“Organizational turnaround and the closing of an organization are the least written about areas of thought and research relating to the nonprofit lifecycle, even though they are the driving force behind what occurs in the other phases of the lifecycle,” say Nonprofit Capacity Building authors, Brothers and Sherman.
If you’ve landed on our home page this week, you know we’re featuring an important read about change management through the lens of nonprofit lifecycles. Why is it essential to know where you land on the nonprofit lifecycle continuum? The authors, Brothers and Sherman, argue that nonprofits can make better decisions and manage change more efficiently if it understands the implications of operating within a particular phase.
While we don’t know why the latter half of the lifecycle is the least common of areas debated in nonprofit lifecycle research, we do know no one wants to be in the middle of a turn-around or closing—they’re exhausting not to mention emotional for everyone involved. Perhaps that’s the reason why this passage from the mature phase to the decline phase captures so little attention.
So, in an effort to boost the minority opinion, I asked Brothers and Sherman about the “decline phase” of a nonprofit lifecycle as it relates to long-standing organizations and the economy.
JB & AS: Growth for growth’s sake is a common error, and an understandable one. In the for-profit sector, there is a principle that the company that isn’t growing is by definition declining. Too often this maxim is misapplied in the nonprofit sector, where competition and profit certainly have roles to play, but differently than in the private sector. We can never lose sight of the fact that achieving mission is our bottom line. In fairness, funding for nonprofits can be capricious, unpredictable and irrational. So there is some logic in pursuing funds opportunistically. But that’s not really a sustainable path. Mature or well-established organizations that grow without careful attention to strategy or desired impact increase their risk of decline.
JB & AS: We think most would agree the recession has exposed or exacerbated flaws in nonprofit business models. We hear a lot about how the greatest challenge nonprofits have faced is a decline in giving. Interestingly, the number of nonprofits that have gone “out of business” has been far smaller than what was predicted in 2008-2009. Just as it is really hard for nonprofits to find financial sustainability, it also appears to be really hard for the market to “weed out” less effective or weaker organizations entirely. The book discusses when organizations hit decline and the different ways they can enter it. This, if using lifecycle thought, can be discussed as the arc of the lifecycle.
Ask yourself if your nonprofit is on the path of growth for growth’s sake or attention to strategy and desired impact on your mission.
CausePlanet members: Don’t forget to register for our next live author interview with Kari Dunn Saratovsky, coauthor of Cause for Change. We’ll discuss how Millennial engagement should be at the forefront of your fundraising plans as well as a primary consideration for your organizational culture. Bring your questions and join us on your computer or mobile device on Wednesday, September 25 at 11 a.m. CST.