To Grow or Not to Grow? The Key Question for Nonprofits

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May 29

Bailey Disher

To Grow or Not to Grow? The Key Question for Nonprofits

by Bailey Disher


In a room full of nonprofit employees and volunteers at the recent Washington Nonprofit Conference, my colleague Karen Hirsch asked “How many of you are planning to grow your organization in the next few years?” I was surprised to see that half the room did not raise their hand.

Considering the urgent community needs that we are seeing in Seattle, King County, and around the country, it feels like nearly every nonprofit I’ve encountered is outlining future plans to scale up, replicate a program, or grow its capacity to serve the community. Outside of the sector, we are similarly conditioned to believe that if you aren’t growing, you’re dying. However, in the nonprofit sector, growth is not our only option.

We expand, shrink, or stay steady based on two primary factors: community need and revenue.


Community Need
 

Ideally, we listen to our community and plan a long build-up or ramp-down period based on the needs we observe. In real life, this isn’t always possible. Take for example organizations serving refugee communities. The community needs have grown to be bigger and more urgent than anyone could have anticipated in the span of a few years. Many refugee-serving organizations are racing to keep up with the community demand for their services created by today’s geopolitical reality. They have no choice but to grow.


Revenue
 

Another factor in organizational growth (or not) is revenue. Some organizations, regardless of community need, expand or contract based on the availability of revenue. Take grants as an example. I know of too many nonprofits in our region that are living in fear of their “funding cliffs” (when long-term funding ends). Here are some all-too-familiar examples:
 

  • An arts organization lost major corporate funding in 2016. If they are unable to fill the gap with other grants, they will have to shrink the size of their programs.
  • A community-building organization incubates new ideas for the community, but they choose to follow the funding dollars instead of investing in a long-term program model. They shrink and expand programs based on where the funding is available.
  • A human services organization has doubled the number of grants they received in the last year. They are rapidly expanding services based on this success and assume exponential growth will continue. Yet, many of their grants will drop off in a few years (or sooner).
     

In these examples, the organizations are making decisions about shrinking or growing their programs at the whim of available funding, instead of establishing a realistic and proactive revenue strategy that can fuel program strategy and growth. This approach is all too common in our sector. It is not necessarily a bad approach if an organization is intentional in recognizing this is our strategy.

So how do you clarify your strategy for growth (or not), and manage the tension between community need and revenue opportunities?

Set clear organizational goals that are bold, but also rooted in reality.


Managing the Tension: Goal Setting
 

Whether you have a formal strategic plan or a magic-marker roadmap on a flipchart, a strategic organization should not plan for program growth (or not) goals without a first taking an honest look at what is best for the community need and what resources are available. What does this plan look like? Here are some key questions that your goals can address:
 

  • How can we most effectively serve the community in the long term? Who does the community need us to be and how does that align with our mission and vision? Do we need to grow to best serve our community? If we choose not to grow, could we instead refine the program model and improve impact for the people we are currently serving?
  • Do we have the operational capacity to support future growth? In addition to added program costs, within our current staff do we have the leadership, administrative, or fundraising capacity to sustain growth?
  • Are we comfortable with the size of the program shrinking and growing with the availability of funds? Are we comfortable accepting funding without a clear sustainability plan after the funding concludes?
  • How do we think about revenue diversification as a method of securing revenue for growth? Instead of larger grants that have funding cliffs are we open to seeking smaller, more consistent grants? Are we willing to invest in the infrastructure to grow individual donations? Are we willing to look at social enterprise or earned revenue sources?
  • How do we think about saving? Do we prioritize funding for immediate needs or build reserves to fill funding gaps or future community emergencies?
     

Invite your Board and staff to ponder these questions together. The conversation can inform a set of commonly-accepted goals that drive your growth (or not) strategy. Then, check in often. Some or all these goals may evolve every year based on the state of the community, funding landscape, and your organization.  Even if you’re not growing, things are always changing!

Let’s keep this conversation going. We want to hear your questions and ideas about organizational growth and funding cliffs. We're here to connect.



Ready to discuss how we can work together?