Leveraging Legacy Organizations

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.

Read more stories by Heather McLeod Grant.