How to Build an Effective Social Impact Organization: Essential Strategies to Cultivate Strength and Sustainability
This brief was written in collaboration with my colleague Ashley Orton
Successful social impact organizations have different stories about what was key to their growth. Some rely on dynamic, visionary leaders who are able to raise significant funds from individual donors with an innovative and scalable idea. Other organizations have a compelling vision that is effectively branded and marketed. While no single strategy will work for every social impact organization, most sustainable social impact organizations that are positioned for growth have the following characteristics:
Leadership. Strong leadership is necessary to harness and maintain the support of funders, staff, board members and volunteers. Effective leaders emphasize a shared vision that is communicated across the organization. Good leaders also value questions and encourage an organizational culture that promotes a thoughtful examination of decisions and strategy.
A strategic plan. A strategic plan provides a roadmap to guide an organization’s growth for 3-5 years. An effective strategic plan includes a "big picture" financial plan with targets based on growth, a plan to generate revenue to meet future operating costs, specific programmatic goals, and accountability for all organizational objectives. An actionable and flexible strategic plan sets benchmarks to measure an organization’s progress and is subject to change as the organization develops.
A focus on metrics. Organizations grow by fostering a culture of learning from successes and failures. A focus on metrics, both programmatic and financial, helps contribute to a culture of learning and ensures organizational transparency. This process includes identifying key performance indicators, analyzing quantitative and qualitative data, examining data to improve the organization and its programs, and sharing best practices.
Financial management. Social impact organizations need a well-organized financial management system with monthly or quarterly financial statements, independent audits, and board oversight. Organizations with financial transparency will be more attractive to individual donors and foundations and many require independent annual audits as a prerequisite for funding.
Donor management. Donor management software is necessary for tracking donor prospects, managing a grant cycle, running donor reports and developing dashboards. Inexpensive or donated software is available to social impact organizations. Time and resources spent entering and refining data in a donor management system is an important investment.
A strong grant track record. Building a successful grant track record is essential to building organizational credibility and diversifying funding. Social impact organizations often start with smaller programmatic grants from family foundations. Once organizations successfully demonstrate accountability and establish trust, family foundations frequently allow grantees greater flexibility than other types of grant-making donors. Organizations build upon the track record of financial and programmatic accountability with family foundations to earn larger, multi-year grants.
A funding stream directly aligned with vision and mission. Organizations that seek funding opportunities not directly aligned with their vision, mission or expertise can ultimately weaken the organization and their financial capacity by fracturing their focus and diverting resources. Impactful organizations are focused on their strengths, their expertise and their ability to effectively manage activities and evaluate their results. Organizations should determine the organizational and programmatic growth strategy and then seek funding to support that strategy.
An ability to leverage strategic partnerships. Strategic partners can be key to implementing programs, increasing human resources, and financial capacity, and diversifying expertise. However, when creating such partnerships, it is essential to remember that capacity is needed to effectively manage and monitor such partnerships.
An active and engaged Board. An effectively managed and utilized Board of Directors that is recruited based on strengths, skill set and network can be one of the greatest assets of a social impact organization. Board members serve as an organization’s advocates, ambassadors, fundraisers, and strategy partners. A carefully recruited Board with clearly defined roles and responsibilities can provide an organization with strength, financial stability and additional human resource capacity.
Marketing and Branding. Organizations with a succinct, compelling and engaging story, and a model that donors can understand and identify with are key to successful fundraising. Starting with a content-rich, easy-to-navigate website, and extending to taglines, logos, and stories, a clear and motivating message will engage supporters, spread an organization’s message, and be a integral part of fundraising.
The importance of each element described above will depend on an organization’s stage of maturity, whether it is during the launch, growth, or sustainability phases. When organizations utilize these strategies, in a context aligned with an organization’s stage of maturity, it creates momentum that propels greater impact.