Small can be beautiful, but stagnation can be deadly. Growth, wisely planned, can be energizing. Now may be a good time for your nonprofit to consider “scaling up.”
It takes guts and chutzpah, of course. The end game: your programs have greater impact, your services reach a larger public, you bring an important message to a bigger audience, and you make a difference in the world beyond the one you’ve made to date. Isn’t that what it’s all about?
This series shares five approaches to scaling; guides you in laying the groundwork for a scaling process; proposes the tough questions that you should ask and answer; and lays out leadership responsibilities for scaling your nonprofit.
Five Ways to Grow
Here are five approaches to consider to “scale up” your nonprofit:
Grow your geographic footprint: bring your program or service to an additional community, a new region or another state, replicating your impact geographically.
Expand your local audience: expand existing programs or add new programs in your current location or region – perhaps by adding staff or facilities – to serve more people in need or to serve an additional audience or population.
Deepen current relationships: offer more to those you already serve, adding additional services to meet unmet needs.
Extend yourself through partnerships: by license or by contract, provide your unique program or service through partners in other locations.
Merge or acquire: byjoin forces with a similar or complementary nonprofit by acquisition and integration, or by dissolving to form an entirely new entity.
Answer Tough Questions
Answer these questions affirmatively to know you are ready to scale up your nonprofit:
- Is there a demand for our programs or services locally, regionally, nationally, internationally that is not being met…or met as effectively as possible?
- Does our mission and our vision encourage or limit us in our ambitions?
- Does our nonprofit have capacity or resources (leadership, staff, facilities, finances); and if not, do we have the talent, know-how and reach to secure them?
Answers shouldn’t come from gut feeling. Use research to build your case. Here are sources to consult:
- Data that evidences demand: what do your numbers say?
- Surveys and studies: what do published numbers say?
- Interviews with practitioners, funders, stakeholders: what do experts say?
- Competitive landscape analysis: are others better positioned or can we fill a gap?
Note: Even when demand is high and mission is fulfilled, scaling up can run into trouble. Several prominent nonprofits have collapsed or scaled back in recent years because they grew beyond their ability to sustain their larger financial obligations. Poor planning, over-commitment of resources, major funding uncertainties, lax management, poor governance and absent regulation all contributed.
Select a Scaling Strategy
Once you have determined that there is a need, and that your nonprofit is best positioned to meet that need, the next step is to select the right scaling strategy.
Glean wisdom from peers: how have others done it? Contact several peer organizations around the region or country that have scaled similarly in recent years. Ask them to share their chosen strategy, what worked well, and any obstacles to avoid. Then, weigh the scaling options you are considering against several criteria, such as:
- Mission alignment
- Projected growth rate
- Projected clients served
- Ability to control program quality
- Financial opportunity
- Financial risk
- Financial sustainability
Whether you use a 1-5 Likert scale or some other method, rank the options and debate them as a team. Then, select a strategy that affords the greatest potential for mission impact weighed against what you consider a reasonable amount of risk.
Make the Case
Make the case for your nonprofit’s growth by writing a business plan, just as a for-profit business would do. Address these key components to sweat the details:
- Statement of Need: What’s the challenge or opportunity you propose to address? A detailed market analysis with current demographics should drive your case.
- Program Overview: Which specific programs and services will you offer? Describe your approach to scaling to meet the needs you’ve identified.
- Management & Staffing: How many employees, and what titles, will it take? Use an organizational chart to propose staffing and structure.
- Role of the Board: Is there a governance role? Let your board know what you expect of them individually and collectively.
- Financing & Fundraising: What will scaling up cost? What will be required for financial sustainability at scale? Project a multi-year budget along with a detailed plan for securing the resources (fundraising and/or financing).
- Operating & Marketing: How will it actually work? Lay out the day-to-day operating implications of enlarged scale, and the ways your nonprofit will market to build an audience for its programs and services.
- Risk Analysis: Especially for your board and senior management, identify the risks associated with disappointment and even failure, and the ways your nonprofit will correct and recover.
- Key Performance Indicators: Consider the way that you will measure your success and indicate what measurement tools you’ll use.
This series of five eblasts on “scaling” concludes with advice to nonprofit leaders, both professional and voluntary.
A note to the CEO: you lead the charge to scale up. The CEO makes the case for growth, identifying and embracing opportunity. In collaboration with other senior executives (CFO, COO, CPO, CDO…) the CEO develops the business plan. The CEO presents the plan to board and staff, and cultivates financial, government and community support to realize it.
- Some tips: 1) Have a respected board member review the draft business plan for scaling and provide an introduction to the full board. 2) Ask a favorite foundation program officer to read a draft to test its marketability with funders. 3) Identify community champions for your scaled-up programs and services to sow the seeds for success.
A note to the board: Board leaders ask tough questions to assure themselves and others of the scaling plan’s wisdom. The full board endorses the plan and works with the CEO to court support from funders, community leaders, and elected officials if public funding or regulation is at stake.
- A tips: With the CEO, make 2:1 visits with select board members who may be contrarians, prospective funders, and community and government stakeholders to “pre-sell” the business plan for scaling.
A note to both: A communications plan with talking points for board and executive leadership is useful for sharing a concise and unified message to announce you are scaling up!