4 Ways to Determine If You’re Ready to Scale
Many resources target start-ups and early stage organizations–contests for new ideas, fellowships for social entrepreneurs, incubators, accelerators, boot camps, and launch-pads. Likewise, there is a subset of funders specializing in growth and scaling. They offer funding (and sometimes capacity-building) for regional expansion, replication, and growth surges (for example, doubling the number of children served). What is available to help strengthen an organization at the “in-between stage” or, as we fondly call it, “the awkward adolescence of nonprofit life”? Not so much.
How We Got Started
Bikkurim spent its first decade incubating start-ups. We provided innovative organizations in the Jewish community with office space, small grants, peer community, consultation, coaching, and moral support. We helped to launch 31 initiatives, 23 of which are still in existence, a ratio of success to failure reflective of taking healthy risks. However, of those 23 organizations, a small number are really thriving and most fall short from reaching their full potential.
In 2010, we commissioned a report from Wellspring Consulting to learn more about start-ups and post-start-ups, how they grow, and the challenges they face. That report: From First Fruits to Abundant Harvest: Maximizing the Potential of Innovative Jewish Start-Ups led us to found a new initiative, Atid Hazak (Hebrew for “Strong Future”), to help ready high potential start-ups for growth.
Initially, we had a lot of hubris. We spoke of “taking organizations to scale” and “helping them to achieve sustainability.” We quickly realized that with the resources available to us and the time frame of two years, no organization was going to achieve exponential growth or unlock the next level of funding. However, what we could do was to lay the ground work for growth, get organizations thinking about why they wanted to grow and learn more about what growth would entail. In other words—get them through the awkward adolescence. We decided to focus on three areas: infrastructure, staffing, and measurement. Over time it became clear to us that a fourth area was also critical—organizational culture.
Early stage nonprofits skimp on infrastructure and pride themselves on being resourceful and thrifty. Over time this yields diminishing returns. Growth requires a good flow of data which means sophisticated databases, skilled IT and data management staff, and time devoted to data entry and analysis. Early stage organizations often “make do” with outdated equipment and professional areas staffed by volunteers. Through Atid Hazak, we granted organizations $100,000 over two years to invest in infrastructure. All five organizations in our program spent a large portion of those funds on their data systems.
At second stage, organizations shift from having a team of talented generalists to having teams (plural) of specialists. To function as a mature organization, you need a clearer division of labor and more specialized expertise. You also need to build a leadership bench and create leadership at the team level because the Executive Director can no longer manage every person on staff. This is also the stage where organizations should improve compensation
packages and bring salaries in line with the market. This is not an easy sell to funders. Earned income and support from individual donors give you more flexibility to hire top talent and compensate appropriately.
Early stage organizations often move too fast to reflect upon what they are doing or to engage in sophisticated measurement. They are opportunistic, diving into projects and strategic partnerships with minimal due diligence. This opportunism serves them well and allows for rapid prototyping, model development, and experimentation. Fundraising is based on compelling anecdotes instead of hard numbers. Stakeholders rally behind the passion, creativity, and exuberance. However, once the organization gets some traction and starts to approach institutional funders they will be asked:
- How do you know your program works?
- With which target populations is your program most successful?
- What are the economies of scale when your program grows beyond a certain point?”
To answer these and other questions, organizations need a theory of change, a data system that tracks outcomes, demographic information about target populations, programmatic dashboards, and more.
Organizational culture can be a nonprofit’s “secret sauce” or its “dirty little secret.” Culture needs to change and adapt as the organization grows. You can’t have the same communication style you had when you were four people sitting around a kitchen table when there are 25 people working in three cities. Culture needs to be conscious and co-created.
How can funders help organizations to grow?
- Enable organizations to build necessary infrastructure and upgrade that infrastructure as they grow
- Reward organizations that invest in their talent and grow leadership internally
- Support measurement by giving evaluation grants in addition to general operating
- Support staff retreats and other culture-building activities
How can organizations plan for their own growth?
- Fight the starvation mentality with regards to infrastructure and compensation
- Enlist funders as allies in setting up systems for measurement
- Train all staff in evaluation and set up rudimentary systems from the start
- Pay attention to organizational culture and invest in it
Are you weighing the benefits of scaling? To hear more from Aliza, and two other experts, on the topic, watch Foundation Center’s recorded webinar, “Should I Stay or Should I Grow?”.
ALIZA MAZOR is the executive director of Bikkurim: Advancing New Jewish Ideas, a joint project of Jewish Federations of North America (JFNA) and the Kaminer Family. Bikkurim has supported 33 innovative start-ups that contribute significantly to the diversification and reinvigoration of Jewish life.
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