Is there a better way to think about scale?
In recent years, scale has become one of the hottest topics in the nonprofit sector. Not a day goes by when I don’t see a report or an email, or a blog post, or at least a tweet talking about the importance of scale.
Much of the discussion is about how the nonprofit sector is not very good at growing organizations to scale. Many people are looking for ways to replicate private sector models of equity investing to help bring nonprofit organizations to scale.
I have been frustrated by much of this discussion, which I think often oversimplifies complex issues, exaggerates our ability to understand how societal change happens, draws false analogies between the private and nonprofit sectors, discourages collaboration, and encourages cherry-picking of the most profitable activities within the nonprofit sector while leaving the less profitable ones to smaller community-based organizations.
So I was very pleased to recently come across two items that I think make important contributions to the discussion.
The first is an interesting article in the Stanford Social Innovation Review entitled Collective Impact by John Kania and Mark Kramer. The article makes a rather simple and seemingly obvious observation— “Large-scale social change requires broad cross-sector coordination, yet the social sector remains focused on the isolated intervention of individual organizations.”
“Large-scale social change requires broad cross-sector coordination, yet the social sector remains focused on the isolated intervention of individual organizations.”
Think, for example, about how our country was able to achieve such a dramatic reduction in smoking over the past 30 years. We used research, litigation, legislation, taxes, education, regulation, chewing gum, faith programs, advertising and many other tactics. No single organization or program made it happen.
Collective impact takes this idea to the next level of intentionality and focus. Collective impact efforts are designed to organize multiple players to unite around a common objective. The authors outline five conditions of collective impact: (1) a common agenda; (2) shared measurement; (3) mutually reinforcing activities; (4) continuous communication; and (5) backbone support.
In Massachusetts, we have helped to promote this model through the Smart Growth Alliance’s Great Neighborhoods program and through LISC’s Resilient Communities/Resilient Families program. And I’m pleased to see the Collective Impact framework gaining attention nationally.
The second interesting article I recently read on the issue of scale was an op-ed in the New York Times by David Bornstein called For Ambitious Nonprofits, Capital to Grow. While this article does focus on how individual organizations can grow, it makes a very critical and important contribution to that discussion by talking about recent efforts by the Non Profit Finance Fund.
Obviously, nonprofits need money to grow, but Mr. Bornstein’s article discusses the difference between what he calls “build” capital versus what he calls “buy” capital.
Build capital is money used to build the capacity of a nonprofit organization and is analogous to private equity for a company
Build capital is money used to build the capacity of a nonprofit organization and is analogous to private equity for a company. Buy capital is money used to operate programs and deliver services and is analogous to sales revenue for a company. Those who supply build capital have different goals and needs than those who provide buy capital, just as investors and customers have different needs.
Nonprofits— and their funders—must understand this distinction. And the nonprofit system must have adequate supplies of both types of capital if we are to become more effective.
Joe Kriesberg is the is the president and CEO of the Massachusetts Association of Community Development Corporations.
A version of this article was first published in MACDC's "Making Connections" blog.
Posted in Implementing, Thinking Out Loud