The Lifecycle of Nonprofit Organizations

Is your organization just starting up, and full of excitement about its mission? Or does your agency have a long track record, assets to manage, and a big staff? Nonprofits - like people - travel through different stages of development over time, and each of these stages poses specific challenges. Identifying your organizational stage will aid in your ability to effectively analyze agency issues as well as plan for the future.

• Stage One: Your agency is just starting up. There is tremendous passion about your mission and what you want to accomplish. What you don't know about nonprofit management is more than compensated for by your boundless enthusiasm and willingness to work. Your focus is on services; policy-making and fundraising happen on an as-needed basis. Your strengths: excitement, commitment to mission, lots of volunteers. Your challenges: lack of expertise, funding, and a track record.

• Stage Two: The work you want to do to serve your mission begins to crystallize. Your organization hires paid staff to do the nitty gritty work, but board members run ongoing operations. Board and/or staff are beginning to see a need to formalize systems for management and oversight, but there is a deep reluctance to giving up the fun and informality of the early years. Your strengths: ability to provide services on a shoestring budget, creativity, friendly and casual atmosphere, a highly committed board and staff. Your challenges: lack of consistent funding, long-range planning.

• Stage Three: Staff begins to oversee programs and services, while the board tries to figure out its changing role. Much of the board's time focuses on governance and financial management. Fundraising becomes absolutely central to the board's role, often in face of great resistance. Your strengths: growing relationships with donors who believe in your cause, the development of systems to sustain your organization over time. Your challenges: board/staff struggles over who is in charge, increased expenses, the board's reluctance to fundraise.

• Stage Four: Your annual budget is significant in size, as is your staff; you have assets to manage. Staff and board must formally establish their distinct responsibilities. These roles will be different than before, requiring everyone to be thoughtful, communicative, and open to change. This can be a challenging and contentious process, but if handled properly will strengthen the organization. Your strengths: established relationships with donors, successful programs. Your challenges: more board/staff struggles, resistance to change, keeping your commitment to your mission vital.

• Stage Five: Your agency is big, well-known, and well-funded. Your strengths: name recognition, established procedures, consistent resources. Your challenges: avoiding complacency, maintaining oversight of complex operations.
  

Numerous books and websites about nonprofits will outline all the procedures you should be following and all the policies that need to be in place. These are important to know, but be sure to exercise judgment about appropriate structures and solutions based on your developmental stage. Understanding the challenges of each stage is key to defining board/staff roles and responsibilities that match the organization's needs and further its mission.