Excerpts for Forces for Good : The Six Practices of High-Impact Nonprofits


Forces for Good

The Six Practices of High-Impact Nonprofits
By Leslie Crutchfield Heather McLeod Grant

John Wiley & Sons

Copyright © 2008 Leslie Crutchfield
All right reserved.

ISBN: 978-0-7879-8612-4


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 non-profits 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 non-profits. 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.

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. 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.

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 mid-size truck fleet to hybrid vehicles. 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 way-side. 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.

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 non- profits 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."

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.

(Continues...)



Excerpted from Forces for Good by Leslie Crutchfield Heather McLeod Grant Copyright © 2008 by Leslie Crutchfield. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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