By: Steve Strang
Often, we see requests for proposals asking for a plan that “leads to 5 years of growth” or for a plan to “diversify revenue” in order to be more sustainable. Sounds good, right?
It’s true that substantially growing can be a strategy to become more sustainable. And, yes, increasing individual gifts and other revenue streams may generate more unrestricted dollars for the organization. But, many organizations have a preconceived idea that growing programs and generating new revenue streams are the only vehicles for organizational sustainability. Over the past few years, I’ve worked with several organizations that decided not to grow programmatically or invest in new revenue streams, but instead, change their business model, and would consider themselves healthier now as a result.
Before beginning strategy work, it’s important to consider the purpose of doing the work in the first place. Approaching strategy formation hoping for more foundation grants, for example, limits the ability to truly diagnose strategic challenges. Many organizations have a propensity to jump right to strategy implementation before considering the ultimate goal: meeting your constituent’s needs more effectively and efficiently, understanding who benefits from the work of your organization, or clarifying your intended impact across your staff teams. By focusing on purpose and strategic challenges (as opposed to tactics and concrete deliverables), organizations can open themselves up to the right solutions, not necessarily the most trendy. You might need to close programs with less impact or invest in specializing in areas of strength to develop funds.
Spectrum recently partnered with an organization experiencing a high demand for services. Similar to most nonprofits, the people receiving services were not the people providing the funds to operate them. In the short-term, the organization could hire and expand services through the current method of delivery as a direct service provider, and remain open. But in the long-term, a lack of increasing revenue within their current streams did not make this model viable. With the ultimate goal for forming strategy identified, the organization recognized a new chapter was in front of them. The organization could have come into this process and said “we need to find a way to reduce expenses and cut services” but instead they focused on innovative solutions, not on a preconceived answer. The solution to their strategic challenge included:
- refocusing community engagement efforts for the people they serve,
- growing partnerships with organizations providing similar services for referrals, and
- expanding a small but successful funding source by reallocating dollars and efforts.
Whether a nonprofit works with a consultant or not to answer their strategic questions, it’s critical to dig down to the fundamental reason why a new strategy is essential for your organization.
Instead of assuming you need one particular strategy or tactic, think broadly about your organization by asking:
- What is the biggest challenge that our organization is facing in accomplishing our impact? Why is this a challenge?
- Has the market changed since the last time we considered our organization’s strategy? Do we have competition for services or a new demographic we are serving?
- Are the similar organizations in other geographic areas with whom we can partner for some of our services?
- Is there a new less intensive way we can provide services to serve our current or prospective constituents?
These questions will help leadership think deeply about the current way the nonprofit does business without restricting a strategy process to a specific set of pre-determined outcomes.