Growing Up: The Stages a Charity Can Expect to Go Through As It Ages

Following are the stages of a nonprofit organization’s life cycle developed by Qm2, a consulting group. The questionnaire

is designed to help organizations figure out which stage they are in; the letters associated with each stage are tied to the scoring system for the questionnaire.

A. Infant. The founder is in charge of the new charity, and there is a lot of activity as the founder and other supporters try to make the founder’s idea work. There are few systems and policies, management is often in a crisis mode, and there is little or no long-term planning.

The organization survives on the founder’s commitment. There is no paid staff, and the founder and a volunteer board composed of the founder’s friends do all the work. They also raise all the money or donate it themselves. The organization may be able to boost contributions in this stage by showcasing the founder’s vision and personal energy in presentations to potential donors and community leaders. There is an opportunity for the charity to gain publicity while it is still regarded as new.

B. Toddler/go-go. As the charity grows and has some successes, it often hires its first paid staff members in this stage. Day-to-day crises no longer require all of the founder’s attention, which allows new ideas to develop.

The organization is characterized by high energy, the founder and board are eager to explore new paths, and there are growth spurts. Everyone is busy, and activity takes precedence over results. The charity often commits to new ideas without exploring them fully and takes risks without being fully aware of the potential outcomes.

Everything seems to be a priority, and everyone is spread thin. The organization adds new staff members long after the need for them is recognized. Many people are involved in fund raising, but there is little or no coordination. There is a heavy reliance on events and grant writing. Programs may be added without adequate funds being secured, and the organization may accept contributions for programs that fall outside its mission. If a fund raiser is hired, it is usually a junior person. Late in this stage, people begin to feel overwhelmed; there is a sense that it’s time to get organized and to do more planning.

C. Adolescent. As people begin to feel overwhelmed and the need for more organization emerges, the charity enters adolescence. There may be internal conflicts between those who want continued unfettered growth and those who want to get organized.

At this stage, the charity begins to craft strategies and goals, often in the form of a written plan, and adopts systems and procedures for efficiency and accountability. In some cases, its leaders recognize the need to cut projects that do not work well or fit the charity’s mission.

The organization may continue to rely heavily on the founder, who brings energy and, often, financial resources. If the organization is to grow, however, the board must assume more responsibility and control.

The founder may see this as a threat, but he or she needs to shift focus from the daily work to building an organization that will thrive on its own. If the founder cannot make this shift, the charity stays stuck in this stage.

New systems and procedures help ensure that fund raising is more organized, but contributions may slow as the charity adopts them. The board and volunteers still lack an in-depth understanding of fund raising. While consultants may help them embrace expanded efforts to raise money, the founder and others may resist following systems of control and accountability.

D. Prime. If the organization successfully resolves the internal conflicts typical of the adolescent stage and brings order and discipline to its work — without sacrificing innovation and risk taking — it moves into prime. The characteristics of this stage include talented employees and volunteers who work well together with mutual respect. Innovation takes place within established systems. The organization is results-oriented, and there is predictable, reliable growth based on the charity’s mission. Risk taking is based on sufficient knowledge and experience. Any conflicts are resolved in the best interests of the charity. People in the organization enjoy their work. The development office has achieved stature within the organization and is seen as crucial to its success. Fund raising is integrated into most activities, and staff and board are fully engaged in appropriate fund-raising roles. Fund raisers are on top of trends in their field.

E. Stable. The charity’s programs, products, and services are popular and supported by contributions and other income. People in the organization take pride and satisfaction in their work. Maximum financial strength and growth have been achieved. Working conditions include good salaries and benefits, and people are happy with the way things are.

At the same time, a degree of complacency sets in, and growth begins to slow. The organization points to past achievements rather than future plans, and there is a declining investment in new ideas.

At this stage, leaders and fund raisers need to challenge the notion of good enough and stay alert to opportunities. Fund raisers should explore the potential for expanding contributions by staying abreast of demographic and economic changes and fund-raising innovations. They should stay in close contact with donors, listen carefully to their ideas, and make efforts to keep them excited about the charity’s work.

F. Aristocracy. Unless leaders take the organization into a new growth curve after achieving stability, the organization begins to age, becoming an aristocracy. At this stage, money is used for comfort and image rather than new programs and services.

The charity is characterized by formality, in people’s dress and in its offices and procedures. Money and time are invested in systems of control. There is an emphasis on how things are done, rather than what is done. There is continued slowing down; some decisions seem to take forever. People inside the organization may become concerned, but most accept the status quo.

Participation in the organization’s programs and services begins to decline, and often fees are raised to artificially maintain profitability. There may be a temptation to dip into endowed funds to cover shortfalls. A large endowment may trick leaders into thinking there is no urgency, and the board is likely to resist new fund-raising strategies and sources of revenue.

Often, little time is spent on replenishing donors who make lower-level gifts, and most of the focus is on the top contributors. The challenge for leaders is to help reinvent the organization by pushing for change and bringing in fresh ideas from outside the group.

G. Bureaucracy. Eventually, the charity uses up so many resources that it declines into a bureaucracy. The focus of the organization continues to be inward, but formality and politeness give way to passive resistance and, in some cases, back stabbing among the staff and board.

Energy is spent on fighting one another rather than fighting for the charitable cause. People begin to blame one another for declining circumstances, and the chief executive may be fired and replaced. Additional layoffs may occur, causing morale to plummet. Employees are alienated and paranoid; some begin to look for other jobs. There are many complex, slow internal systems, and outsiders find it hard to connect with the organization.

A few committed donors may provide “bailouts,” which often only prolongs the agony. The outside world begins to learn of the charity’s problems, making it harder to raise money. Fund raisers’ suggestions for change are likely to be resisted; they may even be blamed for financial problems. They may be able to make small changes, bring in outside consultants, or ignore the problems and focus on modest achievements. If no leader emerges to turn the charity back toward a growth path, which is very difficult for a late-stage bureaucracy, the organization will eventually close its doors. It will linger as long as the money holds out, which may be a number of years.