fine in the early years, but it has to be done well otherwise future success is not a given.

We could come up with another dozen or so, but the goal here is to provide readers with a way to quickly assess start-ups, less as a way to evaluate the impact of their current efforts and more toward the long-term likelihood for sustainability and growth.

Next time, we’ll tackle Niche Organizations.  In the meantime, please share your thoughts on Facebook: www.facebook.com/NextStageConsultingNC/

Just starting this series? Read the other installments here:

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

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Josh 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 : Thuansak Srilao