Breaking the Nonprofit Starvation Cycle

Hello everyone,

I hope your Thanksgiving went well. Ours was fantastic--we had fun with family and friends making life-long memories.

As 2016 winds down, more attention is being paid to fall appeals and the condition of the nonprofit sector, in particular, a phenomenon called the "Nonprofit Starvation Cycle." This was first described by Don Howard and Ann Goggins Gregory in 2009 in the Stanford Social Innovation Journal, a great journal by the way.  With so much attention being paid again to it recently I thought I'd share some thoughts on this important issue.

The Stanford’s Social Innovation Journal described the Nonprofit Starvation Cycle this way: “A vicious cycle is leaving nonprofits so hungry for decent infrastructure that they can barely function as organizations – let alone serve their beneficiaries. The cycle starts with funders’ unrealistic expectations about how much running a nonprofit cost, and results in nonprofits misrepresenting their costs while skimping on vital systems – acts that feed funders’ skewed beliefs. To break the nonprofit starvation cycle, funders must take the lead.”

This is a very important topic of concern for all in the field. The article calls for funders to take the lead. While I totally agree with that, I also think we have to start at a more organic level even than the funder--we have to start with ourselves. We have to take the lead - you, me, the board, staff, etc.  We have to be sure we “get it” internally if we expect our funders to get it externally. 

I talk a lot about the three levels of donor relationship progression:

Primacy – tangible expressions of the cause (first time and smaller repeat givers who have a more primal exposure to your organization, invest in tangible things)

Intimacy – building deeper understandings of why the heart of the organization matters (infrastructure, operational expenses, etc) and leading them to invest in those heart level areas so the tangible items don’t go away

Legacy – helping to educate why it is important that the heart is strong in 50 years so the tangible expressions don’t go away (endowments and planned gifts)

Our charge is to reshape how we teach volunteers and donors to engage with our organizations. To do that, we have to be real about what level our own staff, board and volunteer relationships are in (primacy, intimacy, and legacy). We have to be intentional and actually take time to talk with individuals, not make assumptions. Then we need to meet people where they are and lead them to a deeper place of advocacy for our cause.

If we really want to break the "starvation cycle", we need to answer some pressing questions:

• Are you casting vision about what your destination looks like and the impact you are having?

• Is your organization learning to translate its vision into unified expenses, not mission and non-mission, but ALL mission?  We have to educate the donor on why all expenses we have are critical, down to the last paper clip, to realize our vision and fulfill our mission.

• Are you focused on leading the donor and the volunteer to become advocates for the cause, educating them on how they impact operational expenses and making a promise not to short cut those you serve, but invest in them?

• Are you sharing the truth with your constituents?  The truth of what does it really take for us to provide the value we propose and not be ashamed that we have a desire to pay people well, invest in human capital, and spend money to engage those who care in our mission.  All because those we serve deserve it. 

Just some things for you to ponder this month.

Lastly, I am so thankful that I get to be part of a community of leaders who want to make the world a better place.  The book of Isaiah tells us that when the enemy comes in like a flood, the Spirit of the Lord will raise up a standard against him. You are all part of that standard.  You are all working to curb the impact of our enemy on children, youth, and adults to in some way transform the world around you for what is right.  

Being in this community with you is an honor. For that I am thankful.  

As Christmas and New Year’s comes this year, try to take time to just be.  Reflect on what you are part of and see the impact you have had. Realize that you are in community with others with common passions and desires that galvanize a movement of change.

I sincerely hope and pray that you all have a blessed Christmas and New Year’s.  

Warmest Regards,

Jamie