Forces for Good E-Book

Leslie R. Crutchfield

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: J-B US non-Franchise Leadership
• Sprache: Englisch

Seitenzahl: 497

Veröffentlichungsjahr: 2010

Beschreibung

An innovative guide to how great nonprofits achieve extraordinary social impact. What makes great nonprofits great? Authors Crutchfield and McLeod Grant searched for the answer over several years, employing a rigorous research methodology which derived from books on for-profits like Built to Last. They studied 12 nonprofits that have achieved extraordinary levels of impact--from Habitat for Humanity to the Heritage Foundation--and distilled six counterintuitive practices that these organizations use to change the world. This book has lessons for all readers interested in creating significant social change, including nonprofit managers, donors and volunteers. Leslie R. Crutchfield (Washington, D.C.) is a managing director of Ashoka and research grantee of the Aspen Institute. Heather McLeod Grant (Palo Alto, CA) is a nonprofit consultant and advisor to Duke University's Center for the Advancement of Social Entrepreneurship and the Stanford Center for Social Innovation. Crutchfield and Grant were co-founding editors of Who Cares, a national magazine reaching 50,000 readers in circulation between 1993-2000.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Dedication

Foreword

PREFACE

Acknowledgements

THE AUTHORS

Introduction

WHY THIS BOOK, AND WHY NOW?

A NEW WAY OF THINKING ABOUT NONPROFITS

WHY YOU SHOULD READ THIS BOOK

HOW TO READ THIS BOOK

CHAPTER ONE - FORCES FOR GOOD

THE TWELVE HIGH-IMPACT NONPROFITS

SHATTERING THE MYTHS OF NONPROFIT MANAGEMENT

THE SIX PRACTICES OF HIGH-IMPACT NONPROFITS

MAXIMIZING SOCIAL CHANGE

OUR METHODOLOGY

CHAPTER TWO - ADVOCATE AND SERVE

SERVICE MEETS ADVOCACY

A VIRTUOUS CYCLE

THREE WAYS TO BRIDGE THE DIVIDE

WHAT’S HOLDING NONPROFITS BACK?

FIVE PRINCIPLES FOR SUCCESSFUL POLICY CHANGE

COMBINING SERVICE AND ADVOCACY

CHAPTER TWO HIGHLIGHTS

CHAPTER THREE - MAKE MARKETS WORK

DOING WELL AND DOING GOOD

THREE WAYS TO LEVERAGE BUSINESS

MANAGING THE RISKS

PRAGMATIC ACTIVISM

CHAPTER THREE HIGHLIGHTS

CHAPTER FOUR - INSPIRE EVANGELISTS

TURNING OUTSIDERS INTO INSIDERS

THE RULES OF ENGAGEMENT

RIPPLES OF CHANGE

CHAPTER FOUR HIGHLIGHTS

CHAPTER FIVE - NURTURE NONPROFIT NETWORKS

ADOPTING A NETWORK MIND-SET

HOW TO NURTURE A NONPROFIT NETWORK

WHEN TO GO YOUR OWN WAY

PULLING IT ALL TOGETHER

NETWORKS ARE THE FUTURE

CHAPTER FIVE HIGHLIGHTS

CHAPTER SIX - MASTER THE ART OF ADAPTATION

THE CYCLE OF ADAPTATION

WHAT DRIVES INNOVATION?

DIFFERENT CULTURES SUPPORT ADAPTATION

MASTERING THE CYCLE OF ADAPTATION

WHAT NOT TO DO

CHAPTER SIX HIGHLIGHTS

CHAPTER SEVEN - SHARE LEADERSHIP

THE POWER OF COLLECTIVE LEADERSHIP

ONE STYLE DOESN’T FIT ALL

TWO AT THE TOP: THE SECOND-IN-COMMAND

LETTING EXECUTIVES LEAD

GREAT LEADERS LAST

FOUNDER’S SYNDROME AND SUCCESSION PLANNING

THE INVISIBLE, INVINCIBLE BOARD

LEADERSHIP MATTERS

CHAPTER SEVEN HIGHLIGHTS

CHAPTER EIGHT - SUSTAINING IMPACT

CROSSING THE CHASM

THREE CRITICAL ELEMENTS TO SUSTAIN IMPACT

A PLATFORM FOR FUTURE IMPACT

CHAPTER NINE - PUTTING IT INTO PRACTICE

THE VIRTUOUS CYCLE

THE SIX PRACTICES IN ACTION

BECOMING A FORCE FOR GOOD

APPENDIX A - RESEARCH METHODOLOGY

APPENDIX B - FIELD EXPERTS

APPENDIX C - CASE STUDY RESEARCH GUIDELINES AND QUESTIONS

APPENDIX D - KEY STAKEHOLDERS INTERVIEW LIST

APPENDIX E - ORGANIZATION PROFILES

ENDNOTES

ADDITIONAL RESOURCES

INDEX

Praise for Forces for Good

“As the social sector grapples with critical operational issues such as capacity building and outcomes measurement, Forces for Good reminds us that impact is of greatest importance. Although these other factors are significant, they are simply the means to an end. We need to be more focused on how our efforts make a tangible difference in the communities we serve.”

—Mario Morino, chairman, Venture Philanthropy Partners

“[Forces for Good is] an essential road map to success for any funder and a must-read for nonprofit leaders who seek to build the next generation of high-impact organizations.”

—William Draper, director, and Jenny Shilling Stein, executive director, The Draper Richards Foundation

“Teachers and students of nonprofit management, and social change in general, will benefit from this book. It provides a fresh look at the elements of good organizations.”

—Christine Letts, associate dean for executive education, John F. Kennedy School of Government, Harvard University

“I’m constantly on the look out for tools that can help leaders of social-purpose organizations deliver mission results. Forces for Good is a great new addition to my recommended list. It’s a must-read for anyone involved in social change.”

—Kriss Deiglmeier, executive director, Center for Social Innovation, Graduate School of Business, Stanford University

Copyright © 2008 by John Wiley & Sons, Inc. All rights reserved.

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Library of Congress Cataloging-in-Publication Data

Crutchfield, Leslie R.

p. cm.

Includes bibliographical references and index.

ISBN-13: 978-0-7879-8612-4 (cloth)

1. Nonprofit organizations—Management. 2. Leadership. 3. Organizational effectiveness. I. Grant, Heather McLeod. II. Title.

HD62.6.C78 2008

658’.048—dc22

2007024538

For Caleigh and Somerset

FOREWORD

When my wife Jean and I created the Case Foundation in 1997, we were confident that by putting some of our personal resources to work, we could help to solve some of the world’s most pressing problems. After all, we had both had successful careers in business. We knew how to recruit the right people, act on a business plan, identify barriers to success, and overcome obstacles. We said to ourselves, “How hard can it be to succeed in the nonprofit sector?”

Well, ten years later we understand how hard it really is. We’ve learned to appreciate the nonprofit arena’s inherent complexities and how difficult they can be to navigate. We also have realized that being effective requires unique expertise. Indeed, over the last few years, not many nonprofit leaders have managed to build and scale organizations that have significant, widespread impact.

Today, with the number of donors growing at a rapid rate worldwide, the nonprofit sector has a tremendous opportunity to shape a better future for humanity—but only if people can transform their goodwill into genuine results.

And that is what makes Forces for Good so timely and so welcome. This thoughtful book provides what business people, policy makers, philanthropic investors, and nonprofit leaders have needed for a long time—an intelligent, articulate analysis of the key factors required to generate successful, lasting outcomes in the nonprofit space. Instead of merely asking, “What do nonprofit managers need to do to run a great organization?” Leslie Crutchfield and Heather McLeod Grant ask, “What do nonprofit leaders need to do to create impact that extends far beyond what they could achieve alone?” The answers provide a road map for systemic change, and an inspiring call to action.

Imagine a world focused on high-impact giving, where non-profit organizations collaborate with business to harness market forces for good causes and leverage business people as resources for planning and operational excellence. Imagine executives and boards thinking beyond their own needs, collaborating with their competitors to share scarce investment dollars, and developing a network of active, engaged supporters who can transform an entire field. Imagine a cohort of nonprofit leaders geared toward innovation, prepared to adapt their organizations to changes in the nonprofit marketplace and able to refresh their operating structures with regular waves of creativity.

Based on hundreds of interviews and several years of in-depth research on America’s leading nonprofits, the authors have identified these practices as essential for every nonprofit executive to pursue. And while this book is clearly aimed at the social sphere, its lessons can be applied elsewhere as well.

Regardless of whether you are the CEO of Citigroup or the CEO of City Year, you will need to understand and implement these practices to achieve your philanthropic goals. The world we live in is changing rapidly, and the lines that divide the business, government, and charitable sectors are blurring. The solutions to both local and global poverty require cross-sector partnerships. Collaboration and entrepreneurship are not just options; they are essential to lasting solutions.

In business and through the Case Foundation, I’ve been working to encourage a climate where social entrepreneurship based on these practices can flourish. Recently, I launched a company, Revolution Health, which will help build a new consumer-centric approach to health care. It’s a for-profit organization, but if Revolution Health provides clinics where a sick child can be seen quickly and affordably on a Sunday, or a health portal where consumers can get reliable information about health-care providers or tools to manage health-care spending, I think the public good will be served as well.

Too many people still act as if the private sector and the non-profit sector should operate on opposite sides of an impenetrable wall, where one is all about making money and the other about serving society. A better approach is to take the best of both worlds and integrate these missions: businesses can be “not only for profit” and social-service organizations can learn from the business sector’s best practices, including leveraging capital to maximize scalability and sustainability, with each contributing to significant and lasting social change.

Every individual, regardless of his or her profession, education, or socioeconomic status, has the power to make a difference. To be successful—to become a force for good—all that is required is the will to engage with whatever you can bring to the table. So, whether you are in business, a nonprofit organization, or government, whether you are a high school student or a grandparent, this book can have a profound impact on your ability to contribute to a more just and sustainable society.

July 2007 Steve Case

Founder of America Online

Chairman of the Case Foundation

PREFACE

It was a chilly spring day in 2003 when Leslie Crutchfield was preparing to welcome a new cohort of social entrepreneurs to the Arlington, Virginia, offices of the global nonprofit, Ashoka. For two years, Leslie had led the North America division of this global fellowship, which provides intensive support to public innovators from around the world. She knew that the group was hungry for advice on how to create large-scale social change—but she also knew that she didn’t have all the answers.

When she had searched for information to give the social entrepreneurs, she couldn’t find many materials that were specific to the unique challenges they faced. Sure, there were plenty of how-to publications about nonprofit management, fundraising, and board development. And she had shelves full of books written about for-profit companies, and what makes great businesses great. But there were few rigorous studies of extraordinary nonprofits or of how the best groups achieve real results. So Leslie found herself cobbling together a hodgepodge of how-to manuals, case studies, and copies of renowned business management books. We need to do better than this, she thought.

At that moment, the idea for this book was born.

Leslie called up her longtime mentor Greg Dees, an expert in the field, and founder of the Center for the Advancement of Social Entrepreneurship (CASE) at Duke University’s Fuqua School of Business. He recognized the need for a book like this, and offered to have CASE sponsor the research.

Around the same time, Heather McLeod Grant was consulting with philanthropists and nonprofits in the San Francisco Bay Area, including the Stanford Center for Social Innovation and the Omidyar Network. She experienced firsthand the huge knowledge gap in the sector—particularly with respect to creating social impact—and she shared Leslie’s frustration with how little empirical research existed. Management books just didn’t go far enough. Countless entrepreneurs were reinventing the wheel, starting new nonprofits without understanding what had been tried before or what really works.

So when Leslie approached her with the idea for this project, Heather jumped at the opportunity. As friends and former colleagues who had cofounded a magazine for social entrepreneurs in the mid-1990s, Who Cares: The Tool Kit for Social Change, we decided to lock arms once again to tackle this ambitious project.

What we discovered in the process of researching and writing Forces for Good has both surprised and inspired us. The twelve organizations we’ve studied over the past few years are truly extraordinary, and we feel privileged to have learned from them. We’re delighted to share their secrets to success with you and hope you will be as inspired as we were.

ACKNOWLEDGMENTS

Like any endeavor that requires great effort, this book is the result of the combined contributions of many individuals and institutions.

Forces for Good: The Six Practices of High-Impact Nonprofits would not exist without the thought-leadership of Greg Dees. For more than a decade, we have both been privileged to know Greg; he has at various times been our adviser, mentor, professor, colleague, and, always, friend. Greg is currently on the faculty at Duke University’s Fuqua School of Business and is the founding director of the Center for the Advancement of Social Entrepreneurship (CASE). His colleague Beth Anderson, former managing director of CASE, was a true partner in this project, providing intellectual guidance, project management, and moral support. At every phase, both Greg and Beth pushed our thinking and provided critical in-kind assistance. CASE also created a two-year research fellowship for Heather to spend time on this book.

This book also would not exist without the intellectual and institutional support of Alan Abramson and the Aspen Institute’s Nonprofit Sector and Philanthropy Program. When others questioned whether a book like this could, or should, be written, Alan unhesitatingly offered both time and funding, and had the Aspen Institute act as our fiscal agent. Similarly, Jenny Shilling Stein, executive director of the Draper Richards Foundation, backed this project from the beginning; her foundation has provided funding and acts as an additional fiscal agent.

To Jim Collins, we owe our deep respect and gratitude. His books about great businesses inspired this book about great nonprofits—and he wholeheartedly encouraged the idea from the outset. He also provided valuable guidance early on, as we wrestled with the challenge of developing a rigorous methodology for selecting and studying great social sector organizations.

Other institutional supporters deserve special recognition. Mario Morino, of the Morino Institute, has been a friend and adviser for years; he and Cheryl Collins provided our very first research grant, along with office space for Leslie. Stanford University’s Center for Social Innovation (CSI) provided financial and in-kind support. Kriss Deiglmeier, the executive director, arranged for office space for Heather; and CSI underwrote the valuable time of two graduate research assistants. The staff of the Stanford Social Innovation Review provided editorial encouragement.

We are grateful to our other generous supporters, who have provided funding and thought-partnership. These include the United Nations Foundation, particularly Kathy Bushkin; the Jean and Steve Case Foundation and Ben Binswanger; Rockefeller Brothers Fund and Stephen Heintz; the Surdna Foundation, and Ed Skloot and Vince Stehle; the Skoll Foundation and Dan Crisafulli, Lance Henderson and Sally Osberg; Fannie Mae Foundation, and Kil Huh and Ellen Lazar; Ewing Marion Kauffman Foundation and Munro Richardson; the Fitzie Foundation and Gregg Petersmeyer; the Goldhirsh Foundation and Phil Cutter; and Steve and Roberta Denning. Of special note is Christy Chin, whose commitment to field-building in various roles has been an inspiration to us both.

A host of formal and informal advisers have contributed in meaningful ways to the project—from guiding our research to providing feedback at briefing sessions to reading early drafts of our manuscript. Brian Trelstad, CIO of the Acumen Fund and a longtime friend and colleague, provided much early intellectual guidance, as did Bill Meehan of McKinsey & Company. Christine Letts of Harvard University provided highly constructive feedback, and her publications have strongly influenced our thinking.

We are also indebted to our teams of graduate student research assistants, who joined us through their respective universities. These able assistants include Jessica Thomas and Adrian Cighi of Duke University’s Fuqua School of Business; Brooke Ricalde and Rand Quinn of Stanford University; Christy Gibb and Sarah Lucas of Harvard Business School; and Jennifer Kyne of Yale School of Management. We also thank researchers Elizabeth Ayala, Annabel Kandiah, Maxime Ko, and Jessica Droste Yagan.

The leaders of the twelve organizations profiled in this book also deserve our appreciation and gratitude. The CEOs and their senior management teams invited us into their institutions and allowed us to study their “secrets to success.” Every one of the organizations profiled in this book was exceptionally responsive to our many research requests; they generously shared staff time and volumes of internal and sometimes sensitive documents. Of particular note are Alison Franklin, director of communications at City Year; Charles Kamasaki, senior vice president at NCLR; Mary Mountcastle, senior associate at Self-Help; and David Yarnold, executive vice president at Environmental Defense. These individuals went out of their way to respond to our queries and engage with us as thought-partners as our research progressed.

In the execution of our research, we relied on the generosity of a wide circle of institutions and individuals. The Chronicle of Philanthropy and a number of early-stage nonprofit funders donated lists for our peer survey (see Appendix A for details). Individual field experts generously shared their time and insights to help us select a sample of twelve truly high-impact nonprofits. They are too numerous to list here, but all are credited by name in Appendix B.

This endeavor began with intensive research, and ended with a book. To help us get it there, we are indebted to our literary agent, Rafe Sagalyn, who has been a constant source of guidance. We also extend our gratitude to our editor, Allison Brunner, and her dedicated team at Jossey-Bass; Allison has championed this project from the outset. And as we entered into the writing stage, we were aided enormously by our freelance editor, Mickey Butts. Mickey helped us structure our outline, sharpen our thinking, and refine our prose.

This book was improved by the many friends and colleagues who agreed to review early drafts. In addition to a number of the advisers we’ve already mentioned, we are also grateful to Katherine Fulton, Barbara Kibbe, Shirley Sagawa, Tony Deifell, Betsy Fader, Alana Conner, and Margaret Hutton Griffin, who each provided feedback at critical junctures. Others who helped stimulate our thinking include Bill Drayton, Sushmita Ghosh, Anamaria Schindler, Diana Wells, and Susan Davis of Ashoka, as well as Julien Phillips, Dick Cavanaugh, Don Clifford, Alan Grossman, Cheryl Dorsey, Jed Emerson, and David Bornstein.

We also want to thank our personal friends, who have been there for us throughout this long journey. To Susan Glasser and Peter Baker, we offer our special appreciation for their literary camaraderie, and for hosting Heather (and family) several times at their home in Washington, D.C. Thanks to the Baxter family for hosting Leslie and her daughter in their Bay Area home. To Jan Brown, Andy Cohen, and Leonora Zilkha, thanks are in order for hosting us in their New York City abodes. To Katie and Will Procter, a special thanks for sharing their nanny in New York. And to our many other friends and colleagues in the nonprofit field, we appreciate your listening to our stories over dinner, sympathizing when we agonized about deadlines, and contributing your ideas to our search for a winning title.

Finally, we owe our deepest gratitude to our families. In particular, we are grateful for Heather’s husband, Elliott Grant, and Leslie’s husband, Anthony Macintyre, who both read and reread multiple drafts of our chapters, offering critical commentary, helpful advice, and endless encouragement. (Elliott also lent his PowerPoint skills to help with our graphic presentation.) They are both true intellectual and emotional partners—and we feel blessed to have them in our lives.

To our extended families, especially both sets of parents, Pam and Jim Crutchfield and Ruthie and Al McLeod, we owe our deep appreciation for their lifelong love, inspiration, and encouragement. We thank them as well for the child-care safety net they’ve provided, as we’ve juggled being first-time authors and first-time moms over the past few years.

And to our young daughters, Caleigh Crutchfield Macintyre and Somerset Ellinor Grant, we dedicate this book. We hope that you will go forth into the world and become—in your own unique ways—forces for good.

THE AUTHORS

Leslie R. Crutchfield is a managing director of Ashoka and a research grantee of the Aspen Institute’s Nonprofit Sector and Philanthropy Program. Prior to joining Ashoka in 2001, she was cofounder of Who Cares: The Tool Kit for Social Change, a national magazine for social entrepreneurs reaching fifty thousand readers from 1993 to 2000. She is a philanthropic adviser who has consulted with leading foundations and nonprofits. Leslie is a writer and speaker on such issues as social entrepreneurship, nonprofit management, and international development, with more than fifteen years of leadership experience in the social sector. She served as a Crossroads Africa volunteer in Gambia, and currently serves on the board of directors of the SEED Foundation. She earned her MBA and AB from Harvard University, and resides in the Washington, D.C., area with her husband and two children.

Heather McLeod Grant is an adviser to the Stanford Center for Social Innovation, and research fellow with Duke University’s Center for the Advancement of Social Entrepreneurship (CASE). Heather is a former McKinsey & Company consultant who has more than fifteen years of leadership experience in the social sector, including cofounding Who Cares. More recently, Heather has consulted with leading nonprofit and philanthropic organizations on issues of strategy and organizational development. Heather serves on various nonprofit boards, including the board of the Stanford Social Innovation Review, and has written and spoken publicly about the nonprofit sector. Heather has an MBA from Stanford Graduate School of Business and an AB from Harvard University, and resides in the San Francisco Bay Area with her husband and daughter.

INTRODUCTION

During the last several decades, a new cadre of entrepreneurial nonprofits has created extraordinary levels of social impact. These pioneering “change makers” are the vanguard of a growing civic sector—a segment of the U.S. economy now valued at more than $1 trillion. Operating at the interstices of government and the market—a broad and ill-defined “grey space”—these organizations play an increasingly important role in shaping our world.

That’s why we set out four years ago to research and write about some of the most successful nonprofits of our era. We surveyed thousands of nonprofit CEOs and conducted more than sixty interviews just to select the twelve exemplary organizations featured in this book. (See Table I.1.)

Then we spent two years studying these organizations intensively and uncovering their secrets to success. We wanted to know what enabled them to have such high levels of impact. What we learned along the way truly surprised us.

In the course of our research, we discovered six practices that help great nonprofits achieve significant results. Our findings were nothing like the conventional wisdom about nonprofit management we had read before. You’ll learn in this book—just as we learned—that we need new frameworks for understanding what makes great nonprofits great, and new ways of thinking about creating social change. Fortunately, these twelve organizations can help show us the way.

TABLE I.1. TWELVE EXEMPLARY ORGANIZATIONS.

OrganizationIssue AreaAmerica’s Second HarvestHunger reliefCenter on Budget andFederal and state budgetPolicy PrioritiesanalysisCity YearNational service, youth leadershipEnvironmental DefenseEnvironmentExploratoriumMuseums, science educationHabitat for HumanityHousingThe Heritage FoundationConservative public policyNational Council of La RazaHispanic interestsSelf-HelpHousing and economic developmentShare Our StrengthHunger reliefTeach For AmericaEducation reformYouthBuild USAYouth leadership, housing, job training

WHY THIS BOOK, AND WHY NOW?

Our research on high-impact nonprofits arrives at a key inflection point in the development of the global social sector. Indeed, we believe the rise of this sector is one of the great untold stories of our time.

In the United States alone, 1.5 million nonprofits now account for more than $1 trillion in revenues annually of the nation’s economy. 1 During the past fifteen years, nonprofits grew faster than the overall economy, with thirty thousand new organizations created each year. In fact, nonprofits are now the third-largest industry in the United States, behind retail and wholesale trade, but ahead of construction, banking, and telecommunications.2 Although terminology varies—the industry is alternately called civil society, the citizen sector, the social sector, the nonprofit sector, or the third sector—its importance is undeniable.

Internationally, similar trends are reflected in the growth of a global civil society. “Few developments on the global scene over the past three decades have been as momentous as the recent upsurge in private, nonprofit, voluntary, or civil society organizations,” writes scholar Lester Salamon. “We are in the midst of a ‘global associational revolution.’”3 Worldwide expenditures in this sector account for nearly 5 percent of combined global gross domestic product, or $1.1 trillion in economic activity.4 And the numbers increase each year.

Several forces are propelling this growth. First is the unprecedented amount of wealth flowing to charitable organizations from corporate foundations, private philanthropists, and individual donors. American grantmaking foundations alone currently have nearly $500 billion in assets under management.5 And the estimated amount of money that will be transferred between generations by 2050 is $43 trillion, some of which will ultimately go to charitable institutions.6 Even more important is the new emphasis on “giving while living”—with more donors taking an active role in their philanthropy during their lifetimes. Because nonprofits operate at the interstices of the market and the state, they increasingly act as intermediaries, channeling private wealth to help solve public problems.

At the same time, political pressures and economic realities are forcing many governments to retrench. Big government is out, and market-based capitalism is in. As the social welfare state scales back, nonprofits are filling the gaps and providing services that were historically the domain of the state. In the United States, federal cutbacks in social spending, and pressures to devolve services to the local level, have resulted in more outsourcing to community-based groups. The trend is similar in other developed nations around the world.

Simultaneously, new technologies and instantaneous global communications have created a heightened awareness of the problems facing our fragile planet: climate change; natural disasters; ethnic and cultural conflict; nuclear proliferation; AIDS and pandemics; hunger, homelessness, and persistent poverty. All these issues are compounded by a surging global population that is quickly depleting the earth’s resources. There’s a sense of urgency to solving these problems, as well as a growing awareness that our other institutions are failing us.

In response, leading social sector organizations are rising to the challenge, finding ways to address the world’s problems by working with, and through, government and business to launch innovative solutions. The best are run by social entrepreneurs—highly adaptive, innovative leaders who see new ways to solve old problems and who find points of leverage to create large-scale systemic change. These organizations—including the twelve profiled in this book—are the vanguard of the social sector. Like their equivalents in the for-profit sector, these nonprofits aren’t content merely to plod along with incremental change or let conventional wisdom stand in the way of their success. They are collectively creating new models for social change.

And the global power elite is taking notice. Today, no Davos World Economic Forum gathering of leaders would be complete without a coterie of social entrepreneurs.7 These leaders are the social sector equivalents of successful business entrepreneurs, only they are creating innovative new solutions to the world’s most pressing social and environmental problems. So it’s not surprising that the two groups are teaming up. Philanthropy has been rediscovered, with a new twist.

Today’s corporate titans aren’t content to merely accrue wealth; they now want to have a more meaningful impact in their lifetimes. High-tech leaders like Bill Gates of Microsoft, Pierre Omidyar and Jeff Skoll of eBay, Steve Case of America Online, and newcomers like Sergey Brin and Larry Page of Google are giving while living. The global philanthropy game is no longer about making money and passing it on to heirs or donating it to traditional charities like an alma mater, local opera company, or United Way. The new philanthropy is all about leveraging financial resources by investing in the most entrepreneurial agents of change—those that have figured out how to scale their impact exponentially. It’s the end of charity as we know it, and the beginning of high-impact philanthropy.

Given all these converging trends, it’s not surprising that leading social entrepreneurs and their organizations have outgrown the conventional tools of the trade. Merely building a great board or delivering adequate services or even running an efficient non-profit is no longer enough. In order to be true forces for good, they must learn new ways of thinking and acting. Today’s social entrepreneurs, nonprofit leaders, board members, and philanthropists are hungrier than ever for concise, well-researched information that can help them achieve greater social change.

But if you were to study the existing nonprofit management literature, you’d be no closer to understanding how to achieve meaningful impact in this new fast-paced, global environment. Most early research on nonprofit scale focused on program replication as a means of expanding social impact.8 In the for-profit world, this is the equivalent of studying product development and distribution: a necessary function, but overall, only a small part of what makes great companies successful. In fact, because the sector was still emerging back then, studying nonprofits was a new discipline. These early thinkers paid little attention to the nonprofit organizations themselves and more to the sector as a whole.

Then, in the past decade, the focus shifted to building organizational capacity in order to deliver programs more efficiently.9 Scholars looked at how nonprofit leaders could build effective organizations and manage them well to magnify their impact. Many practitioners welcomed the attention to developing their organizations, because it had been long neglected and represented a necessary step forward. Yet this insight has still not penetrated the conventional wisdom in the field. Too few funders and donors pay attention to building solid organizational foundations.

More recently, nonprofits have been told to look to the private sector for models of success, in part because of the increasing cross-fertilization between the sectors. “Nonprofits need to be run more like business” is the common refrain. Although we agree that nonprofits can learn proven practices from their for-profit counterparts, this still isn’t enough. Better management practices can create only incremental, not breakthrough, social change. And even the best businesses cannot tell us how to change the world, because that is not their primary purpose.

Only the best nonprofit organizations—those that have achieved real impact—can show us the way. That’s why we chose to study the best nonprofits themselves, rather than take management practices derived from businesses and try to translate them to the social sector, as others have done.

A NEW WAY OF THINKING ABOUT NONPROFITS

If the 1980s and early 1990s were all about replicating programs and the last decade was about building effective organizations, we believe the next leap is to see nonprofits as catalytic agents of change. We must begin to study and understand nonprofits not merely as organizations housed within four walls, but as catalysts that work within, and change, entire systems. The most effective of these groups employ a strategy of leverage, using government, business, the public, and other nonprofits as forces for good, helping them deliver even greater social change than they could possibly achieve alone.

As we learned in the course of our research, great nonprofits follow six practices to achieve more impact. We describe these practices in more detail in the following chapters. In a nutshell, organizations seeking greater impact must learn how to do the following:

• Work with government and advocate for policy change, in addition to providing services

• Harness market forces and see business as a powerful partner, not as an enemy to be disdained or ignored

• Create meaningful experiences for individual supporters and convert them into evangelists for the cause

• Build and nurture nonprofit networks, treating other groups not as competitors for scarce resources but as allies instead

• Adapt to the changing environment and be as innovative and nimble as they are strategic

• Share leadership, empowering others to be forces for good

These things may sound simple or obvious, but they’re not. It has taken us, and the groups we studied, years of trial and error to distill these practices—and to make them explicit. We can all learn a great deal from them.

Yet even if nonprofits do all these things, they will still fall short unless the other sectors of society meet them halfway. Business, government, and concerned citizens must be open to working with these nonprofit institutions—and to becoming forces for good themselves. And donors should change their definition of what it means to be great, eschewing less meaningful metrics like overhead ratios and instead funneling resources to those groups that have the most impact. This is what separates the best from the rest.

Without heeding this call to action, we are doomed to plod along with slow, incremental change. We’ll barely make a dent in climate change. We’ll meagerly fund programs that only perpetuate the cycle of poverty. We’ll continue to allow millions of children to go to bed hungry or without health care. We’ll let global pandemics wipe out entire populations because we can’t figure out how to distribute cheap medications. And we’ll continue to make the mistake of focusing too much on inputs and processes rather than on outcomes and results.

We don’t have time for incremental change—we need dramatic change if we are to solve the complex global problems that plague us today. The stakes are high on all sides, and we must rise to the challenge. Doing anything less would squander this momentous opportunity to advance the greater good. Fortunately, these great nonprofits—and the lessons we can learn from them—can show us a new way.

WHY YOU SHOULD READ THIS BOOK

Anyone who is interested in creating social change—or in the non-profit sector more broadly—should read this book. Although there’s something for anyone who cares about social impact, our findings have critical implications if you are . . .

A leader of a national or international organization. If you lead a large nonprofit, you’ll see how applying the six practices of high-impact nonprofits can help you dramatically increase your own results. In fact, you’re probably already putting some of these practices to work. But like many of the great groups we studied, you may need to learn how to do all of them, or how to do some better. This book provides a starting point for thinking about what to do to increase your impact. Later, in Chapter Nine, we’ll help you understand how to begin implementing these practices to achieve greater good.

A leader of a local nonprofit. Although we limited our study to organizations that have achieved significant national or international impact, we believe that these practices are also applicable to local contexts. If you’re not already advocating for policy reform and partnering with businesses, you’ll learn why you should consider doing so. You’ll learn how to engage more individuals through meaningful experiences and convert them to evangelists for your cause. And you’ll come to understand the power that can be gained from collaboration with your fellow nonprofits. By harnessing these forces, you can create deeper local impact, without necessarily growing your organization to a larger scale.

A donor, board member, or volunteer. Whether you’re independently wealthy, an average wage earner, or one of the nation’s millions of working poor, the vast majority of you give something to charity each year, including your valuable time and money. When you consider which groups most deserve your attention, we hope you’ll consider those great nonprofits that most effectively convert resources into results. This book can help you understand how to get more bang for your charitable buck, the same way you would with your for-profit investments. Understanding the six practices of high-impact nonprofits can help serve as a screen for your social investments and help you too become a stronger force for good.

A foundation leader or philanthropist. Foundation leaders and philanthropists have a unique and important role to play in creating social change. You control important resources in the sector and can signal smart investments to government, businesses, and individuals by virtue of where you make your grants. You also have an important leadership role in supporting effective practices, encouraging innovation, disseminating knowledge, and convening and coordinating others to focus on the highest priorities. And as leaders of nonprofits yourselves, you can also apply many of these six practices to your own organizations.

A business leader. Nonprofits are learning how to leverage market forces and work with business to advance their causes. Now more than ever, businesses need to understand their nonprofit counterparts. Whether they are activist opponents, pragmatic allies, or catalysts for social responsibility, nonprofits can no longer be ignored. This book helps you get inside the minds of top nonprofits and understand what to look for in a social sector partner. It can also give you insights as you consider more broadly your approach to social responsibility and your commitment to the community. Your future hangs in the balance, too. You have vast power and resources, and these groups can help you learn how to do well while doing good.

An elected official or policymaker. If you are a political leader, we hope you’ll see that nonprofits are not just a convenient place to outsource government programs and services. They are an excellent source of policy ideas and social innovation as well. At their best, nonprofits can be government’s partner in solving social problems and can also bring business and citizens to the table. But they need government resources to achieve their goals. Government has the money, political power, and distribution might; nonprofits have the talent, networks, knowledge, and entrepreneurial energy needed to create social change. Together they are more powerful.

A nonprofit consultant or adviser. If you consult with nonprofits on any subject—strategy, operations, fundraising, human resources—this book has important implications for your work. Once you’ve read Forces for Good, we challenge you to step out of the traditional management silos and to expand your focus beyond the nonprofit itself as you consider its place in the larger system. Building a strong organization is necessary, but not sufficient, for achieving great impact. We hope this book provokes you to think differently about the work of nonprofits.

An academic. Those who study the social sector have a special charge. Although we realize that our methodology was inductive and grounded in applied research, we believe that our findings highlight areas of academic study that are ripe for further exploration, testing, and refinement. We have just begun to scratch the surface of learning about what makes great nonprofits great and how they use leverage to maximize impact. We hope you will see our findings as a springboard for future research—and we welcome your feedback.

HOW TO READ THIS BOOK

Chapter One provides a more detailed overview of our findings, including discussion of the six practices we discovered and the myths of nonprofit management that fell by the wayside in the course of our research. It also introduces the organizations we studied in a summary table and briefly describes our research methodology. It’s important to read the next chapter first in order to understand the rest of this book. Chapter One is also a great way to get a quick summary of our work if you have limited time. You can then read the more detailed chapters as needed.

Chapters Two through Seven focus in depth on each one of the practices that highly effective nonprofits use to create greater social impact. To bring the concepts to life, each chapter includes stories and lessons from the social entrepreneurs and organizations we studied, as well as powerful frameworks that can help you apply these practices to your work. At the end of these chapters, we’ve provided a brief summary of the main ideas to serve as a quick reference guide. You can either read these six chapters sequentially or dip into those that seem the most interesting or relevant to your particular work.

Chapter Eight highlights the critical elements necessary for nonprofits to sustain their impact going forward—things like exceptional people, sufficient capital, and solid infrastructure. Great nonprofits master the six practices to create maximum impact, and they build an effective organization to sustain that impact. Organizations that try to do the former without the latter, risk being unable to deliver on their promises. But organizations that focus only on their own management risk having less impact.

Chapter Nine addresses how the six practices fit together and how pursuing them simultaneously creates compound good. It also addresses what you might consider doing differently once you’ve read this book, and the larger implications for the field. This chapter can help you put what you’ve learned into practice. Finally, readers who are interested in learning more about the twelve organizations or our methodology should dive into the appendixes. These include organizational “facts at a glance” and a much more detailed account of our research methodology. Our endnotes and additional resources offer more sources of information.

Whether you’re a nonprofit leader, a philanthropist, a business executive, a donor, a volunteer, or a board member—or simply interested in learning how to change the world—we hope this book inspires you to be a stronger force for good.

CHAPTER ONE

FORCES FOR GOOD

What makes great nonprofits great?

It’s a simple-sounding question, but like a riddle, one with a not-so-simple answer. Our attempt at answering this question is the book you’re holding in your hands.

Forces for Good is about the six practices that high-impact nonprofits use to maximize social change. These practices can be applied by any organization seeking to make a difference in the world. Our findings are grounded in several years of research on twelve of the most successful nonprofits founded in recent U.S. history—groups that we selected and studied precisely because they have achieved significant levels of impact.

This book is not about America’s most well-managed nonprofits. It’s not about the best-marketed organizations with the most recognized brands. And it’s not about the groups with the highest revenues or the lowest overhead ratios—those misleading metrics too often used as a proxy for real accomplishment in the social sector.

We chose to study these dozen organizations because they have created real social change. They have come up with innovative solutions to pressing social problems, and they have spread these ideas nationally or internationally. They have produced significant and sustained results, and created large-scale systemic change in just a few decades. In the business world, these organizations would be akin to companies like Google or eBay, which catapulted onto the Fortune 500 list of biggest companies in a matter of years.

One group we studied has housed a million poor people; another has sharply reduced acid rain and created new models for addressing climate change; and one has helped hundreds of thousands of young people volunteer through national service programs. Collectively, they have influenced important legislation on issues ranging from immigration to welfare reform, pressured corporations to adopt sustainable business practices, and mobilized citizens to act on such issues as hunger, education reform, and the environment.

Founded and led by social entrepreneurs—whether they call themselves that or not—these nonprofits have truly become forces for good.

THE TWELVE HIGH-IMPACT NONPROFITS

Teach For America is one of these high-impact groups. Launched by Princeton Senior Wendy Kopp in 1989 on a shoestring budget in a borrowed office, it now has forty-four hundred corps members and more than twelve thousand alumni. Many of the country’s best and brightest college grads now spend two years teaching in America’s toughest public schools, in exchange for a modest salary. In the last decade, Teach For America has more than quintupled in size, growing its budget from $10 million to $70 million by 2007 and its number of teachers from five hundred to forty-four hundred. And it aims to double again in the next few years.1

But rapid growth is only part of the story. More important, Teach For America has succeeded in doing what was once considered impossible: it has changed how we think about teacher credentialing, made teaching in public schools “cool,” and created a vanguard for education reform among America’s future leaders. It is now the recruiter of choice on Ivy League campuses, out-competing elite firms like Goldman Sachs and McKinsey & Company.2 And graduates who went through the program in the 1990s are now launching charter schools, running for elected office, managing education foundations, and working as school principals. Teach For America’s audacious goal is to one day have a U.S. president who is an alumnus of the program.

Habitat for Humanity is another extraordinary nonprofit. Founder Millard Fuller was a successful businessman who gave away his fortune and launched Habitat in 1976 with the outrageous goal of “eliminating poverty housing and homelessness from the face of the earth.” Today, thousands of Habitat volunteers around the world build houses with low-income families, who take part in the construction and pay for their homes with no-interest loans. More than twenty-one hundred affiliated organizations now operate in nearly one hundred countries, and Habitat ranks among the Chronicle of Philanthropy’s top twenty-five nonprofits in revenues, with a combined budget approaching the $1 billion mark.3

But even more impressive than these statistics is Habitat’s ever-expanding community of evangelists for housing reform. Fuller never set out to build an organization—instead, he wanted to start a movement that put poverty and housing “on the hearts and minds” of millions of volunteers. In just the past few years, the group has begun to turn its hammers into votes, seeking to influence the larger economic and political systems that create poverty and homelessness in the first place.

Then there’s Environmental Defense. Founded in the late 1960s, this groundbreaking nonprofit was the brainchild of scientists who wanted to ban the pesticide DDT, which was killing endangered birds of prey. Although Environmental Defense has achieved enormous legal victories on behalf of the environment, today it is best known for introducing market-based strategies that help change corporate behavior. Environmental Defense’s cap-and-trade program was a key component of the Clean Air Act; the pollution credit-trading system has helped reduce sulfur dioxide emissions that cause acid rain, and now serves as an important model in the fight to reverse climate change.

Under the leadership of president Fred Krupp, Environmental Defense has also forged innovative partnerships with such companies as McDonald’s, Federal Express, and Wal-Mart, despite initial cries from other groups that it was selling out. In the early 1990s, the organization helped McDonald’s eliminate more than 150,000 tons of packaging waste, and it is helping FedEx convert its midsize truck fleet to hybrid vehicles.4 Most recently, the nonprofit announced a partnership with Wal-Mart to help the company become more environmentally sustainable.

With a staff of nearly three hundred, a membership base of five hundred thousand, and an annual budget of nearly $70 million, Environmental Defense has had an extraordinary growth trajectory, nearly doubling in size in the last five years. Although its original founders knew little about nonprofit management, the organization has become a model of social innovation that other groups now copy. By daring to “find the ways that work,” Environmental Defense has influenced not only other green groups but also government policy and business practices.

Three nonprofits, three extraordinary stories. This book tells the stories of twelve great organizations, which we studied over three years to understand the secrets to their success. We provide a quick snapshot of who they are and what they do—along with the impact they’ve achieved—in Exhibit 1.1. Longer organizational profiles are available in Appendix E, and their stories are woven throughout the book. Later in this chapter, we explain how we selected these organizations and the method behind our research.

SHATTERING THE MYTHS OF NONPROFIT MANAGEMENT

When we delved into our research at each organization, we donned our MBA hats, examining traditional silos of nonprofit management—leadership, governance, strategy, programs, development, marketing. In the spirit of best-selling business books, we thought we would find that great nonprofits had time-tested habits that conferred a competitive advantage—things like brilliant marketing, perfect operations, or rigorously developed strategic plans. We imagined that there was a “secret sauce” involved in building the organization, and that if you could just get the recipe right and then scale up—presto!—you’d have more impact.

But what we found surprised us—and flew in the face of the perceived wisdom in the field. Achieving large-scale social change is not just about building an organization and then scaling it up site by site. Many of these groups are not perfectly managed. Nor are they all well marketed. And at least half don’t score well on conventional ratings, because they care more about having impact than having low-overhead budgets. They do what it takes to get results.

As we got further into our research, we saw that many beliefs about what makes great nonprofits great were falling by the wayside. In fact, the vast majority of social sector management books focus on things that don’t always lead to greater impact. We found little evidence to support common myths of nonprofit excellence.

EXHIBIT 1.1 ORGANIZATION PROFILES.

Myth 1: Perfect management. Some of the organizations we studied are not particularly well managed in the traditional sense of the term. Although some treat their systems, processes, and strategic plans as high priorities, others are more chaotic, and regard “plan” as a four-letter word. Some management is necessary (as you’ll see in Chapter Eight), but it is not sufficient to explain how these organizations achieve such high levels of impact.

Myth 2: Brand-name awareness. Although a handful of groups we studied are household names, we were surprised to learn that a few hardly focus on marketing at all. For some of them, traditional mass marketing is a critical part of their impact strategy; for others, it’s unimportant.

Myth 3: A breakthrough new idea. Although some groups came up with radical innovations, others took old ideas and tweaked them until they achieved success. As we will explore later, their success often depends more on how they implement a new idea or innovate as they execute than it does on the idea or model itself.

Myth 4: Textbook mission statements. All these nonprofits are guided by compelling missions, visions, and shared values. In fact, it is their obsession with impact that creates internal alignment, despite the lack of perfect management. But only a few of these groups spend time fine-tuning their mission statement on paper—most of them are too busy living it.

Myth 5: High ratings on conventional metrics. When we looked at traditional measures of nonprofit efficiency, such as ratings on Charity Navigator, many of these groups didn’t score so well. A few garnered only one or two stars out of a total of five. These ratings Web sites can tell you which groups have the lowest overhead ratios, but they can’t tell you which have had the most impact.

Myth 6: Large budgets. We discovered that size doesn’t matter much when it comes to making an impact. Some of these nonprofits have achieved great impact with large budgets; others have achieved great impact with relatively small budgets. And all of them have different fundraising strategies.

As we dismissed the conventional wisdom about what makes great nonprofits great, we began to realize that there was a flawed assumption underlying our initial research question. When we began this project, we assumed there was something inherent to these organizations that made them great. Instead, we learned that becoming a great nonprofit is not about building a great organization and then expanding it to reach more people. In fact, growing too quickly without adequate investment can cause an organization to falter or implode. Although growing an organization can be one strategy for increasing impact, it is not the only way these groups achieve success.

THE SIX PRACTICES OF HIGH-IMPACT NONPROFITS

What we learned about these nonprofits astonished us, and intrigued others with long experience in the field. We believe that the framework we’ve discovered offers a new lens for understanding the social sector and what it takes to create extraordinary levels of social change. Any organization seeking to increase its social impact can emulate the six practices that we describe in detail below.

The secret to success lies in how great organizations 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 how they manage their own internal operations. Textbook strategies like relentless fundraising, well-connected boards, and effective management are necessary, of course, but they are hardly sufficient. The high-impact nonprofits we studied are satisfied with building a “good enough” organization and then spending their time and energy focused externally on catalyzing large-scale systemic change. Great organizations work with and through others to create more impact than they could ever achieve alone.

“Give me a lever long enough, and I alone can move the world,” is the common paraphrase of Archimedes. These twelve groups use the power of leverage to create tremendous change. In physics, leverage is defined as the mechanical advantage gained from using a lever. In the social sciences, it translates into the ability to influence people, events, and decisions. In business, it means using a proportionately small initial investment to gain a high return. Whatever the definition, we think the concept of leverage captures exactly what great nonprofits do. Like a man lifting a boulder three times his weight with a lever and fulcrum, they have far more impact than their mere size or structure would suggest (see Figure 1.1). They influence and transform others in order to do more with less.

The organizations in this book seed social movements and help build entire fields. They shape government policy, and change the way companies do business. They engage and mobilize millions of individuals and, in so doing, help change public attitudes and behaviors. They nurture larger networks of nonprofits and collaborate rather than compete with their peers. They spend as much time managing external relationships and influencing other groups as they do worrying about building their own organizations. These high-impact nonprofits are not focused only on themselves but also on the relentless pursuit of results.

After a long process of studying these organizations, of reflection and writing, of testing and retesting our thinking, we began to see patterns in the ways they work. In the end, six of these patterns crystallized into the form presented here—the six practices that high-impact nonprofits use to achieve extraordinary impact. Although they didn’t all use every single practice, at least ten of the twelve groups applied each one, or else we didn’t consider it significant enough to constitute a “pattern.”

FIGURE 1.1. LEVERAGE INCREASES IMPACT.

The first four practices are more external; they represent how these groups dramatically expand their impact outside the borders of their own organizations. Each of these practices influences an external stakeholder group with which the nonprofit works so as to do more with less. In observing this external focus, we also realized that working outside the organization entails special practices inside that help these nonprofits relate more effectively to their environment. This led us to discern two additional internal practices that enable high-impact nonprofits to operate successfully in the outside world and bridge boundaries.

More specifically, we learned that great social sector organizations do these six things:

1. Advocateandserve. High-impact organizations don’t just focus on doing one thing well. They may start out providing great programs, but eventually they realize that they cannot achieve systemic change through service delivery alone. So they add policy advocacy to access government resources or to change legislation, thus expanding their impact. Other nonprofits start out doing advocacy and later add grassroots programs to supercharge their strategy. Ultimately, all of them bridge the divide between service and advocacy, and become good at doing both. And the more they advocate and serve, the greater the levels of impact they achieve.

2. Make markets work. 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 the private sector as the enemy, great nonprofits find ways to work with markets and help business “do well while doing good.” They influence business practices, build corporate partnerships, and develop earned-income ventures—all ways of leveraging market forces to achieve social change on a grander scale.

3. Inspire evangelists. Great nonprofits see volunteers as much more than a source of free labor or membership dues. They create meaningful ways to engage individuals in emotional experiences that help them connect to the group’s mission and core values. They see volunteers, donors, and advisers not only for what they can contribute to the organization in terms of time, money, and guidance but also for what they can do as evangelists for their cause. They build and sustain strong communities to help them achieve their larger goals.

4. Nurture nonprofit networks. Although most groups pay lip service to collaboration, many of them really see other nonprofits as competition for scarce resources. But high-impact organizations help the competition succeed, building networks of nonprofit allies and devoting remarkable time and energy to advancing their larger field. They freely share wealth, expertise, talent, and power with their peers, not because they are saints, but because it’s in their self-interest to do so.

5. Master the art of adaptation. All the organizations in this book 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 based on external cues—allowing them to sustain their impact and stay relevant.

6. Share leadership. We witnessed much charisma among the leaders in this book, but that doesn’t mean they have oversize egos. These CEOs are exceptionally strategic and gifted entrepreneurs, but they also know they must share power in order to be a stronger force for good. They distribute leadership throughout their organization and their nonprofit network—empowering others to lead. And they cultivate a strong second-in-command, build enduring executive teams with long tenure, and develop highly engaged boards in order to have more impact.