Next Generation Organizations: 9 Key Traits

2011, 21 pages, CompassPoint Nonprofit Services, 731 Market Street, Suite 200, San Francisco, CA, 94103, (415) 541-9000, http://www.compasspoint.org

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This report, funded by the Annie E. Casey Foundation, provides a simple framework and self-assessment tool to guide nonprofits as they foster learning, identify organizational areas of strength, and focus staff and board conversations where they need to be to become next generation organizations.

Long-standing among the current trends impacting the nonprofit sector, and particularly within philanthropy, has been the acute focus on mission impact and its measurement. Nonprofits are often required to demonstrate a return on donor investment and provide “evidence-based” data that will back up claims of accomplishment and that justify their existence. Organizations are routinely asked to demonstrate and articulate their effectiveness and accomplishments through the use of tools such as financial ratios, performance indicators, dashboards, and benchmarking standards.

The demand for transparency is a second trend. Sector watchdogs, such as Charity Navigator, Great Nonprofits, and GuideStar, publish easily obtainable information about a nonprofit’s finances, and to a lesser extent, its reputation and public standing. Also on the rise is the use of planning tools, such as theories of change and logic models, designed to draw connections between organizational outcomes and programmatic strategies. While some would assert that simple mathematical ratios have little to do with mission impact, the push for performance metrics—and with them a desire for increased transparency about the impacts organizations are actually achieving—has led to a better articulation of what is really meant by mission impact. Inspired, in part, by social entrepreneurial organizations that strive to address social problems with creativity, innovation, and a relentless drive for change, this shift in perspective is making way for more sophisticated management tools and leadership strategies.

These trends, among others, are having a profound effect on how some nonprofit leaders are managing and leading their organizations. This has inspired an attempt to describe certain behavioral characteristics and organizational practices in those nonprofits that are adapting to the changing environment. This paper’s objective is to describe these distinctive organizations, referred to in this paper as next generation organizations, and offer a perspective of how they might be ahead of the impact
curve.