Nonprofit innovation depends on leadership

By Todd Cohen

A new way of doing business in the nonprofit sector is unfolding in Charlotte, N.C.

Known as Project Hope and designed to help people living in long poverty find affordable housing and build financial stability, the effort offers a glimpse of the kind of innovation and collaboration the charitable marketplace will need for the massive job of taking on both the symptoms and causes of complex social and global problems.

A partnership of four Charlotte agencies, Project Hope is housed at Crisis Assistance Ministry, which carved out existing office space and provides it for free along with back-office services.

While Project Hope is counting on such economies of scale, its greater value lies in its strategy of drawing on its partner agencies’ respective core services to better serve clients, or “leveraging organizations’ specific expertise to improve customer service,” says Carol Hardison, executive director of Crisis Assistance.

Project Hope clients get financial-management support for rent and utility assistance from Crisis Assistance, for example, and social-worker support from the Mecklenburg County Department of Social Services, another partner.

“Sometimes people make a mistake and try to grow an existing organization to add on these other functions that are not their core mission,” Hardison says. “We are going and finding organizations whose core mission meets the needs of the customer.”

Project Hope also represents precisely the kind of reengineering of the local nonprofit sector’s capacity that community leaders hope to stimulate and cultivate with strategic investments from a new $5 million “catalyst” fund they are creating.

What is unfolding in Charlotte reflects a new breed of nonprofit leadership that is starting to bubble up in communities throughout the state, and it offers some lessons nonprofits can use to cope with the recession and gear themselves for competing in a global marketplace in which competition only will get fiercer.

Project Hope is rooted in the idea that what matters most is how effectively clients are served.

So what drives the collaborative is how to play to the particular strengths of each partner agency to craft a suite of services that best meet all their clients’ needs.

In the process, the partners are able to achieve some back-office efficiencies and savings.

And as icing in the cake, their collaborative fashioning of new strategies that aim to better address the immediate and long-term needs of clients appeals to philanthropic funders.

Hit hard by the financial crisis, a growing number of nonprofits in the state are equipping themselves to work smarter and better serve clients, often with support from funders wanting to make a greater impact by boosting nonprofits’ operations and collaboration.

Also spurring the giving sector to remake itself has been the promise of greater investment from the Obama administration and Congress to promote and target volunteerism and civic enterprise to address urgent social and global problems.

Consider:

• Expanding local charitable giving in North Carolina’s 85 rural counties, particularly by finding new ways to grow and tap local assets, is the focus of an initiative spearheaded by the North Carolina Rural Center.

• “Giving circles” and other forms of non-traditional philanthropy have sprouted throughout the state, thanks to investment by NCGives and community foundations that are working to expand giving among communities of color, women and young people.

• Strengthening “social capital,” or civic connectedness, is the focus of collaborative initiatives in Charlotte, Greensboro and Winston-Salem spearheaded by local community foundations.

• Coalitions in Asheville, Greensboro and Wilmington are providing training and support for local nonprofits and nonprofit executives.

• Collaborative efforts have been formed to address a broad range of specific needs, including developing economic and environmental sustainability in a group of counties in Western North Carolina; producing better outcomes for kids in Wilmington neighborhoods with the highest crime rates; and addressing the needs of first-time mothers throughout the state.

Despite all those initiatives, however, retooling the nonprofit business model and mindset can be tough in a sector that, because it traditionally has been expected to do more with less, tends to see its glass as half empty and can be highly resistant to change.

Change is particularly challenging because, while the giving sector is large overall, it consists of organizations that mainly are small, stressed, overworked and under-appreciated.

While North Carolina’s 10,000 charitable nonprofits with annual revenues over $25,000 include big universities, foundations and service agencies, most are much smaller shops like homeless shelters and food pantries.

And those organizations struggle every day to address such basic organizational challenges as how to handle rising demand for services while meeting the payroll and paying the rent.

So reengineering the nonprofit business model may not seem like job one.

But individual nonprofits’ limited size and resources, particularly as the recession squeezes giving, also represents an opportunity for organizations to find new ways to work together.

And with the recession creating an urgent incentive for change, nonprofits and funders can seize that opportunity by putting their heads together and finding ways to work together to better serve clients.

That task is particularly critical because nonprofits must cope with a sector-wide failure to address critical long-term capacity problems, including:

• Filling leadership positions expected to become vacant as Baby Boomers retire and other executives quit because of job stress and the lack of support from their boards.

• Helping boards see that a big part of their job is to secure resources, think ahead and build an organizational culture that values flexibility, collaboration and continuous improvement.

• Taking strategic advantage of the surge in volunteerism by making sure organizations offer skill-based opportunities for volunteers who want to put their actual expertise to work.

• Developing a more integrated and strategic approach to fundraising, planned giving, staff development, planning, communications and the use of technology.

These are huge tasks that will require more than paying lip service to the importance of innovation and collaboration.

Change requires the investment of time, money and planning, as well as a commitment to find and truly work with partners to better serve clients.

Just as community leaders in Charlotte are raising money to create a $5 million fund to invest in nonprofit innovation, leaders in communities throughout the state could create local nonprofit innovation funds, possibly with challenge grants from local or statewide foundations or companies, or even with federal stimulus funding through the state.

Those innovation funds could help inspire creative thinking and planning, and invest in collaborative efforts to build the capacity of local communities to better address priority needs.

Change ultimately depends on leadership.

So meeting the challenge of innovation and collaboration leaves two big questions for the giving sector, not only in North Carolina, but throughout the U.S.:

• Will nonprofits, foundations, corporate-giving programs, government and individual givers make the investment needed to build the capacity of the giving sector to cope with change?

• Will leaders in all sectors step up and push their organizations and constituents to find better ways of working, and working together, to tackle both the symptoms and causes of the biggest problems facing our communities?