A Story of Two NonProfits –
When I started my first nonprofit, I bought a computer before I paid myself. That should have been a sign of trouble ahead. The truth is that I’m in love with systems. It was no trouble at all to set up systems for the nonprofit. I had enough credibility to get a board of directors from respected colleagues. I got bank accounts started, hired staff, started fund raising, and began flying between Madison, Chicago, Knoxville, Buffalo, and New York.
The devil was in the details of the strategic plan. The mission was too broad and the staff were more academicians than strategists. We had great meetings twice a year with the Board and theory flowed like wine. We did not notice any weakness. If we had been a for profit company, we would have noticed immediately how few people wanted our services. As a nonprofit, we were drunk on grand theories of broad vision, dreams of how the world should be, and my administrative competence.
Another nonprofit was set up at the same time. That director understood the strategy and created an aggressive, manageable vision. She did not like systems and ignored legal and financial details as much as possible. The early days had time when paychecks did not arrive and the IRS impounded the account twice for nonpayment of taxes. There was very little in writing, but oral history and a staff team of 2 people made communication easy. There was no computer. What was happening was that she was getting activities started and results for clients.
Which agency survived? The agency with the defined vision and strategic plan (not mine). Thirty years later, it thrives as a $3 million program to support refugees and has 100 staff members.
Systems sink small nonprofits, sustain large nonprofits and suffocate dying nonprofits
Small – If your nonprofit is under $500,000 in revenue and in a human service area of low risk, you can possibly ignore some systems while you get your vision and strategic plan working. Your licenses may not have all the right dates but regulatory agencies often don’t worry about small agencies. If you work in high-risk human services (ex. children or medicine,) you have the worst of worlds with a need to be good at everything.
Large – In a larger nonprofit, the strategic plan is in place but needs the cooperation of many people. It’s no longer a fluid set of tasks that two or three people hand off easily and interchangeably. After $500,000 in revenue, your nonprofit is ready for an increasing round of systems to sustain the vision. When you hire more people, there will be more unemployment claims. The cost of the audit escalates with higher revenue and more time is needed to provide paperwork for the audit. At $5 million in revenue, my company struggles to keep up with the regulatory requirements. Size increases regulation and I have no time for the internal tasks that I used to enjoy.
Dying – Many agencies that are declining have an odd combination of insufficient vision but strong systems and strong systemic need. Let’s use religious congregations as an example. Thom Rainer states that ‘between 8,000 and 10,000 churches will likely close this year’. (2013:Huff Post, The Blog). The Archdiocese of Chicago speaks of closing 100 churches this year. Clearly, there are many religious groups in the middle of retrenchment in the USA.
In the middle of their trials, most of these groups have expensive fixed assets – buildings with towers, special windows, complex organs, and years of neglected maintenance. These remaining assets of the nonprofit and denominational regulations require finance committees, Trustee meetings, and other systems.
Most small nonprofits just don’t have these systemic needs because they have not had the chance to accumulate the assets!
The systemic needs of over asseted J churches overwhelm their strategic planning energy. There is rarely the energy in a small group to discover and refine a Strategic Plan at the same time that a Systemic Plan is being operated. Declining groups are usually loathe to give up a fixed asset. They don’t want to be known as the group that sold the church as long as there is any life left. That is precisely when they should be divesting to shift the remaining energy resources into Strategic Planning.
Operating any corporation is a mix of skill and blessing. Very few companies in the United States of any size have existed for 100+ years. It’s not easy
One of the issues that plague organizations is the balance and need for both Strategic and Systemic Planning – and divesting as well as investing in systems.
If you want One Minute TurnArounds by email, please sign up!
GDPR – Your email is collected by an automated system so that the One Minute Manager posts can be sent. You will be invited twice a year to a two hour Scaling Up workshop for CEOs and EDs. Annually, you will be offered an Ebook and asked whether the resources of TurnAround Business Coaching are helpful.
A maximum of 10 companies per year develop a relationship for Business Coaching to turn around their company or scale up past a growth barrier.
McSwain, Steve. “Why Nobody Wants to Go to Church Anymore.” The Huffington Post. TheHuffingtonPost.com, 14 Oct. 2013. Web. 17 Apr. 2016.