Organizational Development

Leveraging Legacy Organizations

Part of a series of articles on helping mature organizations stay adaptive and increase their social impact.

Social Innovation at Scale

Monitor Institute highlights the value of helping mature organizations stay adaptive and increase their social impact.

For the last two decades, the movements for social entrepreneurship, social enterprise, and social innovation have been working to identify new solutions to old problems and take them to scale. These movements identified and filled a critical gap in our sector: how to get high-potential entrepreneurs and high-performing organizations the startup and mezzanine funding they need to bring new solutions into the world. That work has flourished in the hands of organizations such as Acumen, Ashoka, Echoing Green, Draper Richards Kaplan, New Profit Inc., the Skoll Foundation, and the Social Impact Exchange.

The Monitor Institute team and I have been proud to participate in these movements and to support many of its leaders. Innovation is necessary. But what if this well-intended focus is creating a critical blind spot for supporting mature organizations so that they are able to stay adaptive and increase their social impact over time?

We can agree that the scale of solutions today are dwarfed by the scale of the problems we seek to solve—from global pandemics to dire poverty, failing schools, broken health care systems, environmental crises, and more. In the face of this reality, we have to confront the fact that almost 90 percent of American nonprofits continue to operate on less than $1 million in total annual budget, and many of these small, fragmented groups are reinventing the wheel, or creating duplication of effort and infrastructure: most have their own staff, boards, administrative support, and fundraising capabilities.

What’s more, despite all the attention paid to social entrepreneurs and scaling high performing nonprofits, very few nonprofits —only one tenth of one percent—have gotten above the level of $50 million in annual income in the past twenty years. The well-known Teach for America (TFA) now has an annual budget of more than $250 million. And yet, despite its massive size and 8,000-teacher-strong direct program model, it is merely a drop in the bucket of the three million teachers working in our country’s K-12 schools. (TFA has arguably had more impact indirectly via its larger alumni network and the education reform movement it has helped to create.) We should be proud of Teach for America’s achievements. But no one would argue that its work is done.

These realities have led us to conclude that the nonprofit sector needs new solutions, but we don’t always need them housed in new organizations. Rather than continuing to start thousands of new organizations each year and then trying to scale them up—which results in greater competition for already scarce resources—maybe we should broaden our set of approaches for scaling social impact.

The Monitor Institute team and I have been advocating along with a chorus of others for more collective approaches: getting many smaller actors within a bounded region or issue-area to identify a problem and align their activities, resources, and measurement so they can generate impact at greater scale. Current articles share a number of promising examples of “collective impact”—Strive in Cincinnati, Harlem Children’s Zone, Promise Neighborhoods—which suggests that aligned action holds much potential for solving social problems at greater levels of scale.

But there’s yet another way of thinking about scaling social impact, which is to create social innovation at scale by building on the existing strength of organizations already operating at a large scale. We can reengineer them, or push more innovative programs out through their distribution networks, rather than assuming new approaches require new organizations. Imagine the impact we could have if we spent even a fraction of the resources we invest in early-stage ideas on helping larger-scale organizations continually improve their programs, evolve their organizations and operations, and dramatically increase their effectiveness.

Over the past three years, the Monitor Institute team and I have been exploring how large, established, and older nonprofits can do just that. We’ve led consulting engagements with such well-known groups as UNCF, The Association of Junior Leagues International, Sierra Club, National Audubon Society, Hillel’s Schusterman International Center, Enterprise Community Partners, and others. Our work with them leaves us firmly convinced of the social value to be gained by helping established nonprofits renew and expand their impact.

In the following five posts we will present our arguments for the value of this work and our reflections about how to do it well, illustrated with two case studies of organizations we’ve worked with directly. This is an emerging area of practice and we don’t claim to have all the answers, but we do want to share what lessons we have learned in the hopes that it might spark a larger conversation in the field. Our first-hand experience of helping these organizations reinvent themselves highlights four critical areas organizations should consider as they mature: strategy (i.e. impact model), organization, business model, and brand. By understanding how these mature nonprofits have turned their legacies into leverage for greater impact, we can begin to see opportunities in the sector to mobilize assets anew and add to our set of approaches for truly solving problems at scale.

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COMMENTS

  • BY Jamienne Studley

    ON July 25, 2013 01:58 PM

    Heather: You speak important truths! Thank you for interrogating the bias that favors start-ups over investment in resilient, enduring non-profits. It’s not a choice of innovation versus experience. Our 42 year old social change advocacy organization, Public Advocates Inc., for example, has blazed new policy trails in everything from education financing to transit and climate justice, insurance redlining to food deserts to urban displacement, and radically transformed the way we work.

    Social investment, by both foundations and individuals, in many ways privileges the shiny and new organization over the older one that is attracting and training powerful young advocates or service providers. Too often people value the “founder” line on a resume over the deep accomplishments of a second or third generation organizational leader. Across the sector we can improve results by concentrating more of our energy and other precious resources on getting the most from existing successful enterprises, incentivizing collaboration and new approaches under existing strong umbrellas, and deepening our capacity to get maximum value from our ideas and programs. Let us know if we can help in your project,
    Jamienne Studley, CEO, Public Advocates Inc.

  • Gilles Gravelle's avatar

    BY Gilles Gravelle

    ON August 6, 2013 11:09 AM

    As a consultant, my experience has been that newer organizations can innovate and adjust to current realities faster than older legacy organizations can. In fact, large old legacy organizations, it would seem, can never really make all of the necessary adjustments. May you prove me wrong! I look forward to your five posts.

  • BY Anne Sherman, Vice President for Nonprofit Strateg

    ON August 7, 2013 08:20 AM

    Heather:  We at the Social Impact Exchange could not agree with you more!  This is a most important conversation you have initiated.  Our work focuses on identifying and vetting those more “mature” organizations that are trying to scale their impact.  As you and other colleagues note, this is one important segment of the nonprofit market that is typically overlooked as a potential investment.  Our online platform, the S&I 100, features over 100 nonprofits that have evidence of their effectiveness and plans for growth (http://www.socialimpactexchange.org/exchange/si-100.) 

    One of the things we’ve learned in identifying and vetting the 107 organizations on the platform is that the internal “rewiring” that is often required to develop a sustainable business plan for scale is a real challenge.  This is due to many legitimate reasons, not the least of which is that “collective impact”, or any type of meaningful collaboration, is in itself a challenge to the traditional business model.  We are also increasingly thinking about leadership—both staff and board—as a component of transforming a mature organization and how we factor that in to our processes. 

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