Scaling impact for mission driven organizations requires tackling unique challenges when compared with the typical approach to growing a company in the private sector. Startups in the private sector are typically focused on maximizing shareholder value. In recent years, it has become more common to see startups also add a mission driven approach to growing their company, but it is typically not the primary focus of the business. The larger majority of social impact effort comes from nonprofit organizations.
Truly mission driven and nonprofit organizations have social impact at the forefront and primary objective for almost everything that they do. However, the mechanism by which ventures in the nonprofit and mission driven world are provided with funding can be radically different.
In this article, I’m going to talk about these differences in greater detail and show you how to better prepare your nonprofit or mission driven organization to maximize impact at scale.
Your Mission
If scaling social impact is the mission, then we need to review everything you’ll need to do to increase the probability of successfully achieving your goals. Your mission should intensely focus on what we refer to at NxtStep as Scaling Impact. We want to enable you to help as many people as possible with their biggest challenges in as efficient a way as possible.
As part of visualizing your mission, we want you to do something differently than you may have before. This time, we really want you to think BIG. For example, if your current program helps tens or hundreds of people, what would need to happen in order for it to help thousands or tens of thousands of people instead. Think about the amount of value your organization could bring to the world if you were to multiply the impact of your social ventures by 10 or 100 times what they are today. That’s the headspace you should be in for this exercise.
Tip: Throughout this article, I’m going to compare the nonprofit and mission driven world to the for-profit private sector, especially startups. This is because, in certain ways, I want you to think like they do. I’ve run several of these organizations and there is much to learn from what the best in that world do well that can help you and I bring greater social impact to the world. The difference will be that instead of prioritizing shareholder value, we’ll be focusing on social impact.
I hope you are as excited as I am to talk about scaling impact!
The Objective
If scaling impact is the mission, then we first need to break that down into our objective and the tactics that we can use to help us get there. Before we get started, I want to define in rather simple terms what we actually hope to achieve.
The objective for your nonprofit or mission driven organization is to reach impact at the greatest scale possible for the largest number of people as efficiently as you can.
Review the objective regularly with your team and refer back to it when you come to decision points throughout your journey. This will help you and your team maintain an intense focus on scaling impact. Keeping the objective in focus will help you make the best decisions along the way to ensure you are doing everything you can to realize your mission.
Tip: It’s important to review topics of mission, vision and objectives throughout your projects, but especially at the beginning because it will set the tone for everything for implementing the plan.
The Challenge
A key distinction between the challenges facing for-profit startups and nonprofit organizations along this journey is that sources of funding operate very differently. Let’s take a look at how things typically operate at for-profit startup ventures first.
In the private sector, investors are expecting you to come at them with the BHAG mentatility (Big Hairy Aggressive Goal). Meaning that they are expecting you to bring them a plan that could change the world. This is because investors in for-profit ventures are looking for a 10 to 100X return on their investment. They want you to be the next big thing because that means they will receive a huge return.
In the for-profit company investor world, these big returns are necessary because these investors make lots of bets and most of them don’t pay off. However, this is a well known routine and investors from this world are comfortable stomaching the risk. They know that rewards don’t come without inherent risk and many successful investors have a strong appetite for risk.
However, in the nonprofit world, the process of funding your ventures operates quite differently. Grants and donor money are often tied to various limitations or arbitrary deliverables agreed upon in advance of receiving the funding. Unfortunately, quite often these limitations are not relevant to the project focus. These limitations are a huge burden on nonprofit and mission driven organizations that are hopeful to scale impact. Many organizations are stuck checking off items from these arbitrary lists because they require the funding to keep their operation running. It can be a vicious cycle of having a strong desire to scale impact, but then not being able to do so for limitations tied to funding.
This is one of the biggest challenges holding nonprofit and mission driven organizations back from their mission of scaling impact. Let’s talk a bit about why this happens.
Misaligned Interest
One of the biggest reasons why this funding challenge for nonprofits and mission driven organizations exists is that the interest of certain stakeholders is not aligned. The priorities of your clients and donors are often misaligned.
Your organization is dedicated to solving challenges for your clients. Your donors have a desire to ensure their capital produces some tangible output. This is where one of the major disconnects lives and severely limits the true potential of many projects before they even get started.
Another trap in this sequence is that your donor may want to have a hammered out list of what you plan to accomplish before they hand the funding over to you so you can get to work. The problem here is that the process of figuring out exactly how to scale impact is almost never fully known in advance. You need to go through the phases of customer discovery, solution design and the product build phase to make it all happen. At the same time, it’s near impossible to actually complete these steps without the funding.
This is exactly where nonprofit and mission driven organizations often find themselves a bit stuck.
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Measuring Impact is Hard
In the private sector, measuring success is rather straightforward. There are lots of tangible metrics to track progress, but the ultimate focus is typically on money. How much revenue did you generate, how much of it are you able to keep as profit and how quickly are you growing? If you can answer those questions well and back it up with data you can almost always get more dollars to grow faster and produce the kind of returns investors are really looking for. In this scenario, interests are well aligned and everyone involved can achieve their respective goal.
For nonprofit and mission driven organizations, their mission to scale impact is not the same. Instead, you may be laser focused on solving literacy for children or providing everyone with a home. The mission has a different focus and intended outcome. It is one of impact as opposed to simply monetary gain. This is why it is critical to approach these challenges differently. We aren’t just focused on fundraising, we’re focused on aligning the vision for all stakeholders to get behind a plan to truly scale impact.
Innovate for Impact
To be able to truly innovate, we need to provide your nonprofit or mission driven organization with funding that will not come with strings attached so you and your team will be free to follow the process to truly scale impact. To do this, we should take a page out of the book from startups in the for-profit world. First, we need to think bigger.
To start, re-evaluate your plans from the perspective of achieving significantly greater scale instead. For example, if you are focused on helping 10 or 100 people, what would you need to change to help 1,000 or 10,000 instead? Revising your goals upward by this magnitude can help you truly innovate in your space. The plans that come from trying to reach this scale will get people excited about the possibilities. Impact at this scale will motivate both your team and your investors to get behind the vision.
Tip: We want you to keep your vision and mission in focus, but at a different level of impact. If you think and act like representatives from for-profit ventures you can unlock some of the freedom they experience to bring those ideas to life for your beneficiaries. Just think about the possibilities and what your team would be capable of if you had more funding with less restrictions.
Let’s talk about what else you can do to speed this process up.
Demonstrate your capabilities with an MVP (Minimum Viable Product)
Another lesson we can borrow from for-profit ventures is the power of a well designed MVP or Minimum Viable Product. Even though Investors in for-profit ventures are comfortable stomaching risk, they aren’t quick to part ways with their money. First, they want to know that you can show them some potential. For example, if you promise you can build the world’s biggest bonfire then they are going to want to see that you can first make a little fire. From there all you’ll need is the fuel and supplies to grow it. Achieving this first step, accelerates the whole process of raising money and growing more quickly.
Your nonprofit or mission driven organization is capable of the same. With the help of the plentiful resources available for building software product MVPs today, we can bring your vision to life rather quickly and cost-effectively so you have something to demonstrate before you need to raise additional funding to truly scale impact.
The results you can produce with the help of an MVP can provide what we refer to as ‘social proof’. Social proof is a form of demonstrable results of tangible progress. If you can achieve results on a smaller scale then investors will be able to see how your vision can truly come to life if provided with more resources to scale impact.
Tip: I talk more extensively about MVPs in my article about the product build phase.
Alternative Sources of Funding
We’ve talked about how focusing on reaching a greater scale of impact prepares you to truly innovate and scale impact to a level you may not have previously thought of as possible. I want to talk about another potential accelerator of progress for you along this journey and that is considering alternative sources of funding for your nonprofit or mission driven organization.
The limitations of grant and donor funding are well known in the industry. What’s potentially lesser known is the impact investor movement. There are investors that are fed up with these limitations as well and they know that real innovation comes from removing these strings so that organizations like yours are free to follow a more natural process towards truly scaling impact.
It’s worth evaluating your funding sources and potentially redesigning the approach. For example, instead of spending most of your time securing grant or donor funding to push progress in the opposite direction of what your clients actually need, secure a smaller amount of funding from impact investors so you can perform discovery and bring an MVP to your clients to produce the social proof needed for you to raise additional funding and expand your program.
Build a culture that embraces risk
Your team will be critical to implementing your plan to scale impact. As such, you’ll want to share the details of this vision and revised approach with your team. They are as frustrated as you are and as such, they should be excited by new strategies to reach impact at a greater scale. Everyone wants to be part of something truly incredible.
Something you can do to help prepare them for the challenges you’ll face along the way is to shift your culture in the direction of embracing risk and rewarding ambition. Encourage them to think big and reinforce the objective we discussed earlier when they come to decision points along the way. Keep bigger goals in focus at all times and make decisions based on truly scaling impact.
At NxtStep, we led this charge when helping the Compass Working Capital team rethink their enrollment process for their FSS (Financial Self-Sufficiency) program. We involved everyone on their team and leveraged successful strategies from for-profit ventures to bring an MVP to market that was up and running with their clients in less than 3 weeks. Since, it has helped Compass enroll 2-3X as many clients as they were able to previously with their old system.
Your team is awesome. Motivate them to think big and witness as they accomplish something incredible.
Hire help when you need it
You and your team are capable of amazing accomplishments. Think big and remove roadblocks to progress to give you the best opportunity to reach these goals.
We’ve helped dozens of nonprofit and mission driven organizations complete this journey and those organizations are well on their way to scaling impact at levels never before thought possible.
To learn more about what we can do to help you achieve these goals for your nonprofit or mission driven organization, book a call with us at NxtStep.
