Five Inexorable Nonprofit Changes

Five Inexorable Nonprofit Changes

Sometimes change is dramatic, cataclysmic. The volcano in Iceland erupts.

This rarely happens in the world of nonprofit organizations, where constant but more subtle change is apparent. The ice shelf in Antarctica is irreversibly melting.

Even the iconic, national American pastime has evolved from infielders standing on bases to times when no one is anywhere near third base!

The difference is similar to whether a lobster is thrown directly into boiling water, or into a pot of cold water that’s gradually heating up. The result is often the same, one taking a bit longer.

The same scenario with the pot of cold water occurs with many of our organizations. Outcomes depend on who’s the lobster and who’s the gourmand.

Five significant elements below are undergoing significant change, sometimes heating up, sometimes cooling down, but invariably moving toward a very different place. In my fifty years in the nonprofit, civil benefit sector, I have experienced all of these elements move toward a different place from where I started.

1. Substance of Our Work

Most non-profits have done what they do continuously, without huge investment in what I would call self-consciousness about the substance and process of their work. Yes, we have the strategic planning process, but I am getting at something much deeper, perhaps much more profound, perhaps more mundane.

Both external and internal forces are causing these changes. Government regulation has increased. Funders have asked for conformity to the latest thinking on something. Clients have both presented more complex issues and have asked for different services.

Internal needs, recognition of better ways to do something and technological innovation have contributed to the overall mix.

One of the tech influences motivating change has been the impact of computers on workflow, then records, now almost every aspect of what we do.

The very substance of work has followed this change in technology. Much of what we do substantively during our hours of work is different from what it was. Work is more complex, requiring different experiences and training, more specialized and more competitive.

From administrative assistants no longer using carbon paper, for example,

to high level executives needing to know about such things as employee engagement, both the substance and process of our work have altered. And, from this very basic example all the way to Big Data analysis, all areas of our work will continue to change.

2. Our Sources of Financing Are Narrowing and Expanding

Both are happening slowly, inexorably, together.

Remember when donors started at the bottom of the pyramid and were eagerly urged up? Now we have major giving officers who work the top of the pyramid for 80% or more of our donated funds.

We now find our traditional lead donors cutting back and focusing their contributions. We scramble to find replacements, although their scattered heirs are much more difficult to interest in what we do and where we do it.

We look for new sources of individual funds in unlikely places.

Government seems to have plateaued, perhaps it is recessing. Many of the nonprofits founded and funded during the periods of large government increases in social service and related funding are needing to look elsewhere.

Even healthcare, with an expanding market potential as we age, is getting nervous, among other things, about the potential reductions and changes in government reimbursement through the Affordable Care Act.

Foundation and corporation grants are also either plateauing or growing slowly, often focused on tighter guidelines, with more and more reporting requirements. Change is also occurring within these organizations, with companies focusing giving on areas related to their products and services and some foundations experimenting with using their investment corpus to further program goals.

Expanding sources of revenue are rewarding us for scaling up and becoming entrepreneurs. B Corps and low margin businesses are entering into our market, some as partners, some as competitors.

We will hear more and more about social impact bonding, pay for performance, social entrepreneurship and the other methods of introducing business/finance-like methodologies into our efforts to benefit society.

There are other trends in areas where increases are becoming apparent, Crowd-funding and other digital methods of finding resources are on the rise, especially among younger generations of donors.

3. The Actual Outcomes of Our Work

We once published results and were judged by what we said we did. Now, these very results may be called outputs, body counts and dismissed as not having impact.

There is a progression going from outputs to outcomes to impacts. So we served 600 meals one evening and those eating not only registered satisfaction with dinner, but added 900 calories, 6 grams of protein and five of fiber to their daily intake, but what exact impact did this have on world hunger or poverty or homelessness?

We increasingly need to supply results in systematic form. We are nearing funder expectations, although we are finding it difficult to pay for sophisticated measurement.

Agreement on analysis of data and the development of variables that can be measured across whole groupings of the sector are high priorities. This is part of the next category of change, something I’ll call metrification.

4. The Metrics By Which We Measure Outcomes/Impact

All management, including nonprofit management, is becoming metric-centered. Big Data analysis, a result of many of the factors discussed above, will impact change in many ways. Multiple field trials can now be run simultaneously on data using newly developed software to demonstrate empirically what works and what doesn’t.

Read more of my thoughts about impact measurement.

Metrics and measurement are emerging as all-important, especially with government, foundations, corporations and impact investors wanting to maximize their increasingly scarce resources for the betterment of society.

Scalability also becomes important; if you want more resources, you have to show empirically that scaling up will produce better results. Should a nonprofit not want to grow, it may be out of the sights of many sources of funds.

Will these metrification produce fewer agencies—or newer ones—or more?

Will this produce faster obsolescence, more turnover in organizations or just the opposite?

These questions lead to the quest for higher quality and higher efficiency in the services provided for public benefit. CQI on a comparative basis is the next step. 

5. Organization CQI Based on Comparative Methodology

Systematic analysis of the substance of our work using metrics and methodologies that allow for comparison completes the cycle.

Comparison within our agency and with others produces information to reduce inefficiencies and error, to eliminate unnecessary steps, to reduce unit time, to demonstrate impact and to measure return on investment. These will be the variables that help determine viability in the future.

We already know Deming, CQI, Six Sigma, Lean and other methods to achieve the goals listed above. We will continuously add to this list, expanding it, making the process more integrated, efficient and less expensive, and extending it to substantial segments of our sector.

With all of this, we still come to work each day to fulfill Mission, the set of values that answer the question “Why?” We deliver civil benefit. We work to better the condition of those needing our services. We do good.

All of the changes hopefully helps us do what we do in a more effective, impactful manner. So we metricize, refocus, test, automate, analyze, produce higher return on investment—all to do good.

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