How healthy is your organization?

What’s your trajectory? Are you growing, shrinking, or treading water? What’s the energy level among staff and board? Is your mission still relevant and inspiring?

More than a decade ago, I participated in volunteer training at our local hospice agency. As the Great Recession rolled through the economy, I found myself applying the lessons of hospice to my work with nonprofits.

Not every organization is meant to live forever – and that’s OK. In this post, we’ll discuss how to determine if your organization is dying and what to do about it. A future post will cover the board’s role in end-of-life decisions.

Diagnosis: Does your organization have a terminal illness?

At a conference for the Alliance for Nonprofit Management, a team of consultants, funders, and nonprofit capacity-builders gathered to consider this question. We developed the following benchmarks to define an “end-stage” nonprofit.

• Chronic under-funding and cash flow problems (emphasis on chronic)
• Last-minute, crisis-driven attempts to diversify funding
• Greater-than-usual attrition of board, staff, volunteers, clients, and program participants
• Loss of programs or frantic adding of programs; one colleague calls this “desperate proliferation”
• A sense of obligation – “We must soldier on” – rather than a passion to fulfill the mission
• Organization-wide burnout: “Who cares?”
• Rumors, bad press, and external questions about your viability

You may be thinking, “Wow, our group would qualify on several of these points.” The encouraging news is that all nonprofits, even healthy ones, go through stages when some of these criteria apply, so you’re probably suffering the usual bumps and bruises.

However, if most of these apply and seem to be getting worse, it may be time for the end-of-life conversation. 

Exit strategies: Options for closing shop

If you’re thinking about shutting down your organization, you have several options.

Declare victory. Not every organization has a perpetual mission; some are created to solve a problem and go out of business.

For example, the Toxics Action Center, which provides support for New Englanders fighting toxic pollution, works with a network of informal community groups that often declare victory and dissolve once the immediate health threats have been addressed. If other threats appear, participants can re-form their groups – and sometimes do.

Modify your mission and re-purpose your organization. A well-known example is the March of Dimes, which was founded to find a cure for polio. Once the polio vaccine was widely available, the organization shifted its mission to focus on maternal and infant health.

“Adopt out” programs that still have value. As part of any formal dissolution, you can find organizational homes for your orphan programs. Saying this differently: Many dying organizations have valuable assets – programs, clients, mailing lists, funder and donor relationships, and intellectual property – that might find a viable home elsewhere.

Merge with (or be acquired by) another organization. Sometimes two organizations with overlapping missions choose to merge. A smaller group might seek out a larger one to absorb its programs, staff, and perhaps even a portion of its board, not to mention its obligations – financial and otherwise.

In recent years, I have facilitated multiple merger processes. Some succeed; in other cases, after a lot of due diligence, the boards choose to remain independent organizations. Mergers are often difficult because of:

• A poor match: The mission, history, and organizational culture of two nonprofits may be incompatible.
• A poor dowry: Debts, obligations, and conflicts may exceed the available assets and good will.
• Ego: Leaders (especially founders) tend to experience mergers as both a personal and organizational failure.
• Inertia: Unless the status quo is intolerable or the end is near, it’s often easier to just keep doing the same thing.

Go into hibernation. Without formally dissolving the nonprofit corporation, the board may choose to shut down operations and wait for better days. Under this scenario, the organization is still required to file annual paperwork with the appropriate government agencies.

Regardless of the decision, celebrate

If you successfully merge two organizations, invite everyone to a big wedding party. If you close your nonprofit, celebrate your accomplishments and honor the ways that the work will go on, even without your organization.

Because the work will go on.

When a big tree falls in the forest, it creates light and space and nutrients for younger trees to grow to maturity. This is how forests renew themselves. If your work is valuable and the need remains, someone will come along to build on all that you and your colleagues have already achieved.