Nonprofits are funky creatures. We have long operated in the nebulous zone between government and business.
Funding streams for government agencies are relatively simple to understand (taxes...need I say more?), and businesses have rather obvious revenues as well (products, services, venture capital). Nonprofits, on the other hand, are dependent on individual giving that ebbs and flows with the economy (at all the wrong times - when nonprofits most need support, they have less available to them), foundation grants that change on the whim of their trustees, and government grants that are fickle by administration and public sentiment.
The business model behind nonprofits has to adapt to this ever changing environment.
Fortunately, nonprofits have an unprecedented opportunity to build their financial viability and mission impact by expanding on their approach to revenue generation and program deployment.
The Lean Nonprofit Cycle I'll outline briefly here, is action-oriented, quickly understood and deployed, and when adequately utilized, can produce better results for nonprofit businesses.
Consisting of five steps, this cycle can help solve various nonprofit conundrums - the weirdness of philanthropy, the challenge of program evaluation, unreliable program performance and mission creep, among others.
Here's how it works.
GET INPUT. The first step in the cycle is to get input. This is you getting curious, and finding out about the problem that you need to solve. You hear from your constituents, your clients, your funders, your stakeholders, your guardian angel, what needs to be addressed by your nonprofit. This process can be conducted by many means - focus groups, surveys, conversations, listening to your staff, reading the newspaper - you get the picture. This is where you find out what must be rectified or otherwise handled.
GET CREATIVE. Classic brainstorm time! Get your best people in a room, present the problem, and brainstorm the craziest solutions you can muster. Some will be good, some will be insane, some will be feasible. It doesn't matter what the creativity produces in that moment, just produce ideas together. I'll have lots more about ideation in this blog in the future, so stay tuned for that.
GET FOCUSED. Next, hone in on the approach or limited set of approaches you will take with your organization's skills, resources, time, effort and funds to address the problem you've learned about in the input phase above.
GET GOING. Implement the solution you have arrived upon. No need to make it perfect in the first iteration. You're going for speed of execution, and will measure the results of your first "minimum viable product."
GET INFORMED. Understand how your solution is working once you have launched by integrating evaluation into your management. Eric Reis, in his excellent book "The Lean Startup" calls this "innovation accounting." The metrics you will measure depend on your organization's needs and goals. In for-profit businesses, this is typically related to the financial bottom line. For nonprofits, you might want to measure other things as well as the financial impact. Remember the problem you're trying to solve and select metrics accordingly.
GET DECISIVE. Using the information you've gathered in the Get Informed stage, join forces with your board and staff to make decisions about the solution you've implemented. Is it performing to expectations? Is it falling short? If it is, will you continue on the same path, or will you adjust your course based on new information you have gathered? "The Lean Startup" refers to this methodical decision making process as "persevere or pivot" moments.
This is a simple, quick overview of a process that can help nonprofits maximize their mission value while also tightening up their operations. Ultimately, it's a great system for instituting revenue generating business lines as well.
What systems have you found to help you in implementing responses to community problems? How might you integrate some of the Lean Nonprofit system into your next deployment?