I was able to get away for a couple of weeks this past month for some R & R, which included a short trip to Sante Fe with my wife, Carol, and a five-day bike tour with friends through Utah and Western Colorado. This much-needed downtime cleared my head and re-energized me to do better for my team members, clients and the nonprofit community.
I ran across a book, “Nonprofit Lifecycles,” by Susan Kenny Stevens, who has served as an organization development consultant, Board member and CEO for nonprofits. She does a masterful job of relating growth-stage theory to nonprofit organizations. Growth-stage or lifecycle theory has been around for a long time but is more often discussed and used in the context of small- to mid-size businesses. She outlines seven lifecycle stages that are clearly definable for nonprofits:
Each stage presents its own set of predictable challenges. For example, the most dynamic stage is growth, the transition between startup and maturity, which is characterized by the mission and programs having taken hold in the marketplace, but where service demand exceeds the organization’s structural and resource capabilities. Typical challenges include: too much to do, too little time, developing Board ownership, creating strategic focus, developing and identifying distinctive competence, beginning to formalize organizational structure, diversifying revenues and tracking financial results. To achieve and build capacity at each stage requires the complete balancing and alignment of the nonprofit’s programs, management, governance, resources and systems. Some semblance of this equilibrium is necessary for the organization to move onto the next stage.
Due to the fact that capacity is not balanced, not all startups reach the growth stage and not all growth-stage organizations reach maturity. In building our business, having used the concept before in a consulting capacity, we consciously use the growth-stage model to target the kinds of nonprofits we want as clients. They fall between startup and maturity on the spectrum. Financial management often does not have a high priority for startup and growth-stage organization with poor internal control, inadequate systems and under-qualified staff, which we see as a business opportunity. We help the organization achieve capacity balance by providing financial and systems expertise at the right time. For startups and early growth-stage organizations, providing outsourced accounting services and basic financial reporting at a professional level fulfills a vital resource component of capacity and helps the CEO focus on the mission, programs and fund raising. For later growth-stage organizations on the road to maturity we may continue to provide accounting services but work on a collaborative basis with an internal bookkeeper or administrative specialist. These organizations also require more sophisticated processes and systems, thus an opportunity to provide more robust permanent financial management software and consulting services.
Reaching maturity is a major milestone in an organization’s lifecycle that presents a whole new set of challenges. The key characteristic is professionalization of functions with trained specialists taking on key roles. The organization becomes more important than any single individual. It is not unusual for the “founder” to not make the transition along with some of the early staff. In terms of our role we consider helping nonprofit’s getting their financial house in order earlier than later puts them ahead of the game. We happily take on a more consultative and maintenance role.
I recommend this book to all nonprofit executives and managers, regardless if they have been previously exposed to the growth-state capacity model.