The highest-performing impact organizations—those with products or services that make a profound difference in the world, be it in health, human services, arts, the education, or the environment—possess two discrete characteristics:
1) high quality products or services proven to create a significant improvement at the point of interface, what can be called depth of impact, and 2) high quantity of delivery, meaning that the organization has the resources, leverage and/or infrastructure to deliver its the product or services everywhere they are needed—what can be called breadth of impact.
The first characteristic, depth, is widely appreciated. Most organizations understand that they must evaluate the impact of their work at the unit level of service. For example, if a nonprofit seeks to help vulnerable urban youth, depth indicators look at what significant benefits have been delivered to each young person, such as increases in educational persistence, reduced involvement in the juvenile justice system, avoidance of unhealthy behaviors, etc.
The second characteristic, breadth, receives much less attention. It is also much harder to achieve. A dedicated teacher can volunteer at the neighborhood level and make huge differences in the lives of a few youth. Creating an organization of dedicated teachers to serve every youth person in that city or state is much harder. Taking small programs that are great and making them large is the challenge of reaching scale.
High performing nonprofits have or aspire to have a meaningful and significant impact relative to the size of the problem it is addressing. Moreover, high performing nonprofits have the leadership, strategy and infrastructure to support effective service at the unit level, but the growth of that impact to the necessary scale. They focus on depth as well as breadth. Therefore, an organization serving vulnerable youth cannot be considered high performing if it serves only a small percentage of its target population and lacks the aspiration and credible plans to grow its services to a tipping point or, at best, market saturation—in this case, the point at which all vulnerable youth are being supported. High performing organizations relentlessly pursues depth and breadth—quality and quantity.
Achieving depth and breadth of impact—getting to scale—is challenging. However, there are consistent strategies practiced by high performing impact organizations that can inform the work of all those seeking not just quality, but quantity of impact. How do good organizations with beneficial products or services achieve scale? While a complete discussion would run many pages, the most potent strategies may be concisely expressed:
- Relentlessly pursue large investment. Many impact organizations with effective programs cannot scale delivery because, quite simply, they think small when it comes to soliciting gifts and grants. They pursue high-cost, low-return fundraising strategies that dominate the time and energy of leadership, and they lack visibility to more effective, higher-return revenue generation strategies. For example, an organization exhausts itself generating revenue from it’s action, constant grant writing, and email solicitations. Instead, it could be building a team to acquire, cultivate and mature a portfolio of 5- 6- and 7- figure supporters and investors.Organizations start on the path to scale by creating a business plan with compelling goals, strategies, metrics, milestones and a financial projection that details what scale will cost, how it will happen, and the good that will result, both economic and social. That business plan is the critical tool that maps the generation of investment and revenue from individuals, foundations, corporations, and government agencies, as well as earned income and impact capital.A well written business plan becomes a powerful tool to solicit large investment. It provides a comprehensive, clear, and compelling case for directing large sums to a beneficial program, one with scalable impact. Strategies and tools that enable large investments, not small gifts, are widely practiced among the largest nonprofits: hospitals, universities, and a handful of the most successful arts and culture institutions.
- Invest in growth. Despite recent and energetic efforts to discredit the “overhead myth,” many nonprofit grant makers and funders continue to judge the performance of a nonprofit based on the percentage of revenue expended on fundraising. In their view, this is “overhead,” and a nonprofit should minimize this fraction and channel as high a proportion of resources possible to service delivery. This practice is very unwise, as it starves the nonprofit’s revenue engine and make it difficult if not impossible to reach necessary scale.Therefore, high performing nonprofits not only have visibility to high-return major investment and revenue strategies, they also make the difficult, disciplined decision to continuously invest scarce resources precisely in the direction they are told not to—in the “overhead” of revenue generating staff.
- Fix the staffing model.The average tenure of nonprofit fundraising staff is approximately18 months. Due to low pay, a socialization against “overhead,” and high-effort, low-return fundraising strategies, most nonprofits struggle to recruit and retain high performing revenue generating staff. Such organizations quickly lose promising staff to wealthier organizations like hospitals and universities—who are themselves challenged to keep the most talented from the lucrative draw of the private sector. Therefore, nonprofits who are unwilling or unable to pay six-figure salaries face a difficult challenge: recruiting, hiring, training and retaining adequate numbers of talented, energetic fundraisers who can capture large amounts of investment from all possible sources, contributed and earned.A comprehensive solution to the challenge of revenue staffing exists, one practiced in various forms by a small but growing number of high performing nonprofits. First, as stated above, the organization must have the strategic savvy and strong leadership to direct itself away from the traditional, intensive, low-return strategies that drain organizational resources. There must be a clear strategy to capture major investments in the various capital domains—either earned or contributed. Importantly, the organization must also commit to substantial investment in staffing: a rule-of-thumb is two dedicated, full time relationship managers, plus support staff, for each million dollars in desired income.Additional elements of this “think different” approach to fundraising staffing are as follows:
- High-touch focus on major investors.High growth nonprofits have a singular focus on identifying, engaging, soliciting and reporting to increasing numbers of large investors in every non-profit capital market: individuals, foundations, corporations, government agencies. The majority of staff should be dedicated to large investments, simply because, typically, 95% of revenue comes from 5% of donors. Simply stated, direct resources and energy where there is the most reward.
- Reward results generously.Nonprofits are socialized against paying staff competitive salaries. Martyrdom and burnout are, unfortunately, unspoken staffing strategies at many nonprofits and drive high turnover. High growth nonprofits have clear and compelling professional growth and retention policies for all staff, not just fundraisers. But great fundraising staff in particular should be well compensated. If the system is working as designed, a successful fundraiser hired at 50K will make over 100K within fiver years—the type of compensation growth typically seen in the private sector.
- Hire and train on potential—don’t look for experience. Experienced fundraisers quickly mature into high paying jobs at wealthy organizations. Organizations are unrealistic if they expect to hire strong, experienced revenue generation staff under $100K a year. A more promising approach is to hire multiple people with right skills and characteristics: extroverted people with great communication and relationship skills. Provided the right training and support, along with compensation increases that recognize hard work, and organizations can build and retain great fundraising teams in house.
- Measure the right lead indicators. When it comes to managing staff, high growth nonprofits focus on a very small number of the right performance indicators for their revenue generation staff. They are 1) the number of face-to-face meetings with current and prospective investors; and 2) the success maturing conversations from “stranger to supporter,” or from the first conversation to deeper, ongoing interest and engagement, and then to investment solicitation, and finally to clear and transparent reporting on the performance of that investment—how much good was created. Doing this well requires an accurate relationship management system—a good database, attentive and disciplined input, and a clear cadence of reporting and accountability.
- Leadership leads—staff supports. Low performing nonprofits consider fundraising to be “overhead,” while programs and service delivery constitute the “real” work of the nonprofit. Leadership worries about programs and fundraising staff function in relative isolation, struggling to engage leadership and generate the revenue. High performing, high-growth nonprofits consider fundraising an essential activity, led by the CEO and board and supported in a tightly integrated manner by staff.
There is no understanding the challenge of initiating and sustaining a high-growth nonprofit or social enterprise. It is estimated that fewer than 5% of for-profit businesses ever grow past $1m in revenue—and an oft-cited statistic in the nonprofit space is that only about 200 nonprofits have grown past $50m in revenue in the past half-century. Despite the degree of difficulty, the pathway to success is known, and it is up to the most ambitious changemakers to pursue it.