“Spiral Stairs in Milanese Building” by Michelle Ursino

Editors’ Note: This article is adapted from a new book by Paul Light entitled Sustaining Nonprofit Performance: The Case for Capacity Building and the Evidence to Support It, published in 2004 by the Brookings Institution Press.

Imagine a nonprofit’s life as a journey up and down a development spiral. All organizations would start with a simple idea for some new program or service and then move up the spiral toward greater and greater impact, progressing through five landings, or stops, along the climb: (1) the organic phase of life, in which they struggle to create a presence in their environment; (2) the enterprising phase, in which they seek to expand their size and scope; (3) the intentional phase, in which they become focused more tightly on what they do best; (4) the robust phase, in which they strengthen their organizational infrastructure to hedge against the unexpected; and (5) the reflective phase, in which they address longer-term issues of succession and legacy.

Viewed as a spiral, nonprofit development would be anything but a fixed march ever upward. Many nonprofit would linger at one stage or another, perhaps for long periods, without any guarantee that they would advance. Some organizations would make it up the first flight and remain at the enterprising stage, for example, while others would stay at the reflective landing for what might seem like an eternity. Others might quickly move to the enterprising stage, only to get knocked back by a financial meltdown or executive turnover. Some would make the difficult climb from the enterprising stage to intentionality by focusing their attention on the programs they care about most, while jettisoning and spinning off others. Still others would enhance their capacity to withstand crises and shocks, handle risks, recruit and retain the most talented employees for the long term, and shape the future through their advocacy. And relatively few would reach the reflective stage, by expanding their mission to include broad questions of long-term legacy. Unlike the standard S-shaped life-curve we often use to describe the inevitable confrontation with organizational mortality, the spiral enables a more deeply textured description of how organizations actually live.

Viewed as a spiral, nonprofit development also varies in both direction and speed. Some nonprofits rise quickly through the stages, perhaps because of a large grant or unexpected gift; others move slowly, if at all, from one stage to the next. More important, some nonprofits move down the spiral from time to time, perhaps because of a crisis or shock, a leader’s departure, a change in government or donor priorities, or an investigation. Some would even deliberately jump down the spiral to their organic roots now and again to rethink why they exist, whom they serve, and how they intend to make a difference in the world. Indeed, an important part of being a reflective nonprofit is being acutely aware of the organic history of the organization.

Observing Nonprofits

This image of a development spiral did not spring full-blown from my imagination. It emerged from site visits to 25 high-performing nonprofits identified through a 2001 random-sample survey of 250 members of Grantmakers for Effective Organizations (GEO), the Alliance for Nonprofit Management, and the Association for Research on Nonprofit and Voluntary Action (ARNOVA). Those surveyed were asked to identify high-performing nonprofits for further study. This reputational approach produced a list of more than 450 nonprofits, of which 250 were surveyed, and 25 culled for the site visits discussed below. The site visits covered nine cities—Atlanta, Chicago, Indianapolis, Los Angeles, Minneapolis, New York, San Diego, San Francisco, and Washington, D.C. The site visits began with a trip to Chicago on September 14, 2001, and concluded in March 2003 in Atlanta. The 25 nonprofits were hand-picked to provide a wide range of experience, expertise, size, and geographical representation, and included well-known national, regional, and local organizations.1 They included large organizations and small, young organizations and old, and a wide variety of missions—from AIDS education to international relief—but it is easy to argue that all were achieving significant program impacts. However, at least eight of the 25 were achieving those impacts in spite of significant organizational frustrations, and none was perfect in every way.

According to their responses to my 2001 survey of 250 high-performing nonprofits, which is summarized in Pathways to Nonprofit Excellence, eight of the 25 had budgets under $1 million, seven had budgets from $1 million to $10 million, and 10 had budgets over $10 million. Four of the 25 were both young (seven years old or younger) and small (under $1 million); five were young but larger (over $1 million); four were middle-aged (between seven and 15 years old) and small; two were middle aged and larger; and 10 were older (more than 15 years old) and larger.

The following observations were made after half-to full-day visits with each organization: seven of the 25 high performers did not appear to have a current strategic plan and two more paid little attention to the plan they had; 10 had yet to develop a diversified funding base; 10 were struggling to clarify board and staff responsibilities (no doubt in part because nine did not do any board training); 13 had accounting weaknesses of some kind; 14 did not have clear job descriptions in the files; 14 did not provide disability insurance to their employees; 14 held five or fewer board meetings a year; and 17 did not have a system for measuring outcomes.

The question is not whether nonprofits can achieve program results in spite of organizational weaknesses, budgetary shocks, staff turnover, or even terrorist attacks. Nonprofits make miracles happen every day. Rather, the question is what would help them to move up the developmental spiral toward sustainable high performance. Simply asked, what kinds of capacity building are appropriate and effective in moving up the spiral, and how does their impact vary at different landings along the way?

My research reveals that some forms of capacity building are much more important for moving from the organic to the enterprising stage or for stopping the fall backward, while others are much more appropriate for the climb from intentional to robust. As such, successful capacity building depends in large part on picking the right improvement effort at the right time.

Like most organizations today, nonprofits face an uncertain future. No one knows what might happen to the economy as the federal budget deficit rises, how far Congress might go in tightening accounting and expenditure rules, whether young Americans will ever get into the giving habit, how nonprofits will handle the baby boom retirements, and how many more nonprofits the sector can absorb with a shrinking labor force. And that is just a sampling of the known unknowns.

No matter what happens to the sector as a whole, individual nonprofits can never be quite sure what the future holds. This was certainly the case for the 25 high-performing nonprofits. The Nature Conservancy was about to enter a period of remarkable turbulence following a Washington Post investigation of its management and operating practices; the San Diego Opera was little more than 18 months away from a $10 million bequest from McDonald’s heiress Joan B. Kroc; the Pacific Repertory Theater in Carmel, California, had mailed its annual fundraising appeal only days before the September 11 th attacks and was behind $65,000 by the time the interviews were conducted in November; CARE was about to launch a new branding campaign to change its focus from delivering food to ending global poverty; and Open Hand Chicago was about to merge with two other AIDS nutrition programs