Nonprofit Lifecycle | Organizational Growth

As the pandemic becomes more manageable and we explore possibilities for the future, I find that many executives and board members are reflecting on the “state of their organization.” Many are asking the question: “Where do we go from here?” I was recently asked by a client about the best way to determine where to focus energies post-COVID. My go-to diagnostic tool to start this task is the nonprofit lifecycle (which can also be useful in strategic planning, growth projections and board development). It gives you a realistic sense of where your organization stands now (which may be different from where it was before the pandemic) and whether or not all of its elements are working in alignment with one another (see our piece on the Sustainability Flywheel). If they are in alignment and you are “in flow,” everything is synched up well. If they are not in alignment, you may be experiencing growing pains. You often feel these growing pains first without really knowing the source. For example, an organization’s programs and strategies may effectively function and have a strong demand and reputation (growth stage), yet the elements that support the organization’s operations may not be able to keep up (start-up stage). Or leadership may delegate decisions to middle management without sharing the “why,” creating functional bottlenecks. Or program demand may outpace the ability to quantify and communicate impact, which may make it harder to justify need to potential funders. These kinds of situations reflect an uneven rate of growth, which can create the classic chicken vs. egg dilemma. The nonprofit lifecycle is a great way to better understand where your organization is and begin addressing growing pains, so you can create a steady rate of growth as well as alignment between all the elements of sustainability. Then, you can use your planning efforts to pull all the elements into alignment.

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What Is the Nonprofit Lifecycle?

The nonprofit lifecycle is the process by which organizations grow and decline through changes in systems and processes that support the organization’s existence. It is not based on longevity, but instead on an organization’s progress (e.g., an organization like an all-volunteer PTA could be a start-up forever). Much like stages of for-profit company growth, the nonprofit lifecycle features systemic benchmarks in organizational life, from idea to start-up, growth, maturity, decline and crisis. For example, in the start-up stage, decisions are primarily made by the Founder(s) and the organization typically has few, if any, employees in a flat organizational structure. Each stage tracks an organization’s natural evolution and is based on the research behind organizational progression. See the detailed Nonprofit Lifecycle graphic for additional information on each stage and related elements.

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How Is Understanding the Nonprofit Lifecycle Helpful?

It Sets Realistic Expectations – Assessing the stage of each of your organization’s elements of sustainability within the nonprofit lifecycle will allow you to identify whether the organization has the resources needed to execute its strategy. Misalignment occurs when elements are in dissimilar stages of growth. For example, your programs might be in a growth stage while your finances are in start-up (which means that in the short-term, your reach might exceed your grasp). An organization best accomplishes its goals when it allocates resources to bring elements in line with each other.

It Anticipates and Prepares for Challenges – Stages of the nonprofit lifecycle are also associated with somewhat predictable challenges for which organizations can prepare. For example, more mature nonprofit organizations often face decline by neglecting program relevance or becoming risk-averse. To guard against complacency, nonprofits should proactively institute systems and become learning organizations to ensure innovation, curb decline and keep themselves fresh.

It Determines the Best Leadership Fit – The capabilities of leadership must adjust as nonprofit organizations move from one stage in the lifecycle to the next. The nonprofit lifecycle can be a useful tool for a board in determining the qualities it should seek in CEO/Executive Director or leadership hires. For example, where Founders typically must be passionate and relational to spread the word about the cause in the idea stage, growth leaders must possess strong business acumen to build the organization’s systems as it transforms from the start-up into the growth and maturity stages.

If you find that growing pains afflict your organization, use this framework to create better alignment and identify the barriers you must overcome to achieve the organization’s vision. To do this, we recommend you assess your nonprofit’s lifecycle at your next executive or management team meeting. Print out this chart and have each person individually rate where each of the organization’s elements of sustainability (e.g., start at the Impact row and go down) falls on the nonprofit lifecycle (columns) based on their unique perspective. Then, compare notes and openly discuss where each element falls in the lifecycle stages before reaching consensus. This discussion itself is helpful, because it unearths what we call a “perception gap,” where people have different experiences based on their perspective. Then, agree upon where the organization is across each row and, as a whole, which column best represents where you are now (Is your organization aligned mostly in one column, e.g., growth or maturity)? If not, the pain you are experiencing is most likely growing pains and definitely addressable. Use this as a tool to develop a short-term action plan or decide to invest in a strategic plan to bring the organization solidly into alignment. Invest in the resources necessary to support the demands of each stage of a nonprofit’s life. Even if you are not experiencing growing pains, we encourage you to use the nonprofit lifecycle assessment with your strategic planning process to intentionally plan your growth as an organization and reduce the possibility of misalignment.

If you find the nonprofit lifecycle helpful or if you have already used it in your organization, we hope you will share your stories with us. If you have questions as you plan, send them to us and we will be happy to share our thoughts in an upcoming post.