By: Steve Zimmerman
Solving a community’s intractable problems requires everyone’s efforts, and is not the purview of the mythical heroic “lone ranger” who will ride into town – or assume a leadership position at a local nonprofit organization – with all the answers. The complexity of organizational leadership is increasing with uncertainty over the future of philanthropic, earned and public revenue streams, calls for increased outcomes measurement and the need for organizations to be both proactive and reactive as they implement strategy. It has always taken groups of committed and passionate individuals coming together to discuss ideas, offer solutions and ultimately agree on a pathway forward to build sustainable organizations. Today is no different.
In their excellent article, “Leading for Mission Results: Connecting Leadership Beliefs with Predictable Changes,” Tom Adams and Jeanne Bell highlight the self-imposed challenges put on leadership when society fails to accept that change is ubiquitous. Leadership transitions and funding changes are just two examples of certain shifts that will impact an organization at some point in its life cycle.
“Developing competencies in leadership and organizational changes and transitions is critical to sustaining high-performing organizations and excellent mission results.”
Another article in the same issue of Nonprofit Quarterly dispels the myth of the singular social entrepreneur in favor of “collective entrepreneurship.” The concept put forth by Ruth McCambridge and Fredrick Andersson stresses the need for “networks, coalitions and collaborations composed of multiple stakeholder interests and groups” in order to achieve impact in our communities. Both of these pieces refer to the necessity of bringing people together, making the core competency of an effective Executive Director that of being a convener above all else. For an organization to be sustainable and create meaningful change, it requires shared leadership among multiple stakeholders inside and outside of the organization.
The alternative to shared leadership and perspective often results in misinformed decisions and unintentional outcomes caused by boards of directors and internal leadership teams filling stereotypical roles based on experience. For example, the accountant handles the finances and the program person or board member falls back on a lack of financial literacy and a passion for the mission to ignore the financial implications of a decision. We’ve seen this evidenced by the board treasurer who suggested closing a domestic violence shelter because it was losing too much money or a program manager who proposed increasing services and adding staff beyond the financial capacity of an organization.
If leaders are going to avoid these pitfalls, adapt to change and collaborate with others, they must convene with intention. Shared leadership is a way of operating as a group with each individual having access to information, and the desire to listen, understand, and learn from each other to collectively make decisions. Few places is this more needed than when it comes to understanding an organization’s business model.
Nonprofit business models integrate financial viability and mission impact. In this way, nonprofit organizations answer to a dual-bottom line of delivering exceptional impact in a financially viable manner. Every decision leadership makes within an organization effects both components and they must be held together when exploring options to strengthen sustainability. To do so, impact and finance must be unpacked and understood by stakeholders:
- What exactly is meant by impact?
- How does the organization assess whether it is delivering exceptional impact and meeting the expectations and needs of constituents?
- How is the organization relevant to the community it seeks to serve?
And, likewise, for the financial component:
- What is the full cost of impact?
- Does the organization have a revenue mix which offers the reliability and flexibility needed to build reserves?
- How much impact can the organization afford to have?
None of these questions are easily answered. Each takes time to discuss, which requires active listening to understand where others are coming from and patience to explain sometimes technical concepts in an accessible way. However, leaders who understand the key drivers of programmatic and financial success for an organization are able to participate meaningfully in discussions on how best to invest in programs that are generating the financial strength to continue creating a deeper impact.
Delivering on intended impact requires that organizations not only excel at program delivery, but also in the day-to-day processes, systems and relationships which generate resources. Leadership must build relationships with donors, funders and purchasers of services who believe in and are willing to invest in an organization’s impact. These components are influenced externally by the needs of a community as well as the influences of other organizations, the labor market and the political and social environment. Collectively they all influence the organization’s sustainability and help determine the extent to which the mission will be fulfilled.
All of these dynamic pieces provide an opportunity for shared leadership – building relationships with people who have different perspectives and knowledge and using these strengths to analyze the organization’s business model and make informed decisions to strengthen programmatic and financial sustainability.
Complex problems require collective and shared leadership to address. Sharing the business model of an organization and facilitating deep discussions about impact with all staff and board members can help the organization prioritize the best possible path forward. By learning from each other and working together we can bring others along and build the community that we all desire.