Size Does Matter: For Charities, Staying Small Works
“Evolution has always benefitted smaller creatures over larger ones.”
I’m going to tell you an unflattering story about myself. But the lesson I learned is worth sharing.
One of the biggest mistakes I made as a first-time executive director was getting too cocky. I knew I was a strong fundraiser, and I was on a very good streak in my first 5 months on the job.
The prior executive director left us with plenty of cash in the bank, but our primary fund for payroll was losing money fast in the months after she left. When I accepted the position of executive director and moved across the country to take the job, I assumed we had plenty of cash on hand.
Well, the board made some decisions that resulted in us quickly deteriorating those reserves, and the organization had debt I didn’t know about. When I arrived, we only had $ 1,000 in the fund for payroll. Emergency actions were needed.
Oh wait, I’m not done.
This was August of 2008, and the national economy was starting to crater, and our national headquarters had done some things to really anger many of our donors.
My first executive director job was a perfect storm of crisis, and no amount of training could have prepared me for it.
I quickly engaged my network and found the money to pay off the debt, stop the hemorrhaging, and ensure we were stabilized. But I was too ambitious.
I got cocky. I thought the worst was behind us by fall. Boy, was I wrong. It wasn’t until the following year that the outfall of the stock market would have a crippling effect on our donors and Foundations.
I hadn’t been cautious. I thought I could add a development director to our team. This was before I knew how to use cash flow projections. If I had been able to look at the data, I would have known we couldn’t sustain any new hires for more than six months.
It also could have saved me the hassle of running a search to fill that position!
I knew that people were worried about foundation and individual giving falling off a cliff in 2009, but I believed we were stronger than that. Again… I was cocky.
I needed a development professional on the team, hoping they would help me grow the organization.
It failed. Then it hit me…I failed. I wasn’t cautious or thoughtful.
One day, a paralyzing fear came over me when our financial statements showed that we only had a few weeks of money left in the bank with very little revenue coming in. I was terrified I would have to let one or two staff go. Since I was the highest-paid person in the organization, I even considered resigning myself.
I put down the financial statements and went for a walk. I was sick to my stomach. Had I been too ambitious? Did I cause this? Did I mess up my first job as an Executive Director? Did I fail my first big test in a crisis?
I took a deep breath and called my bookkeeper. That call changed my life.
She told me the financial statements I had seen weren’t fully updated. A cash transfer was missing, so we actually had another few months of cash on hand, and I didn’t know it. (Another reminder of why cash-flow statements are so vital.)
All the fear… all the panic...all the doubt washed away. But the lesson remained. I had to dial back my ambition in the Great Recession if I wanted my organization to survive. I dodged a bullet.
I was stunned and angry at myself. How could I have been so foolish and not been more cautious? I worried that I had failed at my first role as an Executive Director and everyone would know it.
Luckily, just as I realized we had three months of reserves (not three weeks), two employees were offered positions elsewhere and left.
This eased the cash flow problem and allowed me to pause and assess my leadership. What lessons could I learn from this? Where were my blind spots, and how would I grow?
One of the biggest lessons I took away was immediately useful in my next Executive Director position. Size isn’t everything. In fact, a peer told me,
“Stay small. Evolution has always benefitted smaller creatures over larger ones. By staying small, you can pivot, adapt, and not be held hostage to an expensive central staffing structure. It doesn’t mean you shouldn’t raise more money, but it does mean there was a different way to have impact.”
Like a tortoise, instead of a hare, I have adapted this lesson in every small organization I have led.
Most nonprofits and businesses seem to want to grow or “scale.” That is a totally understandable impulse, but it is NOT the only model and not the only way.
If you want to reduce stress and still focus on reaching your mission, consider being a smaller player with a vital niche to fill until the resources are available to grow.
Don’t feel like your small size is a failure of your fundraising or prowess. Deciding to be small can be just as strategic as deciding to grow.
Funders should take this perspective into account because, too often, they are the ones pressuring organizations to scale before they are ready. Nonprofit leaders should also give themselves a reprieve from always feeling like they have to be Sierra Club, United Way, or the American Heart Association.
You don’t have to be them, and maybe you shouldn’t. That’s OK.
It is more important to do a few things well instead of many things poorly. Very often, small nonprofits try to take on everything. It leads to burnout and, sometimes, lower quality outputs. But if we accept that it’s OK to be small and excel in our niche, we might actually be able to transform the entire sector.
I would love to hear your stories of stress and success around issues of scale and size. Message me at Sean@MindTheGapConsulting.org
