Growth Factors for Nonprofits

Since 1970, more than 200,000 nonprofits have opened in the U.S., but guess how many have really grown to become large nonprofits? In a recent article in the Stanford Social Innovation Review, William Foster and Gail Fine of the Bridgespan Group examine the factors that helped 144 young organizations "get big" within a short period of time. Conventional wisdom generally dictates that achieving a diverse blend of funding sources—governments, corporations, foundations, and individual donors—is the pathway to success, but Bridgespan’s exhaustive research shows that, in reality, the opposite is true. Here are a couple excerpts from the report:

Bill Milliken, founder and vice chairman of Communities in Schools, recently elevated a new president within the organization. “The ’60s saw a lot of great movements that died,” he says. “They were led by great frontier people who couldn’t relate to the settlers. They wanted new ideas but didn’t build organizations. Passion and professionalism keep them in balance.”

Consider the example of the American Kidney Fund (AKF), which helps low-income people with kidney disease. From its founding in 1971 until the mid-1990s, the AKF was a relatively small organization, never surpassing $6 million in revenue and relying on a mix of funding including a large number of small individual donations. In 1996, changes in federal law made it illegal for medical providers to assist low-income patients by subsidizing the roughly 20 percent of dialysis expenses that Medicare did not cover – effectively cutting patients off from treatment. To cover these expenses and restore care to low-income patients, the AKF set up a major initiative to raise donations from corporations. The AKF became highly skilled at this work and the organization grew rapidly, passing the $20 million mark in 2000 and reaching nearly $70 million in 2004. “Switching our emphasis to corporate partners was the real turning point in our organization,” says Chief Financial Officer Don Roy.

Report available at: http://www.ssireview.org/articles/entry/how_nonprofits_get_really_big/

David M. Young, Professor
Rural Health Resource Specialist
Extension Service
Montana State University
e-mail: [email protected]
Phone: 406-994-5552
Fax: 406-994-1756