Making the Case for Innovation at Scale

As we explored in our last post, much of our sector’s attention in the past few decades has been focused on early-stage social innovation and entrepreneurship—yet this focus comes at a cost. In some instances, too little attention has been paid to helping reinvent large nonprofits already operating at large scale, perhaps because many of them are older and are perceived as being less relevant. But these organizations can be gems for funders looking to have an outsized “return on investment.” The impact of spending a few million dollars pushing social innovation—or an innovative program—through an organization already operating at large scale is far greater than a few million dollars invested in a start-up, which might take hundreds of millions of dollars to reach substantial scale. That impact may also come sooner, since even a revolutionary new model housed in a highly successful new organization can take years or decades to build itself up. Just possibly, the best investment that funders can make today is in helping these organizations learn how to operate more nimbly.

Based on our experience, many of the largest nonprofits in our country—working on very important social issues—are in fact struggling with how to innovate, adapt their models, and stay relevant in an era of virtually unprecedented change. The economic downturn is threatening their fundraising, and new technologies are driving new ways of working, putting pressure on their existing strategies, business models, structures, and brands. And the support they get from the public is under threat from born-digital startups like MoveOn and Kiva. While some might argue for letting these organizations die in the name of creative destruction, this is an important way that the social sector ought to be different from the business world.

This is not a view held out of sentiment. These large organizations have many assets—combining to create substantial reach—that are too valuable and hard-won not to be leveraged for greater social impact. For example:

• National networks and “distribution” platforms. Many of America’s older nonprofits have an affiliate or franchise model, with a headquarters that loosely coordinates locally led organizations around the country. For example, The Association of Junior Leagues International (AJLI) has 293 Leagues in four countries, with 285 of those Leagues in communities around the US. It can mobilize these Leagues on local issues, and partner with them to distribute new content such as Junior Leagues’ Kids in the Kitchen, a program that fights childhood obesity. UNCF has deep roots in African American communities, a network of 38 member colleges and universities, and genuine credibility that no recent education reform start-up can buy. The National Audubon Society has state offices, 50 educational nature centers, and nearly 500 local chapters. These local affiliates can be effective channels for delivering innovative new programs, without the cost and time required to build such large networks from scratch.
• Social networks of members. Just as many of these national groups have organizational networks of affiliates, they also have social networks of millions of supporters who believe in their cause and brand. Sierra Club can rally its more than one million supporters on issues like their recent “Beyond Coal” campaign; National Audubon Society can mobilize additional millions who care about conservation and wildlife; UNCF can help African-American communities advocate for high-quality education for their children; and AJLI, with its 150,000 volunteers, can be a real force for women’s civic and community leadership across the country.
• Loyal donor bases and revenue streams. While it is true that these organizations’ business models (often built on direct mail solicitation of small donors) may be under pressure, particularly from social media, many of these groups have annual revenue streams in the tens if not hundreds of millions of dollars. Corporate executives know their name and trust their ability to execute. Loyal donors send their checks year after year, whether or not foundations think these groups are cutting-edge. While many of these donors are aging and younger activists may throw their weight behind sexier start-ups, it could be a decade or more before new organizations get to a hundred million dollars or more in revenue. One could argue that a more leveraged—and therefore effective—approach would be to spend a few million dollars fixing a hundred-million-dollar organization so that it can be a channel for implementing today’s updated ideas.
• Established brands. Many of these large nonprofits have been around for a hundred years or more. While the downside is that some of them may need a brand refresh (“not your mother’s Junior League”), the upside is that they are well-known household names—our sector’s equivalent of IBM or DuPont. Just as many a large-scale corporation has reinvented itself for the next decade, or even the next century, so too can these nonprofits use their trusted brand as an asset. When a brilliant new idea is housed in a new organization, its leaders have to fight for credibility. But when that brilliant new idea is delivered by a brand that is already well-known, it stands a far better chance of success… and that success, in turn, can breathe new life into the brand.
• A role in the larger ecosystem. Early-stage organizations can often bring new ideas or innovations into an ecosystem of players in a given field. They are small, fast, nimble, and high-energy. But it’s important to have larger organizations with the heft and weight to help influence the field. They can do things that even the most resourceful start-ups can’t always do—mobilize a million people with a single email, leverage trusted relationships in Congress, or tend to a social need that isn’t currently seen as cutting-edge. One reason the Gates Foundation was willing to invest several million dollars in helping UNCF transform itself was because, “If they didn’t exist, we’d have to invent them.”

Given all of these assets, it is important to invest in “reinventing” these legacy organizations rather than just consigning them to the scrap heap of history. But it’s not easy work, as we’ve experienced first-hand. Next, we’ll look at the barriers that get in the way of adaptation and innovation in these organizations.

Read more stories by Heather McLeod Grant.