With nearly 50,000 nonprofits in Michigan and charitable giving falling 11% in 2009, competition for funding is prickly out there. Michael Tyson, president and CEO of Nonprofit Enterprise at Work (NEW), suggests these organizations should unify and share resources in order to meet their double bottom lines of money and mission.
Post 2: Defining the Successful Nonprofit
Posted By: Michael Tyson
Posted: 2/25/2011
In today's world where success is so often defined by how much money one earns, whether as an individual or as an organization, how do you define success when your ultimate goal is not earning a profit? What does that kind of success look like?
Speaking in terms of NEW, success is defined by (1) Our ability to impact our customers, in terms of our mission to help nonprofits make a difference; (2) Our ability to earn revenue to support that mission; and (3) Our ability to strike the appropriate balance of those two things which allows us to attract the contributions that allow us to keep our fees affordable for the nonprofits we serve – in short, helping nonprofits do more with less!
Success, as defined for the nonprofit, poses challenges in a world where value is determined by one’s "bottom line." Nonprofits must heed the "double bottom line" not only of money, but also of mission. Are we as the nonprofit meeting what we set out to do? Have we lost sight of it? Are we on the right track? And how is all of this measured, anyway, if it's even objectively measurable? Do arts and culture nonprofits define success in terms of how many patrons they have, how many shows are put on, how much music is played, or how much artwork is on display? Do human services nonprofits define success in terms of how many people are served, or how well they are served regardless of number? These questions are not posed to make light of the missions of nonprofits, but rather to try to point out the difficulty of defining success for nonprofits in terms of a profit-driven culture.
Successful nonprofits have found ways to meet the double bottom lines of money and mission. They have stayed true to their mission over the course of time, or have been able to modify it to meet the needs of a changing society. They have successfully managed their financial resources. They have a history of strong leadership, well-trained board members who understand the mission of the organization, and of a strong but flexible infrastructure that can bend – but not break – during difficult times.
Those who fund the nonprofit organization can sometimes define success for the nonprofit. In speaking of donors, success for the nonprofit may be defined in terms of whether they believe their dollars have been used effectively. Has the outcome the donor hoped for, which hopefully resembles the mission of the nonprofit, been achieved? Was there a specific purpose intended for their donation, and was that purpose met? In terms of grants received by a nonprofit, success would likely be defined in allocating the grant dollars to achieve the purpose and outcome in the grant proposal, which must often be reported back to the granting body.
There are organizations that recommend and rate nonprofits based on a variety of criteria. Some may view these organizations as defining a nonprofit's success. Charity Navigator, GuideStar, and the American Institute of Philanthropy are a few. Crain's Detroit gives an annual award for the Best Managed Nonprofit in the Metro Detroit area. These are certainly helpful to philanthropists, corporations, and individuals when determining which charitable nonprofit to which they'd like to contribute, but they do not necessarily define whether a nonprofit is successful or not because a nonprofit could still be meeting its mission and not be recognized by any of these organizations. To provide a list of successful nonprofits in Detroit would be an exhaustive task, because success in the nonprofit world can be nebulous! So I would like to approach it from a different point of view.
In soliciting input from my colleagues at NEW for this blog, NEW's Diana Kern formulated the following questions on defining success for nonprofits. Should success be measured by:
- Mission accomplishment based on outcomes?
- A growing budget every year instead of a shrinking budget?
- A magic number for overhead and fundraising percentages versus money spent on programs and services?
I invite you, the reader, to post your feedback to these questions! How do you define success?
Next post: The Nonprofit Utopia