Preserving the Social Sector

Last month I wrote that I was worried about the future of the social sector and provided some of the reasons why.   Since I wrote that article, I have heard several different speakers voice some of the same concerns and read a couple of different articles that sounded a similar warning.   But the important thing is not that some of us are concerned, rather it is what we collectively will do about it, and who should do it.

The “who” answer is a simple one.  The people that are going to solve the challenges facing the social sector are you, the reader, and other likeminded people who work for, volunteer for, or serve on the boards of social sector organizations.  OK, you say, I get that, but what do I do and what should I tell the board of the organization I support? 

I like to give people easy ways to remember what I recommend, so I am going to give you five “S-words” to remember.  If you use these five words in guiding the future of your nonprofits, you will be in an excellent position to meet the challenges of today and tomorrow.

The first of the “S-words” is SCAN.  More specifically scan the horizon.  Too often boards and staff leadership get caught up in the here and now.  They worry about their next event and making it through this year?  To make an analogy, we often walk while looking down at our feet.  For the future, we need to raise our level of vision and look to see what is coming.  If we don’t, we might just walk into a lamp post or even a brick wall.  We need to look up and scan the horizon for threats and opportunities that will allow our organizations to meet future challenges as they come.  This requires research and awareness on the part of key board leaders and staff.  And it helps to periodically take the time to examine what you are seeing in formal visioning and strategic planning exercises.  These planning processes need not be long and cumbersome; rather they should concentrate on a relatively short period of time in the future (no more than three years) and be kept relatively simple.  These efforts should be highly focused on the challenges and opportunities the organization will face and developing realistic solutions to dealing with these challenges and opportunities.  This then leads to our second “ S-word.

The second “S-word” is STRATEGY.  Now that you have raised the level of your vision and see the challenges and the opportunities of the future, you need to devise strategies to get there.

These strategies do not have to be long and complex, but they do need to meet three basic criteria.  They need to be realistic.  They need to we be well defined, to include specific measures of success, and they need to be tracked as time goes by to ensure that consistent progress is being made, and the collective organization is keeping its collective eye on the goal.  There needs to be what some experts refer to as “strategic clarity.”  Leadership should have a laser focus on the organization’s purpose and how best to achieve that purpose, both now and in the future.

In addition, you and the other members of your leadership group should always be thinking in a strategic way.  What is the potential long-term impact of this decision?  Or how will that event affect our future?  This should be the level of discussion surrounding every decision made.  The board’s discussions should always focus on strategic issues.  Unless you are a grassroots organization with no staff, allow the staff to worry about most of the day-to-day issues and keep the board focused on strategic direction and policy issues.

The third “S-word” to remember is SUSTAINABILITY.  Do you have the resources, in terms of people and dollars, to carry out the mission in the future?  To deal effectively with the issue of sustainability, the board needs to focus in two areas.  First, it needs to fully understand the organization’s resource stream.  How does the organization make its money?  Is it diversified enough in terms of resource streams?  What are the possible threats to future revenue streams, and what can be done to avoid the threats?  Are there new opportunities on the horizon?  One scholar I talked to said that the major thrust in the social sector in the next few decades will be social entrepreneurship and bringing new products and services to bear and new legal structures like flexible purpose corporations to attract new sources of money.  Your board needs to understand these opportunities and discuss how they might or might not fit into their plans for the future.  Other possibilities for the future might include mergers and acquisitions or even strategic partnerships.  We see these every day in the for-profit world, but they are new concepts in the social sector

The second part of sustainability is prioritization.  This concept recognizes that an organization may not be able to do everything it wants to in the future.  The board and staff leadership need to look hard at the mission and decide what activities might fall into the “must have” category and which ones are “nice to have if you can afford them category.”  This may require some tough decisions that call for the elimination of secondary programs in order to keep core programs funded at an optimum level.  This is a far better approach to dealing with limited resources than trying to reduce all programs by the same “salami slice” reductions in the face of reduced resource availability.

The fourth “S-word” you and your leadership colleagues need to be aware of is SUCCESSION.  In my last article I mentioned a Bridgespan Group study that estimated that up to 80,000 new senior leaders a year would be needed in the social sector within the next few years.  How is your organization going to replace that key leader who might be approaching retirement?  Or how will you attract a replacement for a rising star on the staff that chooses to suddenly leave for a better opportunity with another nonprofit? Or how will you keep your board fresh and energized?  Your board and staff leadership need to think about all forms of succession planning and how to approach potential key personal turnover.

The final “S-word” I have for you is STAKEHOLDERS.  Remember every charitable organization has stakeholders.  It may be the organization’s members and volunteers; it may be beneficiaries whose lives are positively impacted by the organization; or it may be the community in general.  All tax exempt organizations exist to provide some public benefit, and that benefit is why our organizations are excused from paying taxes on income.  It is essential that every nonprofit’s leadership stay close to its stakeholders in order to ensure that it is providing the benefits to society that it promised when it became tax exempt.  If the organization is straying from that purpose you may find yourself losing the cover of tax exemption or the ability to raise funds, and this, in turn, could spell the end of the organization.

In closing, let’s remind ourselves that most of what is good in society today is provided by the social sector, but that sector is facing significant challenges in the future.  If we want to preserve our current quality of life and perhaps even improve it in the future, you readers and your colleagues on the boards of our community nonprofits need to keep the five “S-words” in mind as you carry out your responsibility for ensuring the future of society

Keep up the good work!