Friday, March 11, 2011

Share Our Strength's unprecedented growth: secrets of success, lesson #4

I recently used a Community Wealth Ventures convening of leading nonprofits in Cincinnati, and then a lecture at the Kennedy School in Boston, as an opportunity to discuss Share Our Strength’s unprecedented growth over the past two years. Specifically I sought to tease out and understand the key ingredients of that growth, almost as if presenting a case study. This is a unique moment in our 25 year history. And our recent experience is all but unique across the broader nonprofit sector. That makes it a valuable learning opportunity that could help others, whether within or outside the hunger field.

At Share Our Strength our revenues hovered around $13 million annually in the years between 2004-2008. We were a classic case of the nonprofit whose growth had reached a plateau. We were stuck. Then we sharpened our strategy and made investments in capacity – including a few we could not afford. Our revenues grew to about $19 million in 2009, $26 million in 2010 and they will be $34 million this year. We added 30 staff to a base of 65 in 2010 and we are hiring for 20 more now. Though improbable it was not accidental or coincidental. The specific reasons follow below.
Lesson #4 Surplus (playing offense) is better than debt (playing defense)
Financial instability and/or peril is distracting, demoralizing and debilitating. If all of your energy is absorbed on the issue of how to make your payroll and your budget you will not have enough left over to devote to strategy, growth, and mission. Every unanticipated expenditure – and there will always be some - becomes a crisis. There were periods at Share Our Strength where we had so little margin for error that we spent countless hours debating $3000 decisions that felt like they were make-or-break, and that may well have been. But the opportunity costs of spending our time that way were both high and corrosive. For many organizations this is so ingrained as the norm that it is almost accepted without question. But there is another way.

Ultimately it is like the difference between playing offense and defense in football. Think of the football as financial stability. When you have possession you define the game, set the terms, and call your own shots. When you lose possession you find yourself in a defensive crouch, not playing to win, not playing to move things forward, simply playing not to lose, and to continue to survive. A good defense can keep you in the game for a long, long time. But it cannot win it for you. If you want to score big points against your mission, if there is a goal line you want to cross, you must put financial crisis and financial instability behind you and play an offensive game.

Obviously this is easier said than done. There are never sufficient revenues for doing all you want and need to do. And you can’t print money. But you can slow expenditures. Defer and cut expenses, stretch plans and corresponding spending out over a longer time frame. But whatever tough decisions have to be made, make ‘em now. The odds are that they are inevitable anyway, so get on with it and to the other side. The challenge for an organization’s leadership is to keep everyone’s eyes on the prize and ensure that they see financial discipline not as a frustrating or bureaucratic hindrance to achieving mission, but as a tool for pursuing that achievement more effectively.

Tomorrow: Lesson #5: Capacity Equals Impact

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