Nonprofit organizations are expected to deliver results on multiple fronts. The result can be a nightmare for prioritization. A simple framework that spells out the tradeoffs between mission, resources, advantages and impact can help sort it out.
Capitalism is an incredible engine for solving human problems when there is a profit motive and products and services are properly priced. It doesn’t do nearly as good a job when market forces can’t be corralled. It’s a disaster when it makes problems – such as poverty, health care, education, human rights, the environment, and housing – worse. These are the contexts in which mission oriented organizations are desperately needed.
If you are a leader in a nonprofit or public-sector context, my guess is that you are constantly grappling with the reality of multiple missions. Outcomes that are important may not be valued by donors. Equally deserving recipients can’t all be helped. The promise of fresh donations can nudge you into mission creep. You can find yourself forced to gratify someone’s ego. All of this can lead to a strategy-free, frustrating existence that wastes resources and frustrates your people.
Here, I’m going to describe an approach to framing the strategy problem in the mission-driven organization space using an approach inspired by my colleague and mentor, Ian MacMillan.
In search of clarity
Both for-profit and nonprofit organizations benefit when leadership clearly articulates what success looks like. Vague goals like “improve lives” and “increase achievement” are not particularly helpful in making strategic choices. Consequently, most nonprofits struggle to achieve scale.
For instance, with a quick search for New York City alone, I found over fifty programs with the goal of helping teen girls thrive – everything from yoga class to stem education to salsa gatherings, socially supportive groups, the Girl Scouts, you name it. Not that any of that is bad – it’s great that there are so many options.
But if the outcomes the programs were driving were clear, at some point we should be able to figure out which are achieving those goals and which aren’t. That clarity is often missing. The result is that the effort to help teen girls thrive is left in a fragmented state – great for those lucky enough to benefit, but not scalable enough to have a broad impact.
Mission and Intended Impact
As Bradach, Tierney and Stone point out, “in the nonprofit world, missions, not markets, are the primary magnets attracting essential resources – from donors inspired by organizations’ audacious goals; from board members, who not only volunteer their time and expertise, but also often serve as major funders; and from employees, who accept modest paychecks to do work they care passionately about. But missions are typically better at providing inspiration than direction.” As with the often muddled and confusing statements of strategy that bedevil for-profit enterprises, nonprofits often have grand mission statements that leave the question of what success would look like unclear.
A broad mission, such as “help homeless youth” can be made sharper and more effective by specifying the intended impact. In the case of Larkin Street Youth Services, for instance, the intended impact statement is: “help homeless youths, ages 12 to 24, in the San Francisco Bay area develop the self-sufficiency and skills to live independently.” An impact statement like this one is anchored on four key decisions: who the target population of beneficiaries are; what the target outcome is; where they will operate and the approach. This creates the “how” of delivering the mission and is a useful guide to making subsequent strategic decisions.
A nonprofit I admire a lot is Year Up, founded by former Wall Streeter Gerard Chertavian. In his work as a volunteer for Big Brothers, he was shocked to find how a young person’s zip code constrained the opportunities that were open to them, and that became his life’s calling. Year Up was founded to, as he puts it, “close the opportunity gap.” Year up serves a group he calls “opportunity youth,” targeting low-income young adults with a high school diploma or equivalent who are motivated and who, with assistance, can overcome challenges and successfully enter careers in fast-growing technical occupations. Chertavian has a broad geographical reach in mind and has opened centers and engaged in partnerships to address the opportunity gap nationally. The organization has won acclaim for the effectiveness of its programs, with its graduates significantly outperforming comparison groups. They also measure everything and make it publicly available.
Mission clarity and mission fit are the first dimension for our framework.
Munificence of resource pool that can be tapped
Notwithstanding your social mission, you still have to pay the bills! One of the biggest challenges nonprofits face is that donors are more eager to pay for new programs and visible activities than for unglamorous back office stuff. Part of the prioritization matrix is therefore the extent to which a programmatic investment has the potential to be attractive from a resource point of view
Unlike in the private sector, the quality of outcomes has little bearing on the amount of resources made available to charitable causes. There are literally hundreds of examples of vast resources being poured into solving social problems to virtually no effect; while many problems are not dealt with at all. Anti-poverty programs that don’t cure poverty, anti drug programs that fail to stop the flow of drugs and anti smuggling programs that have little in the way of outcomes are all examples.
Some charities successfully continue to operate despite evidence that their programs are ineffective or even harmful! There is also the dilemma that once a nonprofit has become established, it is difficult to alter or disband it, even when more effective methods of solving the same problem are discovered. For instance, the militarized occupation of ridding formerly war torn countries of landmines is giving way to a nonprofit that uses highly trained rats instead, but only after considerable resistance from incumbents.
This is a key reason to separate mission fit from the potential “market.” The size of the resource pool may well have nothing to do with the size of the problem being solved or the quality of the solutions. It also illuminates where your choice of strategy could involve tapping into additional resource pools.
Seeking out underserved customers
For-profit entities are solving problems in environments of abundance – they solve problems someone will pay them to fix. Nonprofit entities have no such luxury.
This leads us to the third principle of the prioritization matrix, which is that unlike for profit organizations, the most successful nonprofit nonprofits (as Kevin Barenblat of Fast Forward points out) “commit first to reaching an underserved population, which often includes higher acquisition costs and lower lifetime value. This unwavering focus on an underserved market segment, even when there are others who could benefit from the nonprofit’s programs, drives all aspects of the organization’s strategy.” Instead of seeking out attractive markets, as a for profit would, they look for unattractive markets.
A final dimension in the prioritization matrix is how effectively your nonprofit can tackle the problem, or what your competitive advantages are, to borrow a term from strategy. Nonprofits do have advantages that are not available to for-profit entities. One of these are that you can leverage the capabilities and resources of other entities, amplifying the good that can be done by any one of you.
Consider NetHope, a nonprofit whose mission is to leverage the ability of nonprofits to use technology in the pursuit of their missions. NetHope is a platform of sorts, connecting a community of nonprofits to a community of for profit organizations in the technological center. Their joint efforts create a formidable advantage, with the nonprofits benefiting from technological expertise they would never have been able to achieve on their own, while the for profit participants gain the benefits of being associated with good causes, networking with other top technology firms and exposure to cutting-edge situations they may never have encountered if they stuck to problems paying customers asked them to solve.
Another example is the Crisis Text Line, which provides free text-messaging crisis intervention 24 hours a day. It is a free service, staffed by unpaid counselors (supervised by paid staff). The texts themselves are free because Verizon, Sprint, T-Mobile and AT&T waive charges for messages, and also do not put these texts on billing records. As an article about the organization reported, the service is demonstrating the value of having a single national text-based hotline for crisis intervention that cuts across issue areas and geographies. This would never be possible in a for profit framework, and has proved to be a literal lifeline to people struggling with mental health issues, particularly as the pandemic has dragged on.
By juxtaposing these elements – clarity of and fit with mission, resource munificence, advantages and customer segment being targeted – we can begin to sort out a path to clarity and prioritization for a nonprofit, or other mission-centered organization.
|Munificent resources||Scarce Resources|
Segment can be served by others
Underserved without alternatives
Segment can be served by others
Underserved without alternatives
|Great mission fit||Strong advantages||
1-Compete to win
5-Support the best alternative
6-Subsidize as possible
|4-Build strength or exit||7-Divest systematically||
|Poor mission fit||10-Divest systematically||
The matrix suggests a way of sorting proposed activities into different decision categories. Category 1 is a good candidate to form the core part of an offering. The fit with the mission is great, there are resources to be had and because the focal nonprofit has advantages, the goal is to become one of the top providers for the selected constituency. Category 2 is an opportunity to develop and penetrate a new segment of customers. Categories 3, 7, 9 and 10 are all candidates for disengagement, as they either don’t fit the mission, can’t be addressed effectively by the focal organization or could be transferred to other providers. Category 4’s fate will depend on whether you believe you can build capability and that it will be worth it.
Categories 5 and 8 represent cases where, because the resources required are hard to capture, a nonprofit can either cede ground to another alternative provider or work collaboratively, as we saw in the case of the Crisis Text Line. Absent its partnership strategy, it would have been inconceivable that it could have built a nationwide 24/7 text hotline without a tremendous investment of resources.
Harlem Children’s Zone: An illustrative case study
Let’s walk through the transformation of a specific nonprofit organization that has led to demonstrable, impressive results with significant increased focus.
It starts almost accidentally, with a young founder observing that many school-aged young people were on the streets instead of being in school. He was Richard L. Murphy, an advocate for youth who eventually became the New York City Commissioner for Youth. He founded Rheedlen Centers for Families and Children in 1970 (the name came from a combination of the names of two favorite aunts). His goal at the time was to help truants stay in school. As he described to the New York Times:
”I was a fill-in social worker during the Lindsay administration. One day, I ran into this kid in a Woolworth’s at 10 A.M. I asked him why he wasn’t in school. He said he didn’t have school that day, that it was a special day off. Same place, next week, he was there. He had a slightly different story. I couldn’t believe this kid wasn’t in school. I got involved. I followed the kid, went to his home. That was the beginning.”
By the late 80’s the charity had a plethora of programs – a family-support network, a homelessness prevention program, a senior center and a whole host of different programs dealing with troubled kids at various stages in their lives.
This began to change when Geoffrey Canada became President of the organization in 1990. Canada, born and raised in the Bronx to a mother who was determined that he receive a solid education, eventually received a scholarship and attended Bowdoin College. Upon his return to his childhood neighborhood, he was shocked that the harsh conditions he had grown up in (chronicled in his memoir Fist, Stick, Knife, Gun: A Personal History of Violence) were still so prevalent. As he said to PBS some years later,
“If you happen to grow up like I did, and you went to a school that failed 70 to 80 percent of its kids, and you go back 50 years later, and see the same failure rate, you say to yourself, how could this be?”
That’s when his work as a child advocate began. In 1983 he joined Rheedlen. He became President of the organization in 1990. At the time, as a New York Times article described, “The organization had an annual budget of $3 million, which it spent on a predictable array of services in Upper Manhattan: after-school programs, truancy prevention, anti-violence training for teenagers.” The programs were successful – so successful, in fact, that demand outstripped supply, and Canada had to institute a waiting list. That proved pivotal in his thinking.
As the article recounts, “Sure, the 500 children who were lucky enough to be participating in one of his programs were getting help, but why those 500 and not the 500 on the waiting list? Or why not another 500 altogether? For that matter, why 500 and not 5,000? If all he was doing was picking some kids to save and letting the rest fail, what was the point?” He joined with other nonprofit leaders with similar missions in a regular discussion group and found that everyone was facing the same depressing reality: some children indeed benefitted, but for the majority, nothing changed – they remained in poverty, fell behind in school and were cut off from opportunities.
Re-Defining the mission and divesting activities without a fit
In 2002, Canada began an effort that would transform the charity and sharpen its focus. The agency was renamed the Harlem Children’s Zone (HCZ) and adopted its original mission to a clear statement of impact: that 3,000 children, ages 0 to 18 living in the zone, should have demographic and achievement profiles consistent with those found in an average US middle-class community. This clarity of focus led the organization to shift resources out of programs that were not aligned with that specific mission to serve children, such as the homelessness prevention program, and invest in those that were, such as a Head Start program and a charter elementary school.
Its Senior Center, for instance, given the re-framing of the mission, no longer fit, although HCZ had run it effectively for years. This in effect put that operation in cell 5, and HCZ handed the management of the center to another agency.
Serving an under-served population
Harlem Children’s Zone embodies the ethos of focusing on segments others neglect. It proudly boasts an 88% “market penetration” of potential recipients of its services by the children in the Zone. Canada is incredibly specific about the children he regards as “his.” As he said to a reporter, after interviewing a prospective applicant for his alma mater, Bowdoin College, ”He comes from a family, they’ve got it together, his parents are both educators. That’s not us. We want those other kids, the ones who don’t have two parents, whose parents haven’t gone to college, who haven’t got a chance statistically of making it.”
When a class of applicants for one of his programs looked statistically as though it was composed of more promising students, he encouraged his staff to do whatever it takes to get the less promising or more disadvantaged to enroll. If it took free movie tickets to encourage parents to sign their kids up, so be it.
Choosing not to get involved in programs where HCZ doesn’t have an advantage
Canada’s approach to poverty is not sentimental. As he told the Times, when he considers any given poor family living in the Harlem Children’s Zone, he divides their problems up in his mind into the ones he needs to solve and the ones he doesn’t need to solve. The ones he needs to solve are the ones that are keeping the child from succeeding in school. Everything else, he has decided, he can leave alone. ”Do we think that it would be better for our parents to be married?” he said, tilting back in his chair. ”Absolutely. Why? Because two-parent families have more income. Children tend to do better when they have two parents in the house.”
In fact, he knows that the great majority of births in Harlem are to single mothers and that most of the parents whose children he serves are unmarried. ”But what ability do we have to make an impact on that?” he asked. ”None. Right? If we tried to do that, we’d spend all our time just doing that.”
Canada admitted that he is engaged in a kind of triage. He described an imaginary Harlem parent. ”You can be 20 years old, with a job that doesn’t pay you enough money to survive on,” he said. ”You’re underemployed. You’ve got a kid. The kid’s not doing well in school. You’ve got no place for the kid to be after school. Well, we’ll provide services for that child. But we’re not going to solve the problem of you being underemployed.”
Today, the Harlem Children’s Zone boasts impressive numbers. A 97% college acceptance rate for its students. 22,500 children and adults served annually. Revenues of over $161 million. And a promising role model as a vehicle for ending intergenerational poverty.
Not bad for an organization that started out at a Woolworth’s lunch counter.
A good starting point is to begin with a conversation about impact. If your mission-driven organization were wildly successful, how would we know? Who would be helped? Then put together a list of the programs you are currently supporting. Are they serving an unserved but important segment? Are resources to support the activity readily available? Are you really good at offering the solution? As you work your way through these questions, it can become far more clear what your top-tier programs should be, and which could perhaps be addressed in another way. It’s well worth an investment of a few hours’ of your strategic thinking time.
If this intrigues you, get in touch. I can point you to great resources for helping people sort out their strategies, whether it’s to make money or save the world!
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