Why Nonprofits Often Fail: Understanding Common Pitfalls

Passion. Purpose. Hope. These are the core values that drive nonprofit founders to make a difference. Despite the vast effort put into nonprofits, the National Center on Charitable Statistics reveals that approximately 30% of nonprofits fail 10 years in. It's clear that these helpers need help too. Why is it that these nonprofits struggle to survive, despite their team's intelligence and hard work? Unfortunately, the top reason is internal.

Here's what's happening.

Lack of Strategic Planning

Many new nonprofit founders operate under the assumption that the most important matters are those that are the most pressing. Yet securing strong legal, financial, and branding foundations over time is often more key than an immediate project. Protecting your nonprofit means protecting its future and building its work to be sustainable, which may often be at odds with maximizing ‘immediate impact.’ Then again, over-focusing on strategy instead of impact will leave you with a bad reputation and an absence of community. Like with many things, balance strategic planning and immediate projects to maximize your outcomes. Here are a few key categories of strategic planning that your nonprofit needs to be paying attention to on a regular basis.

Mission Drift

Mission drift happens when your nonprofit, in its quest to tackle every problem under the sun, veers off its original path. This often happens gradually, as nonprofits expand their activities and try to meet various needs. Sometimes this shift is good, maybe even needed to get closer to the organization's goals. On the other hand, sometimes the projects, actions, or money being spent within the organization are too far from what the company set out to do. Mission drift can weaken the sense of community within and outside a nonprofit, and can negatively impact fundraising and talent acquisition. By clearly establishing and revisiting the boundaries of your organization’s mission, you will be not only more aligned but also more effective. Specifically, establishing regular check-ins for your nonprofit, while seemingly time-consuming, will prevent scenarios where employees are working on tasks that don't align with your goals. 

Theory of Change

The theory of change (ToC) is “an explicit process of thinking through and documenting how a program or intervention is supposed to work, why it will work, who it will benefit (and in what way) and the conditions required for success.” It boils down to having a roadmap of how you will achieve your goals. This roadmap allows you to clearly communicate your intentions to your employees and clarify any assumptions to ensure alignment within the organization. To achieve success in a field where everything is so complex and intertwined with society, people, and laws, you want to ensure everything on your roadmap is as detailed as possible. P.S. If you want to check in with your community directly to align the ToC to their mission goals and perspectives, consider Usorum; that’s what we do .

Succession Planning

What is succession planning? “Succession planning is the process of identifying the critical positions within your organization and developing action plans for individuals to assume those positions." In simple terms, it's making sure that you have a plan for who will do important jobs and how they will be done when someone leaves. It's never fun to see your favorite coworker go, but if the new person does the job just as well, it's a little more bearable. Despite how straightforward it sounds, according to Forbes, about 77% of nonprofits lack a leadership transition plan. You can see how this would likely lead to chaos and misalignment within the company. As a nonprofit leader, you can prevent this by considering and cataloging the characteristics required for the positions that you believe are most important to your organization.

Case Studies

A great example of strategic planning comes from Kids Rethink New Orleans Schools and their Executive Transition. Following the events of Hurricane Katrina, the organization established itself as a support to low-income students. Their Executive Director who was heavily ingrained in the organization decided they would be retiring in 2012, but plans for their transition process began in 2010. The organization began with identifying individuals who could potentially step into the executive director role. This included assessing their skills, experience, and alignment with the organization’s mission. Next, leadership skills were developed through training and mentorship, a leadership pipeline was established to ensure a smooth transition, and stakeholders, including students and community members, were engaged throughout the process. Finally, they focused on transparent communication for the complete success of their executive transition. With timely and effective planning, Rethink was able to implement an executive succession structure without sacrificing what made the company unique.  

Conclusion

Nonprofits can fail for a variety of reasons, but a lack of strategic planning is undoubtedly one of the most critical. Without strategic planning, misalignment is likely to ensue and plague the organization, which will ultimately hurt the people you seek to help. Therefore, addressing this pivotal challenge is essential for sustainability and growth. As you navigate strategic planning, it's important to leverage tools and resources that can enhance your efforts. 

As always, thank you for your part in saving the world,

Usorum

We’re Usorum. We create peer-to-peer and bottom-up conversations for nonprofit communities. We do this by hosting 'brainstorms' for nonprofit organizations, where they can ask their community to engage digitally around a common topic. For those nonprofits who want to, the brainstorm can also serve as a fundraising and a volunteer recruitment tool. Our second offer is an ongoing digital forum for the communities serviced across nonprofits, with a culture of people directly supporting each other and providing their techniques on adversity into a shared lived experience library. If you believe in community engagement, check us out at Usorum.com