Failure IS an Option!
Most of us don’t think about nonprofits closing their doors. It does happen though. What does it mean when that organization is no longer there? In my reading this week, I ran across two articles that analyze the failure of two fairly large and well-established nonprofits and what led to their demise.
Nonprofit Quarterly’s Rick Cohen details the closure of YWCA in greater Raleigh area. While the organization did have diverse revenue streams from investment income, grants, contracts, and to a small extent, donors. Their revenues took a hit across the board. Having never relied on individual donors much, they made a last, desperate attempt to solicit contributions that failed. The organization had continued to expand staff expenses and that eventually led to its downfall. The stunning thing is that other organizations that could have helped had no idea the organization was in trouble. The board was afraid to let the truth be known thinking no one would want to invest in a failing organization and thus it became a self-fulfilling prophesy.
Then I ran across this Nonproft Times article on LinkedIn detailing the failure on the 122 year old Hull House in Chicago. The author, John Davidoff, concluded that the organization was operating in a bubble and had lost touch with key stakeholders and constituents. As a result it had no clear pictures on how to accomplish its mission, much less how to fund it.
- In both organizations, the boards were out of touch with what was happening around them. The funneled all information through one source and did not look for the bigger picture about the organization or what was happening in the community around them.
- Neither organization capitalized on the relationships it had. Not only did they have key relationships with other organizations who could have helped, they did not utilize the individual relationships of the board or the staff to fund raise and monitor what was happening in the larger community and its impact on their mission.
So why am I writing this? Because many start up nonprofits will not make it to their third anniversaries where they might finally be eligible for funding from a larger variety of sources. Many people start the application process and then stall when they realize how much time and effort it takes to get a tax exemption, much less hang on to it once you’ve got it.
Being around for a long time doesn’t mean you’re safe. Older organizations have a tendency to fall into a rut when things are humming along. Because they aren’t trying to survive, things begin to slip until finally one day, failure looms on the horizon, seemingly out of the blue.
Your relationships are the glue that hold your organization together. Your board’s relationships and expertise keep the organization in touch with what is happening in the larger world and by listening, the organization can stay relevant and focused on mission, even if you have to change how you’re providing it. Your staff and volunteer relationships help you understand the reality of the operations. When you have good relationships both internally and externally, you have a climate of trust that allows you to really understand what is happening with your organization and take the steps necessary to ensure success.
What are you going to do today to build a strong relationship for your organization?