Introduction

Every man must decide whether he will walk in the light of creative altruism or in the darkness of destructive selfishness.

-Martin Luther King, Jr.

In 2013, Ken Stern, the former CEO of National Public Radio, wrote With Charity for All,1 an exhaustively researched, evidence-filled, and incredibly shocking account of how the nonprofit sector is pervasively dysfunctional and filled with organizations that routinely fail to deliver on promises. Whether one agrees with Stern or not, it is clear that the nonprofit sector has at least an image problem: according to the Better Business Bureau, only one in five Americans trust charities to use their donations well.2 This mistrust may be a driver behind a collapse in charitable donations from small donors, individuals who make up 98% of all nonprofit supporters. In 2021, fewer than half of American households gave to charity, down from two-thirds only a decade ago.3

Like the rest of society, the charitable organization landscape in the United States and elsewhere is a story of haves and have-nots. While giving collapses among the middle class, wealthy donors and foundations continue to donate record levels to universities, hospitals, and other large nonprofits, a class of organizations that share the same tax status as their smaller brethren but are run with the sophistication of major corporations. Approximately 95% of the nonprofit sector is composed of small organizations with average budgets of about $500,000. The remaining 5%, or about 35,000 total, are often large and complex organizations that have far more in common with Microsoft than a neighborhood soup kitchen. Many operate on a global scale and are our most significant engines for social good. For example, American nonprofit universities, both public and private, consistently lead the world in educational rankings. While US higher education's success is by no means assured, they are, comparatively speaking, mostly well-managed organizations that deliver beneficial products and services at scale.

For example, the University of Washington in Seattle raises approximately $2 million in private gifts and grants every day of the year. It earns billions more in contracts with corporations and the federal government. Pay and benefits are excellent, the facilities are world-class, and the university churns out more patents than almost every other research university in the world. Steve Olswang, the university's former vice provost, explains: "Make no mistake. The University of Washington is a business. We are in the business of education and discovery."

On the other end of the spectrum is the 95% of nonprofits, over 1 million organizations in total, that survive on budgets under $5 million a year, with the average budget holding steady at just under $500,000.4 These include homeless service agencies, community clinics, tutoring programs, arts and theater groups, animal shelters, conservation organizations, human rights advocacy groups, environmental sustainability advocates, and tens of thousands of other types that form so much of our social fabric. Most are financially threadbare, chasing grants, begging for dollars, and existing in or near the zone of insolvency.5 Few can meet more than a small fraction of the demand.

Figure I.1 illustrates that large nonprofits such as hospitals and universities, while few in number, command over 85% of the resources in the nonprofit sector.

FIGURE I.1 Nonprofit Sector Resource Distribution.6

There is relatively little examination of why so many nonprofits remain so small. William Foster and Gail Fine's article in the Stanford Social Innovation Review, "How Nonprofits Get Really Big,"7 provides one explanation, citing a complex financial landscape where few nonprofits have figured out how to grow their revenue. The authors target what they see as the major challenge: sustainable, scalable revenue. Leslie Crutchfield and Heather McLeod Grant's Forces for Good8 examines a set of high-growth nonprofits and attempts to distill from them a set of effective organizational scaling strategies. While an important set of strategies emerges, the book leaves it to executives to figure out how to formulate, finance, and execute them.

For-profit business executives wishing to expand their organizations and generate more profit enjoy access to a massive education, support, and funding ecosystem. Around the world there are hundreds of MBA programs, incubators, and accelerators; scores of mentoring programs and entrepreneurial support and coaching organizations; an extensive literature filled with well-established guidance; a large, expert service industry of consultants and business solutions providers; and an enormous and sophisticated capital marketplace filled with banks and investors of every stripe.

By contrast, nonprofit executives seeking to expand their organizations to deliver greater levels of social impact face a much more austere landscape, one with significant gaps in entrepreneurial, management, and financial training; a comparatively sparse and incomplete literature; relatively thin supporting organizational and professional service resources; and a fractured funding marketplace with a complex, confusing variety of gifts, grants, contracts, and loans sourced from millions of individuals, tens of thousands of corporations and foundations, and hundreds of local, state, and federal agencies.

While running any type of organization is difficult, life as a nonprofit executive is therefore particularly hard, and there is little debate that, for all but the largest, most wealthy nonprofits such as hospitals and universities, social impact suffers as a result. Staff are underpaid and overworked; technology is often underutilized; and underinvestment in program measurement, evaluation, and improvement is common. For example, the National Council of Nonprofits reports that 40% of nonprofits surveyed in 2023 responded that they have a quarter to a third of their staff positions currently unfilled, with most citing low salary as the barrier. Nearly 50% have a service waiting list more than a month long.9

When noted management expert Michael Porter observed, "Philanthropy is decades behind business in applying rigorous thinking to the use of money,"10 he identified one part of a much bigger truth: the nonprofit sector is decades behind the for-profit sector in the rigorous use of organizational growth methodology. There remains a significant gap in the literature for current and future nonprofit leaders around how to lead a small to midsized nonprofit to continuous annual growth and impact.

This book is aimed at this gap. It presents a comprehensive nonprofit management system, the Altruist Impact and Growth Methodology, proven to catalyze significant acceleration in organizational revenue, performance, and impact for nonprofits under $50 million in annual revenue, or over 95% of nonprofits operating today.11 It is based on two decades of continuous development, a comprehensive review of the for- and nonprofit management literature, and thousands of hours of partnership with hundreds of nonprofit executives and board members in diverse fields. It attempts to provide a comprehensive acceleration platform in a step-by-step sequence for accelerating organizational impact and growth, one that organizations can follow independently and at their own pace. It is aimed at the following audiences: nonprofit executives and board members, public and private funders, and graduate students.

• Nonprofit executives and board members find a practice guide with tools, templates, and implementation guidance to catalyze sustained annual growth in organizational revenue and social impact.
• Public and private funders discover new insights for assessing nonprofit performance and supporting scalable social impact efforts.
• Graduate students learn effective social change leadership practices not found in graduate programs.

There are seven phases to this methodology. Each chapter focuses on a particular phase, breaking it down into a series of organizational development steps called practices. In total there are about fifty practices across all seven phases. After the purpose and benefit of each practice is explored, implementation steps follow, supplemented with exercises, templates, case studies, anecdotes, metrics, protocols, and talking points to help changemakers embed the practices into their day-to-day operations. Technical terms are italicized on first use, explained in context, and defined in the glossary.

In addition, a supplementary tool kit of templates, examples, and additional resources is available on this book's companion website, www.altruistaccelerator.org. Users will find electronic versions of all the tools and templates provided here such as business plan templates, organizational charts, financial projection, and scorecard models. There is also a selection of real-world examples we have developed with our clients, ones they have used to successfully grow their revenue and impact.

If applied with fidelity and discipline, the methodology promises to catalyze accelerated organizational performance and resolve barriers keeping smaller nonprofits understaffed, underpaid, and trapped in survival mode. However, implementation is...