The word “crisis” comes from the Ancient Greek krísis, “a decision, or choice.” And though few of us would ever choose the uncertainty that has resulted from COVID-19, every one of us is now facing choices about how we navigate this “new normal”.
If you lead a nonprofit or an association, how you navigate the next months may determine whether your organization survives at all. In fact, the Center for Nonprofit Strategy and Management at Baruch College suggests that perhaps as many as one-quarter of nonprofits – mostly small and midsize — will fail as a consequence of this pandemic.[1]
Whether you serve on the board or on the leadership team of a mission-led organization, how are you going to navigate today’s risks? And how will you identify opportunities that might come out of this disruption?
Your Business Model is Your Story
I believe that right now your business model can serve as a particularly helpful framework for leaders of nonprofits and social impact organizations as you think through the implications of this crisis and determine optional paths forward.
“Hold on!,” you say. “You’re using the word “business” and “nonprofit” in the same sentence?” Hear me out. Think of a business model as your story, the way you achieve your mission by organizing all your resources to create and deliver value to those you serve. How you align all the moving parts to work together in balance is the story of how you will remain a viable organization over the long term.
When things are suddenly NOT in balance, the story may feel more like a horror movie or science fiction than a musical! But using a business model approach to consider your options can help you identify things you may need to do to address risks, and how to get organized to seize opportunities.
One way to “see” your business model more easily is by using a simple tool called a Business Model Canvas. Framed by Osterwalder and Pigneur in 2010 [2], it was initially used to help enthusiastic entrepreneurs explain their start-up on one page. By doing so, entrepreneurs were encouraged to think through their “big idea” to be able to launch and grow. Since then, all types of organizations from startups to Fortune 500 companies to nonprofits and associations to government agencies have used the Business Model Canvas.
The beauty of the Business Model Canvas is that it provides a common vocabulary for boards and leadership teams, and highlights processes across functional silos. When people understand how they fit into the bigger picture, they contribute more effectively. And when you need to make changes, the canvas can help you think through the implications of different scenarios.
Creating and Delivering Value Despite the Storm
For a mission-led organization, the foundation of your business model is your “Why.” “I think of an organization’s mission as their North Star, the direction in which the ship is sailing,” says Christina Becker, Founder of the Canadian Nonprofit Academy.
When a storm hits, you may need to tack in different directions to adapt to wind and waves hitting your bow, and make changes in how you work and deliver value. However, your “why” doesn’t change! Keeping your mission clear at all times will ensure everyone is aligned toward your ultimate goal, despite the storm and your need to make changes.
There are essentially two sides of the business model canvas, (1) how you deliver value and (2) how you create value. Your value proposition itself may need to evolve when the environment dramatically changes. As long as you are aligned to your mission, both sides of the equation can change – they just need to remain in balance.
Delivering value requires you think through several dimensions:
· Your different customer segments, whether these are the people you serve, or your volunteers or donors or sponsors. What problems do they need solved? What may have changed for them in light of today’s new environment?
· The way you find and nurture relationships. Keeping connected helps you know what people are thinking is important, and keeps you top of mind.
· Channels for outreach and to deliver your value proposition, whether online or in person. COVID-19 has forced organizations to explore new ways to deliver offerings, e.g. through telemedicine or virtual education or virtual conferences and working groups.
· A diversified stream of revenue to fund your efforts. To ensure the resiliency of an organization, it is important to plan for fee-based and non-donor revenues, as well as donor and sponsor revenues to cover costs and build reserves.
Creating value requires that you get clear on:
· Your key activities required to fulfill your mission. These are your own “essential services,” e.g. researching diseases, developing standards, serving the homeless, delivering education, fundraising, advocating specific government policies, recruiting volunteers. Identifying your key activities also allows you to realize which activities you may be doing today that are not essential to your mission, and stop doing them or put them on pause.
· The resources to accomplish these activities: e.g. your employees, volunteers, suppliers, physical assets, and technology. What about these will need to change in light of the constraints of social distancing? How can you use these resources in new ways to create new value?
· Partnerships that complement your own value proposition can significantly amplify your resources and are often overlooked as a way to provide scale and reach. Strategic partnerships may even offer opportunities for mergers in the fragmented, crowded sea of nonprofits and associations.
· The costs of these resources must be planned for and funded by a viable revenue stream or by making a conscious decision to use reserves that have been responsibly built up for times such as this. Remember, even as you reduce costs in light of lower than expected revenues, you may still need to invest in other areas to ensure your long term viability, such as in new virtual platforms to deliver value in entirely new ways and create new revenue streams as well.
Looking Beyond the Storm
Today, leaders of non-profits are likely consumed with adapting how you work and deliver value in light of the constraints of COVID-19.
Today, boards need to help leadership teams look down the road, and brainstorm new approaches for how the “new normal” might unfold. Using the business model as a framework for thinking through this crisis allows you to explore risks and opportunities more strategically.
With a more strategic approach, you can confidently write the story of how to navigate this storm successfully. Boards and leadership teams need to take the lead right now and ensure your story has a happy ending for both your nonprofit organization and the mission you serve.
Note: If you would like to discuss how the business model canvas could be applied in your own situation to help you de-risk your new normal, contact me at Susan.Schramm@gotomarketimpact.com.
[1] https://www.philanthropy.com/article/Nonprofit-Crisis-Management-A/248467
[2]Osterwalder, Alexander; Pigneur, Yves; Clark, Tim (2010). Business Model Generation: A Handbook For Visionaries, Game Changers, and Challengers. Strategyzer series. Hoboken, NJ: John Wiley & Sons. ISBN 9780470876411.
