Are You Slowly Going out of Business?

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How strong and effective is your organization? How well do you cope with demographic and economic change? How effectively do you respond to societal and technological changes, and government challenges? Here’s the bottom-line question: How well does your organization adapt? What’s your adaptive capacity? Or are you slowly going out of business?

Too many nonprofit organizations (NGOs) trade upon the presumed value of their missions and the bold, implicit statement that “we do good.” Indeed, most nonprofits do good work for their communities. But to continue such work and flourish, nonprofits have much more to do.

For example, nonprofits must better understand their constituents and create lasting value for them. In a sense, your constituents—your community, your donors and volunteers, the people you serve—are your shareholders. The sense of entitlement won’t work anymore. Inadequate management and weak governance threatens credibility more and more. And the transactional nature of fundraising—and the poor understanding of what fund development really means—threatens organizational health.

Fund development is more than a set of strategies and techniques designed to get quick gifts. Yet too many organizations value short-term, bottom-line contributions over the long-term returns made possible by building relationships. Boards focus on the cost to raise the charitable dollar. Development professionals spend lots of time pursuing the best direct-mail letter, the right special event, and the newest phone-a-thon tactic. But all of this doesn’t get you very far. This short-term approach is necessary, but not sufficient to ensure your organization’s health. Instead, an organization moving full speed ahead into the next millennium will need to develop four key relationships:

  1. Your internal relationship creates the holistic infrastructure that produces a healthy enterprise. Your internal relationships provide the foundation for all your work, allowing you to develop the other three relationships. This means agreeing on shared values and creating a corporate culture and systems that reflect those values. Ensuring individual and team learning. Encouraging dialogue and shared decision-making. Rewarding critical thinking. Welcoming pluralism. Building adaptive capacity. And, accepting uncertainty and complexity.
  2. Your relationship with the community ensures your organization’s continued relevance and clarifies its position within the community. Nurture this relationship through ongoing strategic planning and implementation. Learn while doing. This means identifying and responding to community need. Effectively collaborating to meet community needs and eliminating redundant services and organizations. Regularly testing your mission.
  3. Your relationship with constituents develops and strengthens connections with individuals and groups to produce loyalty. Effective relationship building is critical to any effective organization. Focus on things like identifying and getting to the interests and disinterests, motivations and aspirations of your constituents. Find the most appropriate and effective ways to communicate with them and cultivate the relationship. Engage diverse constituencies more fully with your cause by creating extraordinary experiences for them.
  4. Your relationship with volunteers enables them to take meaningful action on your behalf. Volunteers expect to be adequately supported in their work with you. I call this enabling. See my previous columns on this topic, such as this one.

Make no mistake. The survival of your organization depends on developing these four relationships. Together, these relationships can produce more philanthropic dollars. Together, these relationships make a healthy organization. The most successful organizations recognize that each relationship is a contributor to and a beneficiary of the other relationships. These organizations know that the four relationships interrelate to form one interdependent system, each relationship adding value to the others.

The reward is more than survival. With the four relationships in place, an organization can do everything better, including fund development. Without these relationships, nothing will be done well enough.

Excerpted from Strategic Fund Development: Building Profitable Relationships That Last (3rd edition), by Simone P. Joyaux. John Wiley & Sons, 2011.

  • Colette Mandin

    Thank you for wading into this challenging conversation. In an Imagine Canada Sector Monitor report (Feb. 2012), one quarter of respondents reported they believe their organization is at risk. Demand for services continues to increase putting more organizations in distress. While ‘doing good’ can bolster your organization for a while, it is the relationships the organization forges that help keep it afloat.

  • Renee McGivern

    Thanks, Simone!

    Many nonprofit leaders will swear that they are doing well with all four of these. Yet, they could be operating in a county with two million residents and have only 1,000 individual donors. Or a town with 10,000 residents and only 60 donors. These often are the organizations who have relied heavily on government revenue streams, or new organizations who are failing to tell their new story.

    Too often, nonprofits are “engaged” with insiders; they’re talking and contributing among themselves. They spend little time or money on consistent communication strategies to draw in individual citizens to help solve that community’s problems with them. Unless a nonprofit’s cause is highly specialized, e.g. Celiac’s Disease research, the organization should literally count the number of individual donors they have and divide that by the number of households that are in the community, and then evaluate how well they’re really doing in relationship-building.

  • Michelle Nusum

    Well done! This critical issue is often under appreciated by boards and executive leadership. Colette and Renee, I couldn’t agree with you more!

  • Saras

    Absolutely. I think your first point about the ‘internal relationship’ does not get enough weight. It reminds me of something we should do better with our High/Medium/Low performers. High performers in the organization often get the least attention and most work (because they’re doing what they should) while low performers often get the most coaching and face time with organizational leaders. Investing correctly in the right people can help increase the leadership pipeline and loyalty of your organization. Additionally, I think there is something to the changing landscape of social justice and nonprofits. As evidenced by the recently gone viral video of ‘Kony 2012’, there is a young generation of people who affect social change by the click of a button. This will be the ‘new normal’ as a younger generation takes over nonprofits. Organizations who know how to work with the changes that come with technology and sophisticated methods of advocacy will thrive in the years to come.

  • Simone Joyaux

    Glad that the column is resonating. I’ve been writing about this since my first book, Strategic Fund Development: Building Profitable Relationships That Last, published in 1997. In March 2011, John Wiley & Sons published the third edition. I rant and rave – and speak calmly, too! – about all four relationships.

    I’m very interested in the internal relationship…what’s happening inside the organization. I describe things like values, participatory decision-making, conversation not discussion (that’s part of learning organization theory), systems thinking, and learning organization theory. I also talk about the art of leadership and the concept of fundraisers as organizational development specialists. To me, all this is part of the internal relationship.

    Read Strategic Fund Development, 3rd edition for lots and lots of information and examples.