From Starvation to Innovation

Photo by Daria Nepriakhina on Unsplash

Innovation, beyond a doubt, represents a key ingredient for solving our community’s most entrenched challenges.  Whether you’re tackling affordability, education, health care, foster care, or any other issue, we need fresh approaches to help us break new ground. We nonprofiteers are committed, resourceful, hardworking and smart. But one of the things Mission Capital has seen hinder progress is a cycle of starvation.

Nonprofit Starvation

The overhead myth is a huge contributing factor to the cycle of starvation. The myth is the idea that if a nonprofit isn’t spending at least 80% of its revenue on programs, it must be wasteful and ineffective.  In reality, there are better ways to measure a nonprofit’s impact than overhead. The myth is very effective, though, at starving nonprofits.  In order to keep overhead expenses under 20%, many nonprofits starve their administration, effectively building a house on a foundation of sand.

Does any of this sound familiar?

  • An administrator who also handles all the bookkeeping, human resource, information technology, facilities management, and more?
  • An underpaid office manager who puts in more hours than just about everyone else on staff just to keep their head above water?
  • Old, slow computers held together with duct tape and hope?
  • Paper and pen processes even when the technology to streamline it has existed for more than a decade?
  • Drafty, dingy, poorly-lit work spaces.

You get the idea.

How can anyone, even extremely talented people, innovate in an environment like that?  How can we attract and retain the talent needed to spark and sustain innovation? How can administrative staff provide the support staff what they need to innovate when their own plates are overflowing just trying to stay on top of routine tasks? Scarce resources drive risk aversion, the complete opposite of innovation.

Breaking the Cycle:  Low Hanging Fruit

Although a surprise gift of $10,000 wouldn’t hurt, you can begin breaking the starvation cycle without waiting for a miracle.  Chances are your nonprofit has some low hanging fruit – areas where a strategic investment will pay for itself within a year or less.

  • Equipment– Are your computers so old and slow that staff might as well be working with one hand tied behind their back?  An investment in new equipment, especially for staff that need it for almost their entire job, can pay for itself in less than a year through increased productivity.
  • Software– Are you using the wrong software for the job?  For example, to manage your donors and contacts, do you use something designed specifically for that purpose? Or have you been bootstrapping it with QuickBooks or Excel?  An investment in a good nonprofit CRM can more than pay for itself through new income and productivity.
  • Tech Support – Do you have a staff person whose daily job includes greeting guests, bookkeeping, HR, and a dozen other things plus IT?  Is that person really maximizing their talents and providing top-level support when and where you need it? You can make your whole team stronger with access to reliable, 24/7 tech support from businesses like Integritek and IT Guys.  When we made the switch, it paid for itself very quickly.

Improvements like these are really necessities more than luxuries.  When done right, they’ll not just pay for themselves, but they’ll also provide a boost in morale and help your staff feel more valued.  Over the course of a year, they could even bring your overhead costs down! Most importantly, your increased productivity and efficiency will free up time for your staff to invest in innovation and creating new approaches to old problems. Whether your next stage of innovation means improving your programs, learning how to earn income from a program you already have, or using data better to demonstrate your impact, you’ll be moving the needle.

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