Don’t Just Scale, Retrofit! – Part 2

Most nonprofits are more apt to benefit from retrofitting rather than scaling strategies.

Don’t Just Scale, Retrofit!

Most nonprofits are more apt to benefit from retrofitting rather than scaling strategies.

In my previous post, I discussed what retrofitting strategy means and why it’s relevant to the majority of nonprofit organizations. But just how do you go about using the concept to work more efficiently and effectively? Here are a couple of areas that might warrant retrofitting:

Moving from evaluation to research and development

My colleague at the TCC Group, Peter York, frequently discusses the importance of research and development (R&D) for the nonprofit sector. TCC’s excellent briefing paper “Success by Design: How R&D Activates Program Innovation and Improvement in the Nonprofit Sector” states: “While traditional evaluation seeks to measure return on investment, R&D actually enables that return by providing an understanding of how to reach the greatest number of people.”

The majority of the sector is trying to mesh in scaling-type evaluation systems when they should be developing and advancing off of an R&D-type system. As York states in the paper: “R&D is a process for improving an existing service or product to maximize the likelihood of immediate results for every individual user.” This system is perfect for an organization primed to retrofit.

Bubbling up ideas from the conveyer belt

There are a number of great organizations with great resources (think the Grantmakers for Effective Organizations’ Scaling What Works site and the Packard Foundation’s Wiki site on organizational effectiveness), but these resources draw from the very small number of effective organizations and programs throughout the country. The conveyor belt that carries many of the best and most promising practices is fueled by funders—foundations and government.

The solution to finding ideas and best practices outside of current models might be transparency. Government and foundations have been opening the vault on every aspect of the funding process, including grant applications and reports. On the government side, there have been numerous efforts toward openness and transparency, including President Obama’s Open Government Platform and the previous development of the Freedom of Information Act. While these are great, the system is still so archaic that it would take a special ops force to find anything of value for the day-to-day work of the average nonprofit.

On the foundation side, obtaining useful information can be equally challenging. One of the examples of openness I like most is GiveWell, a small grant making institution and independent charity evaluator that posts both grant proposals and its opinions on its site. I find it very useful to see how groups "sell" themselves through the different proposals and how a trained philanthropic eye might perceive the impact of these proposals. Imagine if all, or even half, of our institutional funders followed GiveWell’s lead in regard to openness and transparency. It would be an entirely different sector.

Creating helpful human capital systems

Whether it’s human resources or volunteer management, many organizations are either underprepared for or under-focused on managing their human capital. Nonprofits spend between 70 and 80 percent of their dollars on people and yet, as the majority of the organizations are small- to mid-sized, they have a limited capacity for effectively managing those people. This should be a huge concern. Outsourced human resources services and volunteer management software—although it potentially helps reduce legal risk and creates some useful processes—is seldom adequate.

When Professionals for Nonprofits released its “2011 Good Nonprofit Job Report,” 60 percent of workers in Washington, DC, and 65 percent in New York said their hard work was not valued at their organization. This sentiment runs rampant in the sector, and many organizations lack even basics like job descriptions, annual reviews, and professional development strategies. Are there tools, solutions, and resources that help ease this burden for organizations? Yes, but the intermediary and management support services that often provide this help at the local level are underfunded.

There are other areas within the sector ripe for retrofitting too, including board development, capital planning, and nonprofit risk management.

Work on scaling effective practices is great, and I am a huge proponent of it, but the market is smaller than the retrofitting one. Our discussion should pivot; we should explore and develop ideas for retrofitting areas within the larger nonprofit community. Like President Obama’s push to build up our nation’s aging infrastructure, we in the nonprofit sector should be pushing for solutions to retrofit our underdeveloped or aging systems and infrastructure.

Read more stories by John Brothers.

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  • Peter York's avatar

    BY Peter York

    ON July 18, 2012 08:41 AM

    John - excellent series and excellent points. Love the concept of retrofit! In our core capacity assessment tool data (with an N now of over 3000 nonprofit organizations), we have found that there are approximately 5% to 10% of organizations greater than $100,000 that are what some might call “scaling organizations.” it is important to remember that 70% to 80% of the entire nonprofit sector is less than $100,000. So, this 5% to 10% is a much smaller slice. Very small! Scalers are kind of an exclusive group that look to take their program interventions, system interventions and/or other types of change efforts, codify their strategies, develop business models to sustain the strategies, and then replicate BOTH their codified strategies AND sustainable business models in other locations/communities. scaling organizations typically began as local/regional nonprofits that developed and proved successful intervention models/social change strategies with consistent outcome success, achieved many stories of social impact, and developed clear business plans for growth.

    It is the 20% to 25% of the nonprofit sector that are neither scalers, nor what we call, “mom-and-pop’s” (the small and/or grassroots nonprofits, 70% to 80% of the nonprofit population, that don’t aspire to grow beyond serving those they already serve, usually basic needs at the neighborhood level), that need to apply what you are calling retrofitting.  This 20% to 25% are not attempting to go to scale, but they are trying to grow and expand their impact within their local or regional communities. They are also often developing more complicated social interventions and are central to engaging in collective impact work at the community table. These are the organizations analogous to what much of the new research on the private sector is showing is the heart of the private sector – mid-sized companies, most of which are not seeking to franchise/scale or go public. these mid-sized companies, and our nonprofit sector’s version – community-based nonprofit organizations – need much more sophisticated capacity building resources, and to your point, focused on research and development, talent management and business planning/resource generation models.

    Again, excellent series… Thanks!

  • BY Meghan Duffy

    ON July 23, 2012 02:05 PM

    Your reflections on the merits of retrofitting organizations in many ways mirror what we are learning in the social sector about organizational readiness to scale impact.

    I agree that the traditional approach to scaling impact requires an investment of resources that many organizations simply do not have. Retrofitting to strengthen what works and remove what doesn’t can help these organizations to streamline their programs and better serve their constituents.
    At the same time, nontraditional approaches to scale can allow smaller organizations to grow their impact without stretching themselves to the breaking point. Methods such as replication of technology and systems across a sector, or using networks to spread a best practice or program model are ways in which smaller organizations can increase their impact and “scale what works.”

    Organizations looking to use retrofitting or scaling approaches to grow their impact will need a strong understanding of their organizational strengths and weaknesses. As you point out, evaluation performed in isolation can create an environment in which a program is either a success or a failure, ignoring the nuances in between. But when viewed through the prism of collective learning, evaluation can be a powerful tool for improvement within and outside of organizations.

    Grantmakers can support this process by providing flexible funding for innovation and R&D so grantees can take risks and learn how to effectively embrace failure as part of the learning process, and providing the multiyear support that organizations need to develop strong programs and solidify best practices over time. A long term view on the part of funders is essential to success, whether an organization is seeking to scale impact, or retrofit to improve its existing programs.

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