From Start-Up to Scale Up: A Nonprofit Journey
Dec. 21, 2021
Increasing your nonprofit’s sphere of influence is the goal of any nonprofit leader. It’s all in the timing and the skill. Too many nonprofit leaders begin scaling up before evaluating whether their organization is ready to take the leap. The results are often disastrous, and at the very least, the approach is misdirected.
Once you’ve determined your organization is ready for the first steps of scaling up, you should first plan on how to proceed. From our own experience with nonprofits, we have come up with the most common scenarios to guide every nonprofit that wished to expand its sphere of influence. Below are a few of the lessons we learned that can help take your organization from minor to major impact:
Begin with the Revenue. Consider what revenue you need to raise for scaling. Your current funding partners will definitely be on board. But attracting new individuals or government funders can be the single biggest challenge to scaling up. According to Stanford Social Innovation Review, more than 71 percent of respondent nonprofits report difficulty getting a shot at the table with large foundations. On the other hand, these same respondents cited receiving huge grants as the stimulus.
Let Costs Take a Back Seat. There’s a bigger difference between cost-effectiveness and cost-efficiency. It’s the difference between working smarter and not harder. If cost efficiency is described as the cost per unit of service delivered, then cost-effectiveness is viewed as the cost per unit delivered within the context of the reach your sphere of influence will have when you’re scaling up. The lowest-cost option isn’t always what’s important, but rather what carries the sphere of influence further is what counts.
Make your Structure Transparent. Often nonprofits scale up by creating multiple chapters or programs. Most nonprofits embrace a ‘trunk and branch’ arrangement. The ‘trunk of the tree’ is the central office or headquarters, while the ‘branches’ are the offices of operations that receive their directives from the trunk. The functions that occupy different parts of the structure is dependent upon a nonprofit’s activities and the priority those events or activities are given. It’s not uncommon for tensions between the “trunk” and its “branches” to occur. The best way for nonprofits to alleviate these tensions is to be totally transparent about the autonomy given to each ‘branch.’
Never Stop Building Skills, Processes, and Resources. Nonprofit leaders should always be vigilant about building resources, revamping processes, and upskilling when possible. By building resource efforts early and often, it will make scaling up an easier goal to attain. This is absolutely necessary for long-term organizational growth.
Develop a Capital Plan for Growth. As your organization grows, so will your size and your nonprofit’s mission. Nonprofits have to be careful with their investments, mostly due to their IRS designation of 501 (c) (3), meaning their funding generally comes from outside sources. Most nonprofits rely on generous donors or grants for their funding. Because of the reliance on others, some years annual budgets will mean a flush cash flow and others lean. Careful fiscal planning and strategy can help streamline your income year to year.
Since funding from donors and grants can dry up, placing your cash flow at risk, it’s important to have a backup plan. A nonprofit could diversify its cash flow through corporate sponsorships or capital campaigns. Corporate sponsorships build brand awareness, improve customer loyalty, and promote a nonprofit’s reputation. Corporate sponsorships are a relationship with a for-profit business that benefits from a trusted nonprofit, and the nonprofit receives funding. For example, a non-profit daycare needs funding for a new wing of a building, and a for-profit business provides the funding, and in exchange, the new wing would be named after their funder.
Employ Technology Wherever and Whenever Possible.
The use of technology is essential to the process of scaling up. It helps with the communications of your mission, with the delivery of goods and services offered and with advertising of goods and services. Because of tight budgets, the cost of updating technology seems forbidden. On the other hand, amazing results come from investing in the right technology, and can also save your organization money. A few ways to use technology to scale up include:
Digital communication through social media, podcasts, and websites not only gets your message out faster reaching a wide audience, but it also allows for personalization.
Invest in digital security. The exchange of information, as well as funds, should be completed in a trusted environment. It pays to protect your laptops and your nonprofit’s network.
Think data analytics. Assessing data helps your nonprofit strengthen a case for donor or grant funding. It can also be used for targeted fundraising according to gran capacity and interest. Lastly, it leads to a better understanding of the relationship between events and outcomes.
Use technology to focus on eliminating waste, errors, and redundancies. With database technology, data is processed, retrieved, and shared more quickly. Integrating project management, finance and HR data keeps track of operations helps track how much time personnel is spending on tasks so that you can make the decision to outsource or apply more resources to their tasks.
While scaling up is often synonymous with growing an organization or its audience reach, it's worthwhile to know that achieving an ever-expanding sphere of influence is what’s most important.