Accelerating Growth in NGOs

Friday, 15 May, 2020 - 10:40

In this age of technology advancement and scarcity of resources, leaders in non-profit organizations are bound to operate like business people. To grow and sustain NGOs, we need to develop strategies such as Target-setting; Financial modelling; Program Measurement; and Organizational Culture.
 
It is true that many community-based organizations do outstanding work at a local level, where scale is more appropriately defined as reaching a high proportion of people in a tight geographic area. But for organizations that pursue scale through replication across communities, reaching an ever-larger number of clients is often necessary to influence underlying systems, policies, and fields for truly large-scale change. Recent studies have found that scaling direct service is important to building the credibility, relationships, and client base that make non-profits more attractive as partners to government and the private sector.
 
Let us, therefore, reflect on four mindsets used by successful organizations to set targets, develop financial models, measure impact, and build an organizational culture that helped these organizations to achieve exponential growth.

1. Adopting the Numerator and Denominator Mindset

NGOs who are considering how to set targets for scaling should not only set a memorable stretch goal (the “numerator” in a market-share calculation), but also think about the total size of the problem they aspire to solve (the “denominator” in a market-share calculation). By keeping both metrics in mind, NGOs can inspire their teams to scale direct service and lay the groundwork for systems change.
 
In case an organization sets a target of beneficiaries/clients it aims to serve, to make it tangible, the following it needs to reverse-engineer the goal into drivers by clarifying;

  • the number of new areas or beneficiaries it need to reach;
  • the proportion of each area or set of beneficiaries it need to serve; and
  • the amount of market penetration the organization need to achieve in those territories.

Such drivers serve as a rallying cry for the organization, forcing it to think beyond the incremental progress that comes with traditional annual planning. The laser-like focus on this goal also cause the organization pressure-test every aspect of its model for scalability, which lead to things like codifying standard operating procedures and modeling the criteria that predict success in new territory launches.
 
However, this “numerator thinking,” which focuses on organization’s reach, is not enough. Making a meaningful dent in the problem meant confronting the denominator: the market of who could benefit from this model. As time progresses, this “denominator mindset” is bound to compel an organization to explore new channels for scale that would, over time, lead to systems change. The resulting public and private sector partnerships ultimately reaches more beneficiaries than what the core program serves directly.

2. Seeing Financial Sustainability as a Means, Not an End

Achieving financial sustainability that is, covering a high proportion of costs with earned revenues brings program efficiency into focus and frees up grant revenue for other purposes. But taken to the extreme, it can shift operations in a way that doesn’t fully deliver on an organization’s mission. Considering impact and cost goals together, however, creates the right conditions for optimal scale.
 
Like many young social enterprises, achieving full financial sustainability would require that an organization limit or even eliminate its programs in highest-need markets, where infrastructure is poor. NGOs must, therefore, be more sophisticated in thinking, allowing for separate sustainability goals by market type and tenure in their programs:

  • Begin to see financial sustainability as a means to the end of cost-effective impact, or
  •  Generate maximum social return on investment (SROI).

This means using a different investment framework centred around SROI, and adjusted for need-level, to allocate resources across programs and geographies. This framework helps organizations to understand when to pause growth in a specific area to improve impact and cost, and when an organization should greenlight expansion.

 

3. Building In-House Capacity to Measure All the Way to Impact

Most NGOs monitor their programs internally. They collect outputs and outcomes, but then rely exclusively on periodic external evaluation to measure their impact. Building in-house capacity to measure all the way to impact requires upfront investment, but it can accelerate program improvements and thus greatly improve an organization’s capacity to scale.
 
We should always value the rigor of independent external evaluations and use, but also view them more as a tool to strengthen our internal methods than a tool to prove our impact. Building internal measurement capacity plays an important role in reaching organizations’ milestone. Unlike external evaluations, we can deploy rigorous internal measurement over every activity, in every targeted area, and during every stage in the timeline. This helps organizations to learn and improve rapidly.

 

4. Making Getting into the Field an Organizational Norm

Having staff at all levels spend at least half a day each month in the field ensures that everyone is constantly learning at the ground-level. Simply relying on the reflections of others or the conclusions of research studies means losing touch with the fast-changing environments and circumstances that require program models to adapt:

  • Interacting with beneficiaries on a regular basis;
  • Developing a cultural nor of going where the work is done;

There is no substitute for learning through observation. We could learn, for instance, that the field officer is particularly well regarded in his/her community and worked through a group of local volunteers to implement project tasks. This may lead to testing, and ultimately scaling a redesign of field operations.

 

Multiplying NGOs’ reach requires a stronger commitment to partnerships, policy, technology and other new channels to reach a much higher proportion of beneficiaries indirectly.
 
NGOs everywhere face the imperative to create scalable models within and often across many communities. Rapid scale requires thoughtful planning and execution, and the right resources, across all internal functions. But it also requires the development of underlying norms that NGO leaders can use to help run their organizations and inspire their teams. These four mindsets form a powerful base to unlock rapid scale while staying true to mission. 

SOURCE

Matthew Forti
STANFORD SOCIAL INNOVATION REVIEW

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