Getting Over Growing Pains

Life-cycle analyses help charities deal with the challenges of aging

Bonnie J. Monte, artistic director of the Shakespeare Theatre of New Jersey, in Madison, knew something was wrong at her

organization, but she couldn’t pinpoint what the problem was. After all, she had led the theater for nine years, culminating in a triumphant move to a new building, financed by a $7.5-million capital campaign that exceeded its goal. The theater had never been more successful or vibrant.

But for nearly two years, Ms. Monte says, she could not shake the nagging feeling that something was amiss.

“Certain parts of my organization were expanding quicker than we could keep up,” Ms. Monte recalls. “We’d see program growth, but systems weren’t keeping up. Or we’d see great artistic growth, but not economic growth. I was depressed and burdened about work.”

What Ms. Monte didn’t realize was that her organization was simply experiencing the kind of growing pains that are common in adolescents — and at nonprofit groups with different missions but at similar stages in their development.

She discovered the problem by putting the Shakespeare Theatre through a “life-cycle” assessment, an increasingly popular management approach that tries to help businesses and charities become more effective by applying ideas about the changing stages of the human life cycle to their organizations. The idea is that every organization goes through predictable stages, just as infants progress to adulthood. But since organizations, unlike people, do not inevitably weaken and decline in old age, many groups find that assessing their organization though a life-cycle lens helps them avoid death.

Once Ms. Monte used the life-cycle analysis to better understand her group’s strengths and weaknesses, she said, she “realized where my institution was, where it had to go, and how it would get there.” The theater has since stabilized operations and doubled its budget, Ms. Monte says. The life-cycle model, she adds, “was my Alka-Seltzer.”

Charites Get Stuck

Life-cycle analyses are structured in many different ways, using an array of developmental stages and approaches to help charities evaluate where their organization is in the cycle.

But the approaches all stress the idea that charities can get stuck at one or more stages in their development, and that the strengths that an organization relies on in one stage often become problems in the next. For example, most growing, young charities get to the point where they need to adopt new record-keeping requirements and other controls to manage their operations, but those same systems can squelch innovation and slow the group’s ability to provide services.

What’s more, the types of managers who are best at leading an organization through one stage are not always the best for a later stage, so many of the life-cycle assessments look not just at the organization, but also at the charity’s executives and board members.

The life-cycle approach is gaining momentum partly because a growing number of foundations are helping their grantees undergo such assessments. Some foundations such as the Rose Community Foundation, in Denver, and the Geraldine R. Dodge Foundation, in Morristown, N.J., have begun offering life-stage training to grantees. A new book, Navigating the Organizational Lifecycle, by Paul M. Connolly, a New York consultant, urges foundations to go a step further and tailor their grants to fit the life stage of recipient organizations. For example, grant makers who want to support a new charity could make grants to help the group create basic accounting systems or assess the needs of potential clients; a foundation could help turn around an older, declining charity by making a grant or loan for its leaders to create and carry out a plan to reverse losses.

Not Appropriate for All

While many nonprofit officials say life-cycle evaluations have helped them do a better job, the assessments are not appropriate for every charity, says Judith Sharken Simon, co-author of The Five Life Stages of Nonprofit Organizations.

“The model is based on growth,” she says, “but some organizations are designed to be tiny and never want to be bigger, so it becomes hard to apply the assessment.”

It can also be difficult to determine what stage the largest, most complex charities are in because they may have numerous divisions, all at varying stages of development, Ms. Simon says.

Other nonprofit leaders are skeptical of life-cycle assessments, arguing that whether an organization succeeds is ultimately a reflection of the personal abilities of its leaders, rather than a combination of leaders’ skills and other forces such as the financial climate or demand for services.

But for many groups, a life-cycle evaluation is a powerful diagnostic tool that takes the personal sting out of inevitable conflicts that charities experience, nonprofit leaders say.

“It places the challenges every nonprofit faces into this compelling framework,” says David Grant, president of the Dodge Foundation, which sponsored a workshop where Ms. Monte and hundreds of other nonprofit officials have learned about the life-cycle approach.

“Most nonprofits have problems and tend to blame themselves,” says Mr. Grant, “but when you take this approach you realize the problems are absolutely part of the deal.”

The Dodge Foundation’s workshops are led by Susan Kenny Stevens, a Minneapolis consultant and the author of Nonprofit Lifecycles: Stage-Based Wisdom for Nonprofit Capacity. Ms. Stevens’s approach to life-cycle theory consists of seven developmental stages, beginning with the “idea” stage — which concludes when the new group obtains tax-exempt status — and ending with a “turnaround” or a “terminal” stage in which the charity either reverses its decline or closes its doors.

To determine a charity’s stage of development, Ms. Stevens analyzes five aspects of a group’s management and operations: the services and programs it provides; its top group of managers; its board of directors; its financial resources, including fund raising; and internal systems like accounting and personnel policies.

Ms. Stevens tells charity leaders to imagine their organization as a table holding a vase of flowers. In her analogy, the tabletop is the organization’s mission, the vase of flowers represents the services and programs it offers, and the table legs are the group’s staff, board, financial resources, and internal systems.

She says many of the groups she advises — especially those in what she calls the “growth” stage — realize that their internal systems or financial resources are too weak to support the charity’s services and fulfill its mission. Or, as Ms. Stevens says, “the table legs are wobbly.”

That description fit the Shakespeare Theatre perfectly, says Ms. Monte. Her uncomfortable sense of surging ahead with artistic programs while falling behind economically, she says, was exactly the teetering, anxiety-producing situation that most growing, young organizations face. That insight led her to hire two new fund raisers to bolster the organization’s budget.

“Once we defined where we were, we could see where we had to take some risk to grow,” Ms. Monte says. “I was able to give myself permission to get more help, which I had resisted before.”

The decision paid off: The theater has since increased its donations and other revenue from about $2-million to $4-million annually.

Slipping Into Decline

Consultants who use a life-stage approach say that charities usually seek their help at one of two developmental stages: when they experience the problems of rapid growth, like Ms. Monte’s theater, or when they have slipped into decline. “These are the places that groups hurt the most,” Ms. Stevens says.

Turning around a charity that is in decline can be especially challenging, say some consultants.

John W. and Anita Nowery Durel, consultants with Qm2, a Baltimore management-consulting group, say it can be difficult or impossible to turn around a declining organization that has reached the stage they call “late bureaucracy.”

At that point, they say, employees are alienated from the organization’s cause, rules are more important than results, morale is low, revenue is declining, and outsiders find it hard to connect with the organization.

The Durels use a corporate life-cycle model adapted from an approach developed by Ichak Adizes, a management consultant who wrote Corporate Lifecycles: How and Why Corporations Grow and Die, and What to Do About It.

In the Durels’ approach, organizations may be in one of seven stages, starting with the “infant” stage, moving to a “toddler/go-go” stage, eventually reaching the optimally functioning “prime” stage, and declining into “aristocracy” and “bureaucracy.” The Durels determine a charity’s life stage by asking 15 board and staff members, if possible, to complete an 80-item questionnaire.

Obtaining multiple perspectives is key, says Mr. Durel. “The leaders of an organization often paint a rosier picture than everyone else. They are often surprised about what people see in the organization,” he says.

Working Styles

The Durels sometimes couple their life-cycle diagnosis with an evaluation of four working styles among individuals on a charity’s board and staff.

They say that certain styles are more important than others at each stage in the organization’s development and that a balanced blend of all four is essential for groups to reach their prime. While assessing work styles is nothing new, they add, doing so in the context of an organization’s development stage can help people better understand why things are not working smoothly.

“Entrepreneurs,” often the founders of charities, create ideas for new products and services; “administrators” excel at establishing and maintaining internal systems and procedures; “producers” get things done by delivering services and products; and “integrators” spur others to work together.

Bureaucratic organizations that manage to reverse course, Mr. Durel says, are always revived by entrepreneurial new leaders. He points to Anita Walker, director of the State Historical Society of Iowa, who has moved her institution — which the Durels say was in the bureaucratic stage — into a growth mode.

Ms. Walker hired Mr. Durel two years ago to perform a life-cycle evaluation and to assess the working styles of her staff. She says she was frustrated by the stagnant environment she had inherited from her predecessor. “We were so burdened with rules and regulations, it felt very sluggish,” she says. “I knew we needed a cultural change, but I couldn’t figure out how to motivate change.”

The historical society’s senior staff members learned from Mr. Durel what it meant to be in a bureaucratic stage, “and why it was dangerous to be there,” Ms. Walker says. They also learned that the staff was dominated by administrators who excel in carrying out policies and procedures — “not surprising for a bureaucracy,” Ms. Walker says. Those findings convinced the group that change was sorely needed.

Soon the historical society was shifting its approach. It recently started generating revenue, for example, by enabling curators to work on loan to other institutions for a fee and by starting a History Hunter Vault Tour, for which people pay to see areas not normally open to the public.

And, to recruit more entrepreneurial and other candidates to balance out the administrators on the staff, the society now uses a questionnaire to determine the work styles of potential employees. “We need to put the right person in the right spot,” Ms. Walker says.

Conflicting Perspectives

Another life-cycle issue that causes people problems is when a charity’s staff and its board are at different stages of development. When the board and staff realize they have conflicting perspectives, Mr. Durel says, “it sometimes comes as a shock.”

Working with the Durels, Alex Sydnor, deputy director of development at the Winterthur Museum, in Delaware, concluded that his board and staff were at opposite life stages and dominated by people with different working styles.

The board, he says, was an “aristocracy,” defined by declining innovation, complacency, and a focus on the status quo; meanwhile, a new executive director, who was unmistakably entrepreneurial, was raising eyebrows among trustees by pushing for innovations more commonly found in high-growth “toddler/go-go” organizations. For example, the director wanted fund raisers to work with curators on special events to bring new meaning to the gatherings and raise more money.

Looking at his organization through the life-cycle lens, Mr. Sydnor says, he has helped recruit entrepreneurial board members who support efforts to revitalize the museum.

“I have found it extremely useful to understand which parts of the organization are in what stage, and which volunteers might keep us from continuing to grow,” he says. “The life-cycle model gives us the language, so I am able to talk to volunteers in a meaningful context about where we are trying to go.”

Defusing Tensions

Kathy Fleming, executive director of the St. Augustine Lighthouse & Museum, in Florida, worked with the Durels four years ago to determine her organization’s life stage, her own working style, and the styles of each of her 29 staff members.

To defuse tensions among staff members, Ms. Fleming invited employees to share the results of their work-style assessments.

“We encouraged everyone to put theirs on the wall,” she says. “You see why people drive you crazy or why you get along. It really works.”

Determining that her charity was in the “toddler/go-go” stage was just as helpful, says Ms. Fleming, noting that the stage is characterized by high-energy growth, people being spread thin, and risk taking. “We were trying a bunch of new things; it was fun because we didn’t have much to lose,” she recalls. At the same time, the board was considering a plan to expand the lighthouse museum’s facility by 5,000 square feet.

“One board member commented that if we were in the go-go phase, we should go ahead and do this now,” says Ms. Fleming. “Expanding was a risk, but it doubled our budget.”

Robin Prothro, executive director of the Towson, Md., affiliate of the Susan G. Komen Breast Cancer Foundation, says her charity was at the same stage of development as the lighthouse museum — but experiencing more conflict — when she arranged a life-cycle evaluation four years ago.

“We were in the go-go stage, where there was a lot of passion, few policies and procedures, and conflict between board and staff,” she says. “The board was too hands-on.”

The organization, she explains, had been entirely run by a group of dedicated volunteers for its first eight years before hiring any employees, and some board members felt that they should keep organizing the foundation’s signature fund-raising event, the Race for the Cure, while the staff handled other projects.

As the staff and board met to discuss the life-stage evaluation, Ms. Prothro says, “everyone agreed we were in go-go, and this got the conversation going about who we wanted to become.”

The founding board members disagreed with Ms. Prothro and others, who argued the charity needed to integrate all of its fund-raising efforts and better publicize how it uses donations.

In the end, a majority agreed to the approach Ms. Prothro advocated, “but it was painful,” she says. “We lost board members.”

Now, she says, there is no conflict between employees and the board.

“We still have a lot of work to do,” Ms. Prothro says, “but we are moving into our prime.”