An Options Framework for Nonprofit Turnarounds

Over the last 10 years, I’ve been developing an informal diagnosis and strategy model for choosing financial turnaround strategies for nonprofits and social enterprises. In this working model, I’ve named 12 directional themes and not quite 100 strategy options.

To use the model, the first diagnostic question is whether the problems are low-level and chronic or whether they are severe and urgent. The next question is whether the problems are primarily rooted in internal causes (e.g. limited funding sources, stagnating growth, exhausted leadership) or external ones (e.g. major changes in the market, loss of a primary funding source, unexpected loss of the chief executive).

Here are the working names for the 12 strategies:

  1. Streamline (Chronic and Internal Causes)
  2. Back to Business Basics
  3. Raise More Money
  4. Reinvent (Chronic and External Causes)
  5. Communicate
  6. Expand
  7. Triage  (Urgent and Internal Causes)
  8. Raise Immediate Cash
  9. Clean House
  10. Transform (Urgent and External Causes)
  11. Merge
  12. Close

Within each theme are at least half a dozen tactics.

For example, driven by the Raise More Money turnaround theme (chronic and internal), your team can consider a combination of any of the following options as priority tactics:

  • Speed up A/R.
  • Add value and raise fees.
  • Spend more time fundraising. Deploy more people to ask and thank.
  • Campaign for medium-sized gifts (mini-majors).
  • Major gift campaign.
  • Grassroots solicitation.
  • Mini events managed by volunteers.
  • Package intellectual assets into new items and services — and make sales.
  • Sublease, discounts, rent lists, and such.
  • Credit or bridge loan. Friendly loan.
  • Diversify income.

It sometimes makes sense to combine a couple of the themes, for example Reinvent and Communicate, pulling options from both categories.

In any turnaround strategy, plan on engaging your board and most loyal donors in reaching out to share your plan with new strategic donors and partners. This work is too difficult to do alone. Risking deeper engagement is where the magic can happen — one major investment towards the new vision will enable change and attract others. In the background and throughout the effort, it helps to assign someone to pursuing all the small ways to increase revenues and someone else to focus on all the small ways to save.

I’m interested in feedback and in further developing this model. If you find this interesting or potentially useful in your work, let me know.