NONPROFIT Scaling Impact
Nonprofits need funding to grow, but can also scale impact through collaborations and thought leadership.
Not every nonprofit needs to scale. As a matter of fact, many local social services will never need to grow beyond the scale of the problem in their particular community. Nonprofits generally hope that the effectiveness of their intervention will solve the problem they are aiming to address sooner rather than later.
For the social enterprises that are thinking about a scale strategy, it is important to identify the kinds of resources it will take to scale the impact of the organization, whether that scale is achieved through growth, dissemination (thought leadership), affiliation (partnerships) or branching (expansion, franchising, or replication).
Growth scaling strategies are capital intensive
Habitat for Humanity, WWF, and Red Cross are examples of nonprofit organizations that have grown their impact by growing the organization itself, developing a global footprint of offices and staff. Franchising is another approach to scaling impact through growth, which has helped organizations like Girl Scouts or Alcoholics Anonymous to reach across the globe through a vast network of local chapters.
Raising sufficient external funding to scale your impact by growing your organization can be challenging. Few donors and foundations focus on this stage of organizational growth, and there is a huge gap in philanthropic capital for this approach to scaling impact in the nonprofit sector.
Earned income provides a stream of unrestricted funds that can be directed toward growth and new initiatives. Earned income is also unhampered by the fundraising process and donor constraints, and generally increases as the organization becomes more successful. However, earned income usually grows slowly over time, not in large spikes, raising the risk that the timing of the organization’s growth opportunities will not correlate with a spike in earned income. Thus, as a funding source for growth, earned income can rarely match the funding that private investors provide to for-profit ventures, which is one reason that nonprofits have a harder time scaling through growth than for-profit corporations.
Non-growth scaling strategies require resources but can get creative
Numerous nonprofit organizations scale their impact through strategic partnerships, government adoption, advocacy, and thought leadership. These approaches to scaling impact benefit from the trust and credibility associated with many mission-driven nonprofits, and often rely less on expansion of a venture’s physical operations in multiple sites. Still, resources are required to fund highly skilled staff with time to focus on these highly complex approaches to delivering impact at scale.