Nonprofit Strategy

Top 3 Strategies to Achieve Growth

In today’s world, organizations are finding it increasingly difficult to keep up with the pace of change that is occurring in the marketplace. Growth, sustainability, relevance, and future viability discussions have become commonplace in the Board room and amongst Leadership Teams as organizations strive not only to survive, but to thrive.

Many strategic solutions have emerged from discussions and planning, however, the three that we see most frequently discussed as the means of ensuring future viability are:

    • Get Bigger

    • Get Niche

    • Get Integrated

Get Bigger: The pressure to consolidate, merge, acquire, or partner is being felt by companies across every industry and sector. Increasing size as a growth strategy provides several competitive advantages: 

  • Offer increased salaries in a market where talent acquisition is difficult

  • Achieve scale to obtain the resources and capacity to innovate, make capital investment, and support further consolidation

  • Acquire and implement advanced systems that deepen customer engagement and data acquisition and management

  • Broaden service offerings, becoming a one-stop-shop to increase value to customers

  • Improve quality and capabilities by acquiring organizations that add value by improving service or quality

Get Niche:  For those organizations that lack the desire to increase in size, getting very niche in strategic focus is a necessity. Getting Niche does not mean getting small. Instead it means focusing on your ability to own a market space in a very specific area of service in which you have the ability to:

  • Own the market for the niche space you are operating in with a competitive advantage that others lack

  • Design or invest in technology solutions that allow you to improve service and the customer experience

  • Shift resources, focus, and ability, to differentiate yourself in the market towards the niche area

  • Design a strategy that will scale and grow your ability to be a leader in the niche area of focus

Get Integrated: Organizations are becoming more reliant on partnerships, collaborations, and shared services in order to survive. However, sometimes the “too big to fail” approach does not work. When this is the case, you need to look at becoming “too integrated to fail”. Getting integrated allows companies the ability to:

  • Entrench with partners to deepen relationships and share resources that may be too expensive to acquire alone

  • Bridge relationships to work more effectively for the benefit of the customer

  • Collaborate with multiple partners, strengthening relationships that could result in mergers or new models for growth

  • Share data and information to position yourself in the market across multiple companies serving a single market

Regardless of what strategy your company has decided or decides to embark on, each comes with equal benefits and drawbacks. However, there is one core theme that plays across each strategy, which is the utilization of technology. Technology is allowing us to interact, communicate, service, and work together differently. This concept may seem odd to organizations that consider themselves service providers, but we have entered a time of technological advancement that is disrupting the traditional ways we think about conducting business and providing service. 

If you are interested in learning more about the planning trends we are seeing or which strategy might be best for you and your organization, please connect with us. 

Creating Wins & Community Success Through Mergers

By Anne B. Colwell, CEO
Cape Cod Child Development

“Merger” and “Acquisition” seem to be scary words in the nonprofit world, but invigorating words in the for-profit arena.  Could it be the mission-driven nonprofit world is more focused on a smaller, targeted service?  How about the theory that a for-profit organization is just simply more competitive and wants to grow revenue?  Nonprofits are seen as softer, kinder entities, and acquisitions give the impression of negativity and loss.  For-profits may be viewed more as a business model that acts in a manner that drives profit, sometimes at the expense of human capital.  Perhaps the types of professionals that lead organizations tend to fall into two general motivational categories—intrinsically and extrinsically valued.  There, of course, is no actual clear answer—only the remaining question about why the concept of creating more greatness by combining resources has not taken hold in the nonprofit world in the same way as in the for-profit world.

As the CEO of a nonprofit on a 70 mile peninsula with two small islands (good guess—Cape Cod!) and over 1,000 nonprofit agencies, it is clear we can see the opportunities for (nonprofit) mergers and acquisitions.  Our agency is one of the largest nonprofits in the region, especially within the child and family services sector.  Roughly two-thirds of the Cape’s nonprofits provide services to children and families with significant overlap of services and missions.  All of these hundreds of nonprofits have CEOs/Executive Directors and most have financial/human resources management, marketing, development, and administrative support staff—all functioning outside the direct services provided to clients.  Many of these agencies have outstanding leadership and staff but, conversely, many do not.  Many are utilizing effective technologies, evidence-based practices, and good operational excellence processes but, in reality, many probably are not.  There is only one fair reality when we look from afar and in general terms—the total amount of money available is not being spent in the most effective ways.  We know this by just simply looking at the administrative costs of running so many nonprofits in a relatively small geographical footprint.

Let’s take a closer look at the nonprofit world.  In any given year, there will be a dollar figure that accounts for all the financial resources and funding opportunities for nonprofit entities.  It is a sizable figure, relatively speaking, whether it is international, national, regional, or community-based.  At the end of every year (fiscal or calendar), it represents the total investment in the nonprofit service-based sector—regardless of the source of revenue.  If one considers the holistic approach, it is very logical to want to combine all nonprofit revenue streams into one number and understand the value of what that revenue truly means to a community or larger scope, as appropriate.

When we think about potential mergers and acquisitions, we must first consider a collective impact mindset.  If we merge, will it create more services, better quality, enhanced employee satisfaction, improved productivity, or an enriched customer experience?  We seek a win, win, win situation (triple wins), meaning it is a win for all agencies, a win for our agency, and, most importantly, a win for our children and families.  We know we can create more operational efficiency and lower administrative costs but there also must be a mission-driven connection to helping the same demographic.

Not all mergers and acquisitions are losing propositions for human capital—people!  In fact, many mergers and acquisitions provide far greater opportunities for growth and intellectual stimulation.  Although there may or may not be some transition of leaders and staff, in my experience, the newly merged entities realize new outcomes, different challenges, and professional growth that could never have occurred in the previous agency.

As nonprofit agencies struggle with Executive Director Transitions, reduced funding/revenue, and increasing administrative burdens, the answer may well lie in a merger or acquisition.  Yes, it is daunting, scary, and unfamiliar to navigate a nonprofit merger, but the benefits can be dramatic for a community.  The greater ability to provide much-needed food, housing, health, education, clothing, referrals, and all types of services to children, adults, and families can dramatically outweigh the doubt to move forward.

If mergers are not possible, another great option to consider is strengthening strategic partnerships, shared services, and collaborations.  Why not combine efforts, space, and talent if you serve the same demographic in the same area?  Identify the cross-over points of services, how each agency brings unique products/services to the community need and work together to provide more that is similarly missioned.  There may be nothing more impressive to donors, funders, and foundations than to see nonprofit agencies working smarter together.

In the nonprofit world, we are definitely “better together” and “stronger united”—let’s all consider an approach going forward, whether a merger, an acquisition, a strategic partnership, or a simple collaboration, that can change our communities … the world is waiting!

Nonprofit Disruptors

Over the past decade we have been helping nonprofit organizations design strategy, business models, and implementation methods to align to the future. We are entering a period of massive disruption to all nonprofit sectors, and the pace of change is accelerating. The landscape of all nonprofit sectors is changing, which is being driven by two major disruptors: Consolidation and Technology.

Consolidation: Regionalization, partnerships, mergers, collaborations, shared services, synergies, networked approaches, joint ventures, and many other types of concepts that bring nonprofits, municipalities and private organizations together is becoming a necessity for survival and achieving greater mission impact. Consolidation is being driven as a result of market saturation, donor demand, cost savings, talent scarcity, greater capacity demands, succession planning, and the support of struggling nonprofits. 

Technology Disruptors: Robotics, automation, big data, shared systems, IT systems, applications, and data management are all changing the business models of many sectors. These technologies are driving discussions around improved service, customer centric service, and the ability to customize experiences, while evaluating those for improved efficiency and effectiveness. 

Both of these disruptors will require strong leaders to move their organizations forward to align to the future and ensure relevance. The transformation of business models and strategy will be significant and necessary, so do not wait to start having discussions about these disruptors and how to position your organization.