how not to grow your nonprofit

A woman made a passing comment to me at a conference that I haven’t been able to get out of my head. I didn’t answer the way I should have. So, I’m hoping she and anyone else who thinks like her are reading along.

We were waiting for a session to start and we did the awkward introductions, and I took my best stab at answering her “what do you do” question.

She was delighted that my day job was helping nonprofits with strategy, fundraising and marketing. Even my “income solutions for nonprofits” line resonated with her because it turns out she’s the Executive Director of a nonprofit.

After she told me about her organization, she said something I haven’t been able to get out of my head. She said, “You’d be impressed with how much I have cut our expenses.”

That caught me off guard. So I stalled and asked her what she meant.

She told me that in the past year she’d “slashed” (her word) their expenses by over 25%. She said that their expenses had been too high so she’d started cutting. She was quite proud of the projects she’d shut down, the programs she’d axed and the people she’d laid off. (Proud may not be a fair word, but that’s the way it sounded in the moment).

She then completely freaked me out by saying how delighted her Board was with the drastically lowered expenses.

I asked about their fundraising and marketing expenses . . . what had she done with those line items?

She beamed: “Oh, I cut those the most. We do no marketing or fundraising.”

Just as the session was starting I whispered, “So what’s happening with your work? The reason your nonprofit exists . . . what’s happening with what you do?”

She whispered back. “Oh we’re not doing very much but our operating expenses are so low it’s fine.”

Here’s where I blew it. I didn’t tell her: “You can’t cut your way to growth. If you’re not growing you’re dying.”

When I was a nonprofit CEO/Executive Director, I had the horrible experience of having to significantly cut the budget, which meant not only slashing program expenses. I had to lay off nice people. But I only did it to get enough room in the budget to grow. It was far too painful and gut-wrenching to do it “a little.” I cut to balance the budget, and then I cut some more to have dollars to invest in growth. Those choices were too terrible for everyone to have to do more often than I had to. Or to do it and not have resources available for growth.

Here’s my thought for you. If you’re not growing, you are dying. Period. That’s reality just like gravity, Newton’s Laws and all manner of uncomfortable rules of the universe.

If you lead and your organization is stagnate or in decline, you cannot risk freezing and hoping things will improve. You have to make drastic changes to gather the resources necessary to GROW! You can’t wait.

And, if and when you have to make difficult budget decisions to cut expenses, cut enough to have resources left in your budget to invest in growth. You cannot cut to grow. You have to invest in growth. You have to find a way to invest in opportunities. You have to have resources available for the future. And by “future” I mean in 3 months not in 3 years. You might not be around in 3 years.

And here’s another reality about trying to cut your way to growth . . . the best people in your organization will flee to safety. If your people see budget reductions only to survive or to just barely meet budget without providing for investment in growth, they will become far more active on LinkedIn with brand-new resumes. They’ll be out the door as soon as they can find a place to land. The best people in your organization demand growth and opportunity. They want growth-excitement not the terror of budget cuts roaming the halls.

What do you do? Keep saying to yourself that you can’t cut your way to growth. Get enough room in your budget to have dollars to invest in the future growth. No pie-in-the-sky hoping that some big dollars will arrive somehow. “Hoping” is not an acceptable strategy.

What do you think? I know you’ve experienced your version of either experiencing cuts or having to do cuts . . . what was that like? I’d love to hear what you think.

Steve Thomas
Partner, Oneicity

(photo credit: KevinMcGrew)