Health and human services nonprofits across the country are in the midst of a developmental crisis. Taking a page from Erikson’s stages of psychosocial development our sector is in the “industry vs. inferiority” stage battling with the question “Can my organization make it in the world of value-based payment?” Developmental mastery is always preceded by chaos, crisis, learning and struggle. This article confronts this developmental challenge through presenting the context for the struggle with an architecture for organizational mastery.
Nonprofits began as charities, created for doing “God’s Work.” Settlement houses, orphanages or food pantries were often initiated by a religious organization or a wealthy benefactor to care for the less fortunate. While the work was extremely challenging, the mission and corporate structure were clear and simple. With the advent of the Great Society in the 1960’s Government needed extenders across America to meet an ambitious agenda for social, health and education improvements. With a proliferation of 501©(3) organizations between 1970 and 1990, the focus of nonprofits shifted to doing “Government’s Work.” A robust stream of government contracts expanded the reach and complexity of nonprofits. Over five decades, significant advances in the healthcare, social supports, housing and education have been made.
The results, however, are not all positive. This prior developmental phase left us with a lasting moniker as a “charity” where it is acceptable for government to underfund services while simultaneously messaging that nonprofits should think and act like a business. The mismatch of expectation places unrealistic demands on an outdated architecture for nonprofits as agents of government. While their mission is strong, the current nonprofit scaffolding of budgeting, finance and business intelligence is too frail and inelastic to support the changes necessary to move to a value-based environment. Delivering value is akin to the retail market. The developmental challenge we face, to “deliver value” is an existential-level change from simply “doing good.” Not unlike the difference between a rotary phone and a smart phone, that do the same function in remarkably different ways.
To complete the analogy, nonprofits need to develop an operational vision and framework for taking care of people which comports with a competition-based, product-driven market. Without this structure and attention, the magnitude of the change required in government policy, regulation and funding in the nonprofit sector could quickly create paralysis in organizations fighting fires on a number of fronts. An architecture for moving to the value-based world connects and inspires people inside the organization and beyond. Nonprofit boards and leaders need to articulate a clear vision of what “value-based” means to them from the beginning, breaking it down into clear action steps, communicating what it will look like at mile-markers along the journey, and translating it into a story that can be told and retold.
A well-constructed transformation story paired with an implementation structure will guide the organization through the turbulent waters of change as individuals understand what must change and why. Millennial Nonprofit is an architecture that leaders can use to build core competencies for success in a value-based environment and perhaps most importantly to build hope and conviction across the organization. Organizational mastery is articulated by performance in eight (8) core Millennial Nonprofit™ characteristics of Mission, Distinctiveness, Expertise, Highly Efficient (ROI), Messaging, System Affiliate, Results and Location. Nonprofits can both drive internal transformation and communicate their capability as a value-based provider externally using the Millennial Nonprofit standard.
A shared vision of what a “mastery model” for a nonprofit is in the era of value-based payment must be achieved among agencies, payers, government and philanthropy to ground critical transition work in public policy, finance and payment, regulation and outcomes.
To effectively move towards a Millennial Nonprofit standard, one must realistically know where one stands today. The pathway to mastery demands organizations pursue rigorous assessment across many domains. While each is important, the fragility of the financial position and infrastructure of nonprofits makes attending to the organization’s capacity to keep the doors open during a transition priority one. Our approach to financial and infrastructure assessment must recognize that self-assessment is limited. Nonprofits have thick reputational veneers and neither governmental, Foundation accreditation bodies nor outside auditors have really cracked the code to identification of risk. How might we look differently at assessing the health of our agency? Chief Executives of major corporations are always looking at their company’s performance and risk. Risk is a constant presence, but its form is continuously changing. In reviewing their approach, nonprofits could consider a “health scan” for the Agency. By example, a scan administered by an objective source across nine (9) domains using a select group of indicators scored in a basic color code of green (meets or exceeds)/yellow (partially meets)/red (does not meet). Whatever the tool, the assessment should build transparency, accountability and conversation across the organization leading to action. Organizational health assessment before, during and after the transition to value-based payment creates the rigor needed to achieve mastery.
We in the nonprofit community can master this developmental challenge before us if we are good students of history and deploy a strong vision and architecture for the change within our field and in our organizations. It also seems wise for us to heed Erikson’s caution that challenges in the developmental stages not successfully completed should be expected to reappear as problems in the future.
Kristin M. Woodlock is the CEO of Woodlock & Associates, LLC a consulting firm specializing in nonprofit health and human services. She can be reached by phone at (917) 244-4221 or by email at firstname.lastname@example.org.