So focused on short-term funding for survival, the nonprofit sector is losing its ability to implement innovative solutions to the world's problems.
"When you're up to your ass in alligators, it is hard to remember that your original intention is to drain the swamp."
That quote, attributed to former Atlanta Police Chief George Napper, pretty well sums up the state of nonprofits in America today. So focused on short-term funding for survival, the nonprofit sector is losing its ability to implement innovative solutions to the world's problems.
Decreased donor giving and cuts in government spending have created a perfect storm that is wreaking financial havoc on the nonprofit sector -- today, 57 percent have three months or less cash on hand.
Chasing money is the name of the game in the nonprofit sector.
Short-term fundraising prowess has trumped the ability to effectively scale innovation as the most important skill set for nonprofit leadership.
When headhunters call me for referrals for executive directors, they tell me, "First and foremost, they've got to be good fundraisers."
Nonprofit leaders know this. Ask what keeps them up at night, and you'll often hear it's the pressure to raise more money. As one nonprofit leader recently told me, "I feel like I'm doing the doggy paddle just to keep my head above water."
It's time for a new model. We need a new sustainable strategy; we need to invest early in long-term public policy that changes the entire system.
Answering one crucial question can begin the shift: "What one piece of legislation or regulation can we change that will completely transform the system so that it dramatically improves the lives of those we serve?" The answer to that question will drive sustainable solutions.
Here's a hypothetical example that illustrates the contrast in the models:
Imagine two innovative social entrepreneur leaders who have developed a successful model to teach students in low-income communities how to start a business -- we'll call them Mr. Fundraiser and Ms. Policychange. Each receives a $500,000 grant to "invest," allowing them to scale their innovative models nationally.
Mr. Fundraiser uses the traditional model, setting a goal of launching 20 new high schools over the next five years. His big questions are: "Who has money?" and "Who knows people who have money?" After five years, Mr. Fundraiser is considered a huge success when he reaches his 20th high school.
But instead of celebrating, Mr. Fundraiser is more stressed than ever. Each of his twenty high school sites cost around $500,000 to operate per year. He must now raise more than $10 million per year just to keep the organization afloat. Fundraising is prioritized over innovation. There's demand across the nation for his model, but he and his staff are too busy raising critical funds to develop new sites.
In addition to raising money, he needs to keep the principals of his current schools happy. Every time a new principal takes over one of his schools he must restart the sales process of gaining their support for his program. He experiences an attrition rate of one or two high schools each year as the leadership changes.
Though he's only meeting 5 percent of the nation's need for his model, Mr. Fundraiser is exhausted with pleasing donors and is looking for a new career.
Now let's compare that with Ms. Policychange. Her organization asks, "What policy might we change that would change the rules to change the system?"
She invests her funding into revising federal regulations by building her own policy team and hiring consultants to help her engage on Capitol Hill. She also trains her regional sites in the skills of advocacy.
After five years, her hard work has changed the rules. She's added "teaching business skills" to the list of requirements in national education regulation. Today, her model is replicated at thousands of high schools across the nation. Her organization serves 60 percent of the nation's need.
Ms. Policychange's role has evolved as well. Instead of working on program delivery and site-by-site growth, her organization now provides consulting and training services to high schools across the country that seek to replicate her successful model.
It is time for the nonprofit sector to change the rules that change the world. It must become the sustainability it seeks from others.
Until there's a shift from scarcity to sustainability, we will never drain the swamp.
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