The Story of The Generator

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The Generator is a high-energy membership organization, which in only four years has become one of the largest in the midwestern city where it is located. It is one of a number of programs there meant to cultivate young people as the city’s next movers and shakers. With a jump-start from the local philanthropic and corporate communities, who recognized that the leadership in the city was graying, it was able to devote most of its energy and staff resources to building a large membership base and launching a number of high profile programs. The goals established in the initial five-year plan were met in just 24 months. The Generator currently has over 1000 members, but only a quarter of them could be called “active.”

The Generator was founded after six months of investigation by a small group of young people who were intrigued with the city-changing potential of the under-40 population. Their exploration focused on several questions:

  • Why is it so hard in this multicultural city to convene a diverse group of young people?
  • Why aren’t young people involved in community organizations?
  • How can we get young people involved in policy-making?
  • Who is responsible for helping young people into leadership channels in this city?

After talking to business and civic leaders, the founding group learned that although there was a widespread desire to tap into the leadership potential of the under-40 population, there was no organization capable of engaging this population and creating leadership on-ramps.

However, four years later, those in and close to the organization acknowledge that there is no common understanding of the mission, even among those who are in the inner circle. Some people see it as a social club and value their involvement for the networking activities and group events. For people who serve on one of the Generator’s committees, the mission is about the work of that committee. Others think of the Generator as a political organization. There is a general sense that these varying perceptions of the mission likely result from the organization’s lack of focus and the fact that it has been trying to be all things to all people.

One explanation proffered for this lack of clarity about mission is that the one of the Generator’s core values is the empowerment of its members. The Generator’s custom is to let people run with ideas, and the board feels that one of the organization’s biggest strengths is the creativity of its members. However, with inspiration flowing over in all directions, there is no overarching focus or authority to frame and guide the organization’s work.

There is also some feeling that the Generator may currently be too oriented to college students, others in the 21 to 25 age bracket, and first-jobbers, making it less appealing to people in their 30s. There is speculation that this is because the majority of the Generator’s members are single, and its activities and style are not attractive to married people with children. Another—and possibly more complex—problem is that it tends to attract newcomers to the city, rather than locals. This could pose challenges for the Generator’s intention to fashion homegrown avenues to political power.

With current assets of $248,000, the Generator’s income has relied on corporation- and foundation-based funding (representing 43 percent and 16 percent of its income, respectively), money raised through special events and fee for service activities (30 percent), and membership dues, which account for only 7 percent of its revenue. The organization is now at the end of a three-year funding cycle with its bread and butter donors, and is working to put another three-year cycle in place.

The executive director does most of the fundraising. Board members—most of whom are under 40 themselves—question their ability to bring in money, considering that at this point in their lives most do not have personal wealth or access to the wealthy. They are wondering about the potential role of a board of advisors—people in the over-40 population who believe in the Generator’s mission and who could help open doors or advise the board on how to “push buttons.”

The Generator’s two-person staff see themselves as serving in a member-support role. As the organization has grown, however, it has become increasingly less clear what this actually means on a day-to-day basis, and if, how, or where the staff should take a leadership role.

The Generator’s success in attracting members has taxed its systems. The Web site and e-mail software are especially problematic. With these two mechanisms not working well, the Generator cannot easily get information to its members. Its e-mail program allows the organization to send e-mails to only 25 people at a time. This system is burdensome to volunteers trying to organize Generator activities, and confusing for those receiving communications from the organization.

Furthermore, the Generator’s database has not kept pace with growing membership numbers. Current systems do not allow staff to collect and report on basic member information easily and consistently. Without this information, it is difficult to tailor programs and communication to meet the needs of members.

The Generator has learned that the key to involvement is getting new members connected and plugged in to an activity shortly after they join. Their experience has shown that if they do not connect personally with members within a short time after they join, they lose them. A welcome meeting connects new members, but effective processes are not in place to connect new members with an activity.

With the numbers growing, what seems to be missing is personal contact—a way for the Generator to get to know its members. Committee chairs have so much to do that it is difficult for them to take on the primary responsibility of personal contact with their members, even though they know that a 10-minute conversation may be all it takes to get someone excited.

The Generator’s board is dedicated, energetic, passionate, motivated, diverse, experienced, and “Type A,” according to the staff and other board members. It is working well from a mechanical perspective, but expectations for board members are not clearly articulated and this could become problematic if left unattended.

Collaboration is an essential part of the Generator’s identity. Almost everything they do involves cooperation with another organization. This strategy, however, has proven to be a double-edged sword. Because of the Generator’s short track record and cloudy sense of identity, many believe that these partnerships sometimes result in less “bang for the buck” than if they had undertaken the project alone. Board members and staff have begun to wonder now about the value of some of their collaborations. They have also noticed that some of the team efforts result in lost fundraising power when they do not achieve sufficient visibility to be able to claim ownership of whatever success was generated by the collaborative project.

Commentary by Paul C. Light

Like many organic nonprofits, the Generator has made it past the anxious first moments of life and now confronts the reality that it might actually survive. The only problem is that it isn’t sure why it should exist, whom it serves, or how to measure its success. It has followed the market to its current location, picking up momentum from its members, but now has to ask how it will advance up the development spiral—if it can advance at all (see “The Spiral of Sustainable Excellence”).

The Generator is a nearly perfect candidate for assumption-based planning, which is a simple technique for both clarifying the assumptions that drive an organization’s theory of change and identifying the vulnerabilities that threaten success. Unfortunately, the Generator can’t do assumption-based planning until it more clearly defines what it wants to do. It has plenty of momentum, but is being blown in all directions with each burst of energy from its members. Tempting though it is to recommend a quick injection of technology, faster e-mails won’t make a difference unless they say something meaningful. This organization desperately needs to ask the core questions of nonprofit existence: Why does it exist? Whom does it serve? And how will it know it is successfully accomplishing what it set out to do?

The Generator doesn’t have to get the answers exactly right—most successful nonprofits never do—but it does have to start asking the questions, and soon. This set of questions presents a perfect way to frame the Generator’s first board retreat, which would be a terrific place to initiate the inquiry.

Commentary by Clara Miller

The Generator’s board and staff should focus first on two pieces of the puzzle: clarifying the mission and creating financial strategies tied to membership. “Building leadership” is different from “having a voice in city policy,” even when they’re related. If the mission is clear, and the board and staff are focused on some basic metrics that track both mission and financial progress, they can build upon the terrific start they have made.
Ideally, the financial model—in this case, membership-driven revenue—has a direct and positive relationship to mission. In other words, if they’re succeeding at membership, they’ll be succeeding at revenue strategy and mission. This is difficult for many nonprofits, but the Generator has the potential for this kind of alignment. For example, if the mission was to “build future leadership by engaging capable young people with the city’s business, institutional, and government leaders,” it would require a different—possibly more exclusive—membership strategy than if it was to “create a civic force to attract, engage, and retain young people in the city,” where numbers would be paramount and strategy would be “y’all come.”

The relationship of mission to revenue strategy demands that the Generator see members as customers—the main buyers of what it has to offer. Pricing (such as membership dues and fees for services), products (e.g. special events, discounts, trips, meetings with key leaders), and investment (capital, or “equity”) in the core business (ranging from computer systems to skilled personnel, space, and new program development) must align with this choice. The Generator should look at its foundation and corporate funders as customers as well, but as a different kind of customer—investors who are helping build the business, not simply using the services. Their grants can be used for investments in building the firepower—the program and capacity infrastructure—and thereby shifting the organization to a financially more self-sustaining path that is supported by members.

A related task for the board is to develop a shared view of what growth/scale looks like, including timing, path to achieving it, key assets, and size ambition. Assuming the Generator’s core business will be tied to membership-related revenue, an average annual membership fee of $200 from all 1,000 members would fund a budget of $200,000—and $250 would exceed it. This may not be the right way to go, but it’s one way the Generator should be thinking about revenue potential, staff growth in relationship to membership growth, and pricing strategies.

Clearly, investment in built capacity that would allow the staff and board to stay in touch with members—and members with each other—is key. However, such an investment should be tied to specific goals related to building participation, providing real value to the customers, and, eventually, turning goodwill into a source of financial as well as moral support. Now, it looks like the key to building the business should be a focus on customer service, and that would be technology, software, training, and possibly personnel.

Finally, market knowledge is mandatory. It is paramount to find out why the 75 percent of “inactive” members are absent, and engage them in helping craft products and services that will draw them. Diversifying the demographics is critical to fulfilling mission and, eventually, to shaping a strong organization.