Nonprofit organizations are increasingly challenged today. In our town, a wonderful social service nonprofit closed its doors recently after many years of growth. Part of the problem was reduced funding from some of its main sources like the United Way; but the larger problem was a loss of focus.
The organization made a number of seemingly logical growth moves over the years adding, one at a time, programs that served at-risk youth, the mentally ill, the homeless, seniors, the disabled and a number of other groups. Often this involved a merger with other social service organizations. In each case, the leadership felt that there would be economies of scale that would reduce costs and improve service. In the end, just the opposite happened. The organization was unable to adapt to changing conditions and hundreds of workers were laid off when it closed.
And then something surprising happened. Most of the programs found new homes with organizations that focused on just one of these groups. Some of the workers moved with their clients to the new organizations. The organization ended but the work went on.
For those of us doing strategy work in both the profit and the nonprofit sectors, there is a lesson here. Growth for its own sake is not a strategy. In this case, the organization lost its sense of purpose. It’s mission became unfocused. As a result, it was not sustainable. All planning needs to begin with the questions: 1)” Whom do we serve?” and 2) “How do we intend to create value for those stakeholders?”. To be successful, an organization needs to be very clear about its purpose and to avoid being distracted by opportunities that lie outside that purpose. — Al Blixt
