11 Lessons for Early-Stage Social Entrepreneurs and Nonprofit Leaders
By Tim Hanstad
Three decades ago, I started my journey in social entrepreneurship–like so many others—hungry for impact.
I told Roy Prosterman, my early mentor and fellow co-founder of the nonprofit land rights organization Landesa, that I wanted to transform our scrappy two-person team into an influential international powerhouse. I envisioned offices around the world and a staff of hundreds.
His response stopped me in my tracks.
Our ultimate goal should not be building and growing an organization, Roy said, but rather building and growing impact that benefits those we serve. That wisdom became my North Star–focus first and foremost on impact for those you serve. A larger organization–more revenue, expenses, and staff–is not the equivalent of larger impact, nor will it necessarily bring you closer to achieving that goal.
I offer this lesson and others listed below with the humility of a leader who has gained incremental wisdom slowly over 30 years of trial and error (first at Landesa and now as CEO of the Chandler Foundation), from the good fortune of having remarkable mentors (particularly Roy, as well as my current boss Richard Chandler) and peers who freely shared their learnings, and in and what I soaked up at events such as the Skoll World Forum. I hope today’s early-stage social entrepreneurs and non-profit leaders hungry for impact can learn from these lessons informed by years of both mistakes and successes.
1. Define success precisely and narrowly.
Success should be defined specifically, simply, and narrowly with a focus on those you intend to serve. If you don’t know where you’re headed, you won’t know whether you’re getting there. You won’t be able to effectively inspire and lead other stakeholders, including staff and funding partners. Too many organizations have an overly broad and flexible definition of success which then contributes to mission drift and the dangerous prioritization of a search for revenue over a strategic search for impact.
2. Develop a coherent theory of change
A theory of change (TOC) is an illustration and description of how and why your desired outcome is expected to happen. If you don’t have one, learn about them and develop one. If you do have a TOC, revisit it frequently. Kick the tires. Ask yourself if the evidence linking each step in the TOC has changed. Again, simple is beautiful. This Bridgespan tool and this NCVO guide can help nonprofits to develop or revise a TOC.
3. Establish strong governance
Strong governance means a board that can act on behalf of those the organization serves to both keep executive leadership accountable and to support executive leadership in driving towards impact. Family and friends are great, but they won’t serve you well in this capacity. Another mistake founders make is to assemble a board primarily for fundraising. That is one of their roles, but not their primary role.
4. Build a strong and cohesive leadership team
Without a strong AND aligned team at the top of an organization, it will never achieve its potential impact. Finding, recruiting, developing, and retaining the right people can take much time. It is time well spent. But there is more–building a cohesive team is more than having the right members. It involves building trust, commitment, and clarity among the individual members. I found this tool by Patrick Lencioni of the Table Group to be a useful resource.
5. Plan for leadership succession
Planning for leadership succession should begin on Day One for any CEO/ED. You will not and should not lead the organization forever. Identifying a plan for what happens after you’re gone is crucial for long-term impact. Identify leaders who can succeed you. Ideally, they will be other leaders from within the organization. Too few nonprofits and social enterprises experience smooth transitions from the founder to the next leader.
6. Build a strong, fit-for-purpose finance function
I find that most non-profit founders focus more on assembling a strong program team than building a strong finance team. I made this mistake early. A capable, fit-for-purpose finance and accounting function is a necessary foundation for an impactful organization. Neglect this at your peril.
7. Develop high-quality program expertise and execution
Once you have identified the central program activities for achieving impact through your theory of change, work towards excellence in delivering those programs. Favor quality over quantity, especially early on. Recognize that programmatic excellence is a long-term and ongoing goal. Build it over time. And seek to improve it by soliciting feedback and learning from those you serve and partner with.
8. Soften the soil with communications
The ability to communicate effectively, to tell stories, to influence, and attract others is often viewed as a “nice-to-have” but should be viewed as a “need to have.” I made the mistake of under-investing in communications in the early years of Landesa. Don’t make the same mistake. Good communications professionals are worth their weight in gold. They serve as the advance team for your program staff and are critical for elevating your issue and influencing others to action.
9. Design a revenue model that aligns with your program model
The conventional wisdom to have an even balance across the types of revenue streams–individuals, foundations, government, business–is usually wrong. You cannot be all things to all people. Your revenue model should reflect your program model. For example, if your program activities are easy to understand and your mission appeals to emotional heartstrings, you will have any easier time raising funds from individuals. Double down on the category that best aligns with your program model and provides the type of revenue that allows you to achieve optimal impact. And remember, your ability to build relationships will be the key to your success, regardless of your focus category.
10. Revenue shouldn’t rule
Don’t let the pursuit of revenue become more important than the pursuit of mission impact. And don’t confuse the two. Too often, non-profits are willing to take money that leads to mission drift and detracts or distracts them for achieving their defined impact. Money is the means, not the goal. And money that comes with restrictions or distractions can make you less, not more effective in creating mission impact.
11. Collaboratively seek partnerships.
If you have chosen a worthy social impact goal, it’s virtually certain that you won’t be able to achieve that goal on your own. It’s also virtually certain that other existing entities (including governments, other NGOs, and business sector actors) share in that goal. View those entities as collaborators rather than competitors. Actively seek and work with partners who share your purpose and values. Prioritizing those your organization serves above your own organization helps to maintain a collaborative mindset. For each collaboration opportunity, ask first whether it advances the interest of those you serve before you ask whether it serves your own organization’s interest. This will help keep you focused on the North Star of impact for those you serve that Roy Prosterman pointed me to so many years ago.
No matter the size of your ambitions, from achieving universal health care in an entire country to improving access to books in your own community, I hope these 11 tips can help keep your worthy efforts on track.