A Nonprofit Tale—how to write a better ending

Joan M. Renner, CPA, CGMA, Director 501(c)(fit!)

Once there was a little nonprofit.  Its founding Board was super engaged and passionate.  The Executive Director worked hard to do more with less, squeezing every dollar to put the most toward the mission.  Everyone shared the same style.  They were one big happy family.

“We’re doing great”, the leaders said, “but we could do more if we were bigger.  We need to attract more resources to expand our programs.”  So the little nonprofit grew.  They hired more people, they raised more money and got more grants.  They doubled, and then tripled in size.  The Executive Director worked hard, did even more with less, and the community praised her accomplishments.

But being bigger was not as easy as it had seemed.  Cash flow was tight.  Bills mounted.  Donors wanted more accountability, grantors had more requirements to follow and employees viewed their duties as more of a job than an adventure.  The informal systems and procedures that worked when the nonprofit was little, didn’t hold up under the higher volume of participants and employees.

One day, the grant auditors arrived and found a number of compliance issues.  Worried about program quality and grant funding, some of the newer Board members demanded improved performance and stricter controls.  “We’re all doing the best we can”, the Executive Director complained.  We can’t do any more with less.  Two camps formed; the founding Board members who felt criticized, and the newer ones who wanted more organization.  The once happy family members became resentful and accused one another of being difficult and unreasonable.  It was a painful time.

There are two endings to this story.  In one version, the conflict alienates the newer Board members, the nonprofit never evolves and the once-little nonprofit dwindles away.

In a second version, the once-little nonprofit makes changes to address the higher expectations and thrives, but only after losing the passion and support of its founders who, after many years of hard work, left feeling unappreciated.

What about the Executive Director, you ask?  Unfortunately, in both versions of this story, she is out of a job, either because the organization disappeared, or because she left with the founders.

What can we learn?

If you recognize some of these emotions and events, you’re not alone.  This unfortunate dynamic happens in nonprofits every day.  Karl Mathiasen, III wrote about it in Board Passages:  Three Key Stages in a Nonprofit Board’s Life Cycle.  Mathiasen described three stages of Board development; organizing, governing and institutional.  Growing pains are common when a nonprofit begins to move from the organizing or founding stage, to the more formal governing stage.  It’s sad that more people don’t know about this.

Write a better ending for your nonprofit’s growth story.  Now that you know that this is a thing, don’t make it personal.  Approach your nonprofit’s growth as a transition, with a greater awareness and understanding of the dynamics of growth.  Neither side succeeds alone.

Don’t lose your passion for your mission.  Making your policies and procedures more formal does not mean that your original founding-stage passion is any less important.  Strong nonprofits balance inspiration and mission-related impact with today’s expectations for accountability and sustainability.

Look for ways to assign value to everyone’s strengths and provide support for weaknesses.  Can you team up someone who is a great community connector or a great program person with someone who is good at compliance matters? 

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