Level Up Your Game: Nonprofit Strategy and Sustainability

How about a simple chicken and egg problem? What comes first? Strategy or sustainability? Its pretty clear that you must have an effective strategy to be sustainable as an organization . . . and you must be sustainable in order for strategy to be fully and effectively implemented. What does it mean for an organization to be sustainable? Is it as straightforward as financial security leading to organizational longevity? It turns out its more complex than that.

Adapted from William Moore (Fall 2017) Journal of the Grant Professionals Association, Essential Features of Nonprofit Sustainability: Towards Clarity for Grants Professionals

The National Council on Nonprofits (Nonprofit Sustainability, n.d.) notes

that the term sustainability commonly describes a nonprofit organization

able to sustain itself over the long term, perpetuating its ability to fulfill

its mission. In this context, sustainability is largely focused on finances,

but the National Council on Nonprofits acknowledges the importance of

leadership succession planning, organizational adaptability, and strategic

planning to an organization's longevity.

Sustainability and Resiliency

Zimmerman and Bell (2015) define sustainability as both financial (the

ability to generate resources to meet the needs of the present without

compromising the future) and programmatic (the ability to develop,

mature, and cycle out programs to be responsive to constituencies over

time). They note that the two are not independent of each other; rather,

they intersect and contribute to overall organizational sustainability. The

authors believe that truly resilient organizations recognize and adjust to

environmental changes that may affect their future.

Three Capacities Leading to Sustainability

The TCC Group (York, 2010), in its study of over 700 nonprofits

participating in an assessment of their organizational capacity, found

that sustainability is a function of three capacities: 1) leadership-the

ability to create and sustain a vision, to inspire, model, prioritize and

make decisions, and to provide direction and innovate; 2) adaptability-financial

and program adaptability; and 3) program capacity-adequate

resources to run and deliver programs and services. York's work suggests that

effective senior leadership situated in a learning culture is a significant

contributor to organizational sustainability.

Five Dimensions of Organizational Success

The Public Interest Management Group (PIMG) (Schaffer, 2015)

developed a multidimensional conceptualization of highly successful

nonprofits reflecting the practices associated with sustainability and

success. Schaffer defines organizational success as "performing its

mission-related work effectively ... achieving positive outcomes through its

efforts. It is also operationally stable and well positioned for longevity"

(Schaffer, 2015, pp. 5, 8). Schaffer proposes five dimensions:

• Strategy: a systematic approach describing an organization's future

business activity;

• Culture: the values, beliefs, and shared assumptions as well as

practices by members of the organization;

• Operations: the structure and actions to administer and deliver

services;

• People: the policies and practices to engage staff and volunteers; and
• Business Model: the economics of services and revenue. PIMG's Success

Factor Analysis model has a strong orientation toward efficiency,

performance accountability, and diversity of revenue sources

(Schaffer, 2015).

Great Social Sector Organizations

In their book Forces for Good, Crutchfield and Grant (2008) reported

finding patterns of behavior and practice among high-impact social

sector organizations. The authors note that of the six practices or

patterns of behavior, four are external or outwardly facing and reflect

the belief that great organizations expand their influence and share

their lessons broadly. According to the authors, great social sector

organizations reflect the following six practices (Crutchfield & Grant,

2008, pp. 21-22):

1. Advocate and serve: influence and shape policy as well as provide

high quality services, realizing that serving more and more people

never changes the underlying social problems;

2. Make markets work: operate to create greater leverage of market

forces to generate earned income revenue, create public-private

partnerships, and influence business practices;

3. Inspire volunteers and donors: inspire volunteers and donors to

become evangelists to engage more deeply around the organization's

mission and core values and to expand the network of individuals and

organizations who passionately work to create solutions;

4. Nurture nonprofit networks: high impact social sector organizations

play a leadership role in the sector, building relationships, connecting

individuals and organizations, and collaborating with and helping

other organizations be successful;

5. Master the art of adaptation: highly successful organizations adapt

to the changing priorities, needs, and conditions in their community;

6. Share leadership: distribute leadership throughout their organization

and network, empowering others to lead.

Relevance, Vibrancy, Capitalization

WolfBrown, a consulting organization working with nonprofits,

foundations, and government agencies, argues that nonprofit arts

organizations are much better positioned to achieve long-term

sustainability when they effectively balance three interdependent but

sometimes competing priorities:

• community relevance;
• artistic vibrancy; and
• capitalization.

Brown et al. (2011) observe that community relevance is the primary element of

sustainability, but the extent to which an organization is able to focus

simultaneously on all three elements largely determines the level of success (p.

2). Artistic vibrancy "is the fuel that drives sustainability ... and the lifeblood of

any arts organization" (p. 3). Capitalization and sound fiscal policy are

important elements of sustainability but, the authors note, financial

distress is a symptom of, not a reason for, its lack.

Sustainability requires the consistent execution of specific organizational behaviors and practices

At The Strategy Group (TSG) we define sustainability as an organization's viability

and relevance and its likelihood of successfully achieving its mission.

Sustainability requires the consistent execution of organizational behaviors and

practices that cross many dimensions-some that necessarily occur before others

can be implemented. It can be thought of as a collection of related practices,

behaviors, or features of an organization; the resultant outcome of this collection

is the extent to which mission fulfillment, success, and impact occur. TSG's

sustainability approach poses a set of "essential questions" about the presence

of practices and behaviors within an organization and uses those questions as an

entry point to gaining clarity and understanding of how an organization is

positioned for long-term viability and strategic impact (Moore, 2016).

The Dimensions of Nonprofit Sustainability

A synthesis of seven different models of conceptualizing nonprofit sustainability

revealed 49 specific practices and behaviors related to nonprofit sustainability.

The 49 practices are grouped into eight dimensions:

1. Relevance and Connection to Community: The extent to which an

organization's mission and services are relevant to community

needs, responsive to the cultural and linguistic needs of potential

consumers, and leveraged to maximize impact in the community

through partnerships and collaborations. Connection to the client

or consumer of an organization's services, supports, or programs

is a centrally important practice that not only informs the most appropriate

service mix but also adds the voice of the consumer to strategic planning,

program design, and service delivery.

2. Organizational Adaptability: The organization's responsiveness

and resiliency, both programmatically and financially, to changing

community needs and factors influencing supply and demand of

services. Each model endorses the dimension of adaptability in the

form of flexibility, resiliency, evolution, and innovation. Central to

an organization's adaptability is the tolerance of the organization's

personnel to adjust. Constant change in a chaotic environment can

erode tolerance to make adaptations. Organizations need to allow for

time to make needed adjustments in the face of a rapidly changing

policy and resource environment.

3. Strategic Orientation: The organization's orientation toward strategy

and community impact as reflected in the adoption of board approved

strategic plans. Organizations use tools such as theory of change to

communicate organizational focus and intent, engage in strategic and

operational collaborations and partnerships to expand potential impact,

and recognize that policy and grassroots advocacy is central to mission

success.

4. Leadership: The organization's leadership embodies the mission

and core values of the organization, regularly motivates and

inspires others, manages staff turnover, and is keenly aware of the

accountability to be cost-effective and successful. Leaders strike an

effective balance of inclusive decision-making and decisive action

when facing challenges.

5. Operations: The organization's leaders create clear operational plans

for service delivery with established systems of support for staff,

clear job definitions, and accountabilities for each role. Leaders are

effective at recruiting staff and volunteers to meet organizational

needs, have well-defined internal controls and processes for

operations, and have a passion for developing emerging leaders.

6. Board Governance: The organization's board of directors sets the

strategic direction of the organization, supports leadership, and

creates plans for retaining leaders as well as succession plans.

Interestingly, several model authors noted this dimension but did

not include them per se in their sustainability models. Regardless, as

most successful CEOs acknowledge, the strategic partnership between

the CEO and board chair and key leaders on the board is important in

advancing a vision and strategic direction for an organization. Taking

advantage of the board's expertise and community connections can

significantly improve the chances of strategic success.

7. Financial and Funding: The organization's financial decision making

and fund development are evident in all of the models. Reflecting the

importance of revenue generation and sound financial management,

most models note financial stability and the need to keep capital flowing

to support the mission. Effective fund diversification and the use of

sophisticated financial management practices that inform both operational

and program decisions are essential features of successful nonprofits

(York, p.11).

8. Learning Culture: The organization's cultural expression to keep

learning at the center of strategy and operations is reflected in six

of the eight models. The two models that do not explicitly reference

a learning culture instead focus on organizational features that

highlight adaptability, programmatic vibrancy and innovation, and

authenticity of personnel and their interactions in the community.

In one of those models, culture includes integration of business

practices that ensure efficiency, performance accountability, and

effective operations. Finally, organizational culture centered on

learning and data generation creates a dynamic, innovative, and

authentic workplace where ideas are tested and questions posed

about the quality and value of the work.

Brown, A., Kluger, J., Palmer-Wolf, D., Wolf, T., Mandeles, L., &

Woronkowicz, J. (2011). Is sustainability sustainable? Sounding board:

Perspectives on nonprofit strategies from Wol{Brown, 30. Retrieved

from http:/ /wolfbrown.com/images/soundingboard/ documents/

WB_SoundingBoardv30_ l l l 4_d.pdf

Crutchfield, LR., & Grant, H.M. (2008). Forces for good: The six practices of

high impact nonprofits. San Francisco, CA: John Wiley & Sons.

Moore, W.P. (2016). Dollars and Sense: The Essential Questions o f Nonprofit

Sustainability [PowerPoint slides]. Retrieved from https://www .

grantprofessionals.org/content.asp?admin=Y&contentid=408

National Council on Nonprofits (n.d.). Nonprofit sustainability. Retrieved

from https://v,1v,;rw.councilofnonprofits.org/tools-resources/nonprofitsustainability

Schaffer, S. (2015). Success factors for nonprofit organizations: A new

approach to the development o f thriving mission-driven enterprises.

Seattle, WA: Author.

York, P. (2010). The sustainability formula: How nonprofit organizations

can thrive in the emerging economy. Retrieved from http:/ /vvww.

tccgrp.com/pdf s/SustainabilityFormula.pdf

Zimmerman, S., & Bell, J. (2015 ). The sustainability mindset: Using the

matrix map to make strategic decisions. San Francisco, CA: Jossey-

Bass.

Next Week - Assessing Nonprofit Sustainability