Rip Rapson, president of the Kresge Foundation, recently spoke to gathered YMCA’s and gave a chilling overview of the nonprofit sector:
Early on in the crisis, we argued about whether the problem would be short- or long-term, about whether we could simply limp through to a resumption of what we’ve come to understand as normalcy. No longer. We are indisputably in the midst of profound structural shifts that will carry deep and enduring effects. There has been a fundamental breakdown in those systems that serve as the thermostat for much of our daily lives – not just in whether we can get a bank to make a loan, but also in the nature of the regulatory environment, the role of government investment, the need to manage against scarcity.
The nonprofit landscape of yesterday or today will not be the nonprofit landscape of tomorrow. Undercapitalization, chronically a problem, will become a death spiral. When revenues decline by 10 or even 20 percent, a nonprofit can put itself on a diet of discipline and flexibility and emerge at the other end with its mission pretty much intact. When demand skyrockets and revenues decline by 40 or 50 percent, however, you’re a different organization altogether.
This is the best description I have yet seen about the gravity of the new reality nonprofits face. Many nonprofits wonn’t be able to just belt-tighten their way out of it. They will have to change fundamentally or perish.
It is much like the defense industry in the earlly 1990’s, when the chief revenue source (the US government) fundamentally changed how it operated. Defense firms perished, merged, or retooled.
The good news is that, on the other side, the surviving organizations can be far more robust and effective than they were going into the crisis.
Even in good times, when I advise clients that are going through strategic planning, I tell them that no strategic plan is really complete without a “stop do” list. You really haven’t made the tough decisions unless you have included things that you are not going to do anymore.
But at times like this, when we’re in the “death spiral” that Rapson describes, it’s even more important. Organizations simply cannot afford to expend extraneous energy.
Here’s one way to think about it. Start with those things that only your organization can or is willing to do. Put everything else on the chopping block.
Here is how Rapson describes the questions that Kresge is facing:
Foundations . . . also need to ask themselves where their uniquely flexible resources can make the greatest difference. Is it in investing organization-by-organization in those elements of the safety net infrastructure that touch people directly? Or is it in putting money into efforts to change systems that bear so heavily on people’s life opportunities?
The answer to this question will drive very different day-to-day responses. Nonprofits can ask similar questions of themselves. Indeed, they must.
So what’s on your “stop do” list? What can your organization uniquely do?