Breaking the Non-Profit Starvation Cycle

Dec 2

Hello everyone,

I hope your Thanksgiving went well! I know ours did. I was able to visit with family and have fun, all while securing some life-long memories.

As we end the year, there is more attention being given to fall appeals and the condition of the nonprofit sector. I was just talking about this yesterday when I was sharing the Nonprofit Starvation Cycle with a client. So I thought, hmm, this would be a good topic to send out in Calibration Point this month. I have shared it before with many of you, but a reminder is always good. This title, The Nonprofit Starvation Cycle, was first coined I believe by Don Howard and Ann Goggin’s Gregory in 2009. It is a good reminder as we are wrapping up the year on how we engage and translate value to our donors.

The cycle as listed below is defined as:

The Nonprofit Starvation Cycle (Excerpted from Stanford’s Social Innovations Journal)

“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 nonprofit costs, 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. I talk a lot about the three levels of donor progress:

Primacy – This level is connected to tangible expressions of the cause. It is first time and smaller repeat givers who have a more primal exposure to your organization. They invest in tangible things.

Intimacy – This level is 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 – This level is 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).

In the article it 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 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. We have to be real about what level our own staff, board and volunteers may be at (primacy, intimacy, and legacy) and meet them there and lead them.

Our charge is to reshape how we teach volunteers and donors to engage with our organizations. We have to be real about where our board members are (Primacy, Intimacy, and Legacy) and lead them to their own next phase of relational progression. We have to be intentional about our volunteers, staff, and donors and not assume that people are at closer levels of relationship than they are. But instead, we need to take time to determine it and meet them where they actually are. If we change the conversation with the donor, volunteer, and our community, we can champion healthy infrastructure because they will see how those dots connect. They will see that it takes both direct and indirect expenses to create impact. If we restrict our discussions of giving to just direct expenses, then the only way that the donor gets to be part of real impact is by being subsidized by others who are funding the whole cost equation. When we can change the conversation and fund the whole equation, we will no longer starve the organization but champion it.

If we really want to break the cycle, then I have some critical questions for you:

Are you casting vision about what your destination looks like and the impact you are having?
Is your organization learning to translate that 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, which includes 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. This is all because those we serve deserve it.

Just some things for you to ponder this month.

Thanks,
Jamie