Conventional wisdom says that scaling social innovation starts with strengthening internal management capabilities. This study of 12 high-impact nonprofits, however, shows that real social change happens when organizations go outside their own walls and find creative ways to enlist the help of others.
By Heather McLeod Grant & Leslie R. Crutchfield Fall 2007
{Full text at www.ssireview.org/articles/entry/creating_high_impact_nonprofits/#}
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Six Practices of High-Impact Nonprofits
The secret to their success lies in how high-impact nonprofits mobilize every sector of society – government, business, nonprofits, and the public – to be a force for good. In other words, greatness has more to do with how nonprofits work outside the boundaries of their organizations than with how they manage their own internal operations. The high-impact nonprofits we studied are satisfied with building a “good enough” organization and then focusing their energy externally to catalyze largescale change.
To paraphrase Archimedes, “Give me a lever long enough and I alone can move the world.” These groups use the power of leverage to create change. In physics, leverage is defined as the mechanical advantage gained from using a lever. In business, it means using a proportionately small initial investment to gain a high return. The concept of leverage captures exactly what high-impact nonprofits do. Like a man lifting a boulder three times his weight with a lever and fulcrum, these nonprofits are able to achieve greater social change than their mere size or structure would suggest.
After a long process of studying these 12 nonprofits, we began to see patterns in the ways they work. In the end, six patterns crystallized into the form presented here – the six practices that high-impact nonprofits use to achieve extraordinary impact:
1. Serve and Advocate: High-impact organizations may start out providing great programs, but they eventually realize that they cannot achieve large-scale social change through service delivery alone. So they add policy advocacy to acquire government resources and to change legislation. Other nonprofits start out by doing advocacy and later add grassroots programs to supercharge their strategy.
Ultimately, all high-impact organizations bridge the divide between service and advocacy. They become good at both. And the more they serve and advocate, the more they achieve impact. A nonprofit’s grassroots work helps inform its policy advocacy, making legislation more relevant. And advocacy at the national level can help a nonprofit replicate its model, gain credibility, and acquire funding for expansion.4
The nonprofit Self-Help, based in Durham, N.C., presents an excellent example of how combining advocacy with service can result in greater impact. Self-Help began by giving home loans to clients – often poor, minority single mothers – who did not qualify for traditional mortgages. Although its services helped thousands of low-income families purchase a house, Self-Help’s work was soon undermined by predatory lenders, which took advantage of vulnerable borrowers by adding excessive fees or charging exorbitant mortgage rates, virtually ensuring that the borrower would default.
Eventually, Self-Help organized a statewide coalition in North Carolina and lobbied to pass the first anti-predatory lending law in the country. Later, the organization established the subsidiary Center for Responsible Lending to help local nonprofits pass similar legislation in 22 additional states. Through its direct services, Self-Help has given more than $4.5 billion in home loans to low-income families in the United States. But through its advocacy efforts, it has created far more value for the country’s most vulnerable populations by protecting them from predatory lenders.
In nearly every case we studied, the nonprofit combined direct service programs and advocacy to enhance its impact over time. Some groups, like America’s Second Harvest and Habitat for Humanity, began by providing services, such as feeding the hungry or housing the poor, and added advocacy only after a decade or more. Other groups, like the Center on Budget and Policy Priorities, the Heritage Foundation, and Environmental Defense, began with advocacy and later added grassroots programs or services to expand their impact to the local and state level. Some groups, like City Year and the National Council of La Raza, did both from the outset, despite pressure to specialize, and recognized early that advocacy and service reinforce each other.
2. Make Markets Work: High-impact nonprofits have learned that tapping into the power of self-interest and the laws of economics is far more effective than appealing to pure altruism. No longer content to rely on traditional notions of charity, or to see business as an enemy, these nonprofits find ways to work with markets and help companies “do good while doing well.” They influence business practices, build corporate partnerships, and develop earnedincome ventures to achieve social change on a grander scale.5
Environmental Defense was one of the first nonprofits to realize the power of harnessing market forces for social change. The New York-based organization was founded in the late 1960s by a group of scientists who lobbied to ban the use of DDT, and its informal motto for years was “sue the bastards.” Over time, however, the nonprofit became known for a different – and initially more radical – approach: working with corporations to change their business processes and become more sustainable.
For example, even though other green groups criticized Environmental Defense for “selling out” at the time, the nonprofit worked with McDonald’s in the 1980s to make the fastfood giant’s packaging more environmentally sound. Since then, Environmental Defense has worked with hundreds of companies – from FedEx to Wal-Mart Stores – often scaling its innovations to change practices in an entire industry. Although these partnerships are becoming more common among environmental groups, Environmental Defense was an early pioneer in this area.
But Environmental Defense didn’t just set out to change businesses’ behavior. It went a step further, harnessing market forces to help solve larger environmental problems. Environmental Defense has been a strong proponent of market-based systems to control pollution, such as “cap and trade,” which establishes overall emission limits (on carbon, for example), and then creates economic incentives for companies to comply and reduce their emissions. Cap and trade systems helped reduce acid rain in the northeast United States and have become an important tool in the effort to fight global warming. In fact, this approach led to the passage of California’s Global Warming Solutions Act of 2006, the first statewide legislation of its kind and a model for more stringent federal emissions controls.
We found three primary ways in which high-impact nonprofits use markets. They help change business behavior on a large scale, as did Environmental Defense. Self-Help also followed this path, creating a secondary loan market and expanding its innovative lending models through mainstream financial players such as Wachovia and Fannie Mae, thereby changing the industry’s practices and helping large companies reach historically underserved markets.
Nonprofits also leverage markets by partnering with corporations to garner additional resources for their cause, as have America’s Second Harvest, City Year, and Habitat for Humanity. All three have established large corporate partnerships through which they obtain funding, media relations, marketing support, and in-kind donations.
Some nonprofits run their own small businesses, generating income that helps fund their programs. Share Our Strength, for instance, runs a nonprofit consulting business called Community Wealth Ventures, whose revenue it redeploys toward its social mission.
3. Inspire Evangelists: High-impact nonprofits build strong communities of supporters who help them achieve their larger goals. They value volunteers, donors, and advisers not only for their time, money, and guidance, but also for their evangelism. To inspire supporters’ commitment, these nonprofits create emotional experiences that help connect supporters to the group’s mission and core values. These experiences convert outsiders to evangelists, who in turn recruit others in viral marketing at its finest. High-impact nonprofits then nurture and sustain these communities of supporters over time, recognizing that they are not just means, but ends in themselves.6
Habitat for Humanity, located in Americus, Ga., exemplifies this ability to create a larger community and inspire evangelists for its cause. As founder Millard Fuller has said, he didn’t set out to create an organization so much as a social movement. From the outset, the nonprofit spread its model through local church congregations and word of mouth, building its brand from the grassroots up. That model includes enlisting supporters in the very core of its work: building homes for the poor. Participants work alongside the future residents of the home, and in the process live out their values while becoming advocates for the housing cause. These evangelists, in turn, recruit their friends and colleagues, expanding the circle of supporters outward.
In addition, Habitat for Humanity attracts what we call “super-evangelists” like former President Jimmy Carter – people who by virtue of their personal accomplishments, famous names, and vast social networks can help take a nonprofit to the next level. By serving on the board and as a spokesperson for the organization, Carter helped propel it from a grassroots nonprofit to a global force for change.
Not all of the high-impact nonprofits we studied had an organizational model that makes involving supporters easy. Yet almost all of them found creative ways to convert core supporters to evangelists and to mobilize super-evangelists.
4. Nurture Nonprofit Networks: Although most nonprofits pay lip service to collaboration, many of them really see other groups as competition for scarce resources. But highimpact organizations help their peers succeed, building networks of nonprofit allies and devoting remarkable time and energy to advancing their fields. They freely share wealth, expertise, talent, and power with other nonprofits not because they are saints, but because it’s in their self-interest to do so.7
The Heritage Foundation exemplifies this network mind-set. From its founding, this Washington, D.C.-based organization defied the traditional notion of a think tank. The foundation sought not only to cultivate a broad membership base, but also to infuse conservativism into mainstream thought. To achieve its goals, Heritage realized that it needed to build a movement, not just an organization. And so the foundation helped to seed and galvanize a vast network of conservative organizations at the local, state, and national levels.
Today, Heritage’s Resource Bank – a network of state and local nonprofits – includes more than 2,000 member organizations. The Heritage Foundation helps leaders of these state and local nonprofits raise money and freely shares its donor list with like-minded groups. It also offers extensive programs to train non-Heritage policy analysts on everything from conservative strategies to public speaking skills. And Heritage cultivates talent – not only for its own organization, but also for other leading conservative groups – by offering a prestigious internship program and job-placement service for its young acolytes. The nonprofit also frequently works in coalitions to promote conservative policy and to pass legislation. Rather than seeing other conservative organizations as competitors, Heritage has helped build a much larger conservative movement over the last two decades, serving as a critical connector in this growing network of like-minded peers.
Other high-impact nonprofits harness the power of networks. In some cases, they formalize their networks through an affiliation structure, such as YouthBuild USA or America’s Second Harvest. In other cases, they keep their networks less formal and operate without official brand or funding ties, such as the Center on Budget and Policy Priorities or the Exploratorium.
Regardless of whether they have formal or informal affiliates, all of these nonprofits help build their respective fields through collaboration rather than competition. They share financial resources and help other nonprofits succeed at fundraising. They give away their model and proprietary information in an open-source approach. They cultivate leadership and talent for their larger network, rather than hoarding the best people. And they work in coalitions to influence legislation or conduct grassroots advocacy campaigns, without worrying too much about which organization gets the credit. These nonprofits recognize that they are more powerful together than alone, and that largescale social change often requires collaborative, collective action.
5. Master the Art of Adaptation: High-impact nonprofits are exceptionally adaptive, modifying their tactics as needed to increase their success. They have responded to changing circumstances with one innovation after another. Along the way, they’ve made mistakes and have even produced some flops. But unlike many nonprofits, they have also mastered the ability to listen, learn, and modify their approach on the basis of external cues. Adaptability has allowed them to sustain their impact.8
Too many nonprofits are highly innovative but can’t execute new ideas. Other nonprofits are so mired in bureaucracy that they lack creativity. But high-impact nonprofits combine creativity with disciplined systems for evaluating, executing, and adapting ideas over time.
Share Our Strength has been exceptionally adaptive. Bill Shore started the Washington, D.C.-based nonprofit by mailing letters to food industry celebrities to raise money for hunger relief. Although he received a few checks, he found that professional chefs were much more enthusiastic about donating their time and talent to a local tasting event. After the success of a single event in Denver, Share Our Strength abandoned its direct mail campaign and launched the Taste of the Nation series – now a national success in more than 70 cities. It has raised millions of dollars for hunger relief, and many other nonprofits have copied it.
Over time, Share Our Strength has experimented with a number of different innovations, from participatory events to cause-marketing campaigns. Not all of these events have been successful. One failed experiment was its attempt to extend the Taste concept into the sports arena, through a program called “Taste of the Game.” Share Our Strength solicited celebrity athletes to coach young people in a sport and asked parents to buy tickets to demonstration games – with all proceeds going to hunger relief. But the passion for antihunger issues wasn’t as strong among athletes and coaches as it was among the restaurant community. After several less successful initiatives cost the nonprofit time and money, Share Our Strength developed a more rigorous approach to managing innovation. Today, the nonprofit’s staff develops business plans and conducts more research before diving into new programs.
All of the nonprofits in our sample have mastered what we call the cycle of adaptation, which involves four critical steps. First, they listen to feedback from their external environments and seek opportunities for improvement or change. Next, they innovate and experiment, developing new ideas or improving upon older programs. Then they evaluate and learn what works with the innovation, sharing information and best practices across their networks. They modify their plans and programs in a process of ongoing learning. It’s a never-ending cycle that helps these nonprofits increase and sustain their impact.
6. Share Leadership: The leaders of these 12 organizations all exhibit charisma, but they don’t have oversized egos. They know that they must share power in order to be stronger forces for good. They distribute leadership within their organizations and throughout their external nonprofit networks, empowering others to lead. Leaders of high-impact nonprofits cultivate a strong second-in-command, build enduring executive teams with long tenure, and develop large and powerful boards.9
The National Council of La Raza (NCLR) is a great example of collective leadership in action. The Washington, D.C.- based nonprofit was founded in 1968 by a group of Hispanic leaders, and within its first decade it appointed Raul Yzaguirre as CEO. Yzaguirre led the nonprofit for more than 30 years of extraordinary growth. He quickly developed a cadre of strong and empowered senior executives, many of whom have been with the organization for decades and who have played critical leadership roles. Yzaguirre always had a second-in-command, or COO, who helped him with internal management while he focused on external leadership. And the NCLR board has learned to share power with the executive director. Even when Yzaguirre retired and was replaced by Janet Murguía, the organization maintained its leadership practices.
Habitat for Humanity is one organization that went through a difficult leadership transition when Fuller left and started a competing housing organization. But almost all of the nonprofits we studied, like NCLR, exemplify a shared leadership model. They have strong leadership at the top, led by either a founder or a growth leader who has learned to share power. They all have long-tenured executive teams with significant responsibilities. And their boards are larger than average – with sizes ranging from 20 to more than 40 members – and share power with the executives.
We believe that without more nonprofits, businesses, and government agencies following these six practices to achieve maximum impact, we are doomed to plod along with slow, incremental change. We’ll barely make a dent in global warming. We’ll meagerly fund programs that only perpetuate the cycle of poverty. We’ll continue to allow millions of children to grow up without healthcare. And we’ll continue to make one of the biggest mistakes of all: focusing too much on process rather than on impact.
