Tough economy offers perfect time to re-evaluate a nonprofit’s mission
Published in the February 15, 2008 edition of Columbus Business First
Many nonprofits these days are encountering donors who are less willing or less able to provide support. Government support and contracts are harder to obtain or come with less generous terms. Earned income is flat or declining.
The big question is whether these troubles are temporary or symptomatic of a general decline in a community’s need or support for the nonprofit’s purpose?
If it is temporary or cyclical, the nonprofit needs only to survive until the economy turns around. But if the troubles are persistent or structural, the nonprofit will need to change how its raises money, how it spends money, or both.
Determining the true situation is tough because the search can be affected by two burdens that are acute for the nonprofit sector.
One is guilt that the community needs the nonprofit to do more and it must persist regardless of its circumstances.
The other related burden is a reluctance to have faith in the judgments of its donors, clients, and patrons. The cost of these burdens is greatest in times of economic decline, like we are experiencing.
Change is necessary
In contrast, profit-making companies are more willing to accept outsider’s judgments of their value by choosing to be sold, merge, or go out of business. Companies that were around 20 years ago are not the same ones around nowadays.
In the for-profit world we accept that people still have needs but over time they choose to address their needs in different ways.
Communities and the community needs that are addressed by the nonprofit sector are not so different -- the needs still exist, but the community may choose to address the needs in different ways.
Honest look
In times of difficulty, it is essential nonprofits remain open to messages from their supporters that it is necessary to change. While it is always gratifying to hear support for its purpose and what it accomplishes, the nonprofit mustn’t disregard more worrisome messages or push away the friends who send those messages.
This situation is reminiscent of the tragedy of Shakespeare’s King Lear. The king rejected his most loyal daughter, Cordelia, because she spoke the truth and refused to flatter him with unrealistic promises of support.
But it was Lear’s other daughters, flattering him with specious love and loyalty, who tempted him to choose the path that led to his demise. At that point, even Cordelia was helpless to restore him to his former greatness.
These days many nonprofits are facing reductions in support from city and county governments. They are reeling from the United Way’s sharp narrowing of what it will support. Are these budget actions the frank messages of loyal Cordelia? Are others’ urgings to stay the course empty promises that keep us on the road to greater difficulties?
The best course for a nonprofit is to listen to these messages and respond by performing the same research and considering the same options available to for-profit companies.
Market research and surveys are critical reality tests of a non-profit group’s actions and how much the community values it. If the community sees less value, then a nonprofit must purposefully identify changes that boost its value or reduce the level of activity.
At the same time, this research may identify needs that are unmet and which the nonprofit can retool itself to provide. Merging with another nonprofit, dropping a service, or ceasing operations entirely are not actions of disloyalty to mission if the community need is no longer significant or is better met by another nonprofit.
As community needs vary over time, nonprofits needed by the community will also vary.
Ears open
When a nonprofit is facing difficulty in finding enough funding, it is appropriate to seek out other nonprofits that do similar work to see if ceding the work to them or merging will best address the needs of the community at a level the community can afford. If not, no one should feel guilty proclaiming mission fulfilled and shutting down.
When facing such difficulties a well-run nonprofit will keep its ears open to messages of praise and criticism from its friends, and it will use that information to guide objective, reflective research to determine if its troubles are due to the recession or to a structural change in its value to the community.
If King Lear had listened more carefully, the community would have been better off.
Allen J. Proctor was formerly chief financial officer of Harvard University and is the author of Linking Mission to Money(R) Finance for Nonprofit Board Members. Subscribe to his free newsletter at www.proctorconsulting.org.
Copyright 2008. Reprinted with permission, Business First of Columbus Inc.
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