Fall2007



	Knowledge Letter, Fall 2007
	Friends of the Bridgespan Group, Good decision-making practices are one of the most striking characteristics of high-performing organizations. They can also be devilishly hard to develop. “RAPID^SM Decision-Making” offers a simple, well-tested framework, which nonprofit leaders and their colleagues can use to map how decisions are being made in their organizations today, and how they might be made more effectively tomorrow. Unfortunately, the decision to invest in building their own capacity is one that many nonprofit organizations avoid making. Why the omission? Among the reasons, the most pernicious may be the need to conform to unrealistic expectations on the part of donors, funders, and the public at large about what constitutes an appropriate level of overhead. Such expectations continue to be widespread, as “Overhead Rates: What Does It Take to Run an Effective and Sustainable Organization?” indicates. And yet, as this Bridgespan data point also shows, when nonprofit leaders and their boards do push back, the impact on mission can be dramatic. Additional examples of the impact of organizational investments (such as the design of a new performance evaluation system, or the development of a stronger senior management team) can be found in the profile of the Annie E. Casey Foundation and the MY TURN, Inc. case study. Finally, for readers who are eager to expand their own organization’s leadership team, Bridgestar’s Hiring Toolkit offers practical, seasoned advice for every step of the hiring process. As always, we invite your comments and welcome your suggestions at feedback@bridgespan.org. Nan Stone The Bridgespan Group			IN THIS ISSUE Bridgespan Perspective RAPID^SM Decision-Making: What it is, why we like it, and how to get the most out of it Bridgespan Case Studies The Annie E. Casey Foundation—Answering the hard question: “What difference are we making?” MY TURN, Inc.: Building on Success Data Point Overhead Rates: What Does It Take to Run an Effective and Sustainable Organization? From Bridgestar.org Hiring Toolkit Tools for navigating the hiring process Subscribe to Strategies for Social Impact



		BRIDGESPAN PERSPECTIVE

		RAPID^SM Decision-Making: What it is, why we like it, and how to get the most out of it (PDF) Jon Huggett and Caitrin Moran
		Decision-making in nonprofits can be challenging, for reasons ranging from vague reporting structures to the complexities that naturally arise in organizations with many constituencies to consider and represent. In the worst cases, a poor decision-making process can create a climate of mistrust, and even undermine an organization’s mission. The result is often wasted time, confusion and frustration. One way to address the issue is to diagnose the source of the problem by mapping out how decisions are being made. Another is to map out how key decisions should be made. There are a variety of tools available to facilitate these processes. Among them, a tool called RAPID^SM has been highly effective, and is easily adaptable to different situations, team sizes, and types of organizations.


		BRIDGESPAN CASE STUDIES

		The Annie E. Casey Foundation—Answering the hard question: “What difference are we making?” (PDF) Katherine Kaufmann and Robert Searle
		It’s one thing to be able to say, “Our foundation funds programs that do great work.” It is a very different thing to be able to say, “Our money is having the impact we want it to have.” How can a foundation explicitly and confidently measure its performance against its mission, when it’s the grantees who deliver? In 2000, the Annie E. Casey Foundation's measurement activities were focused mainly on tracking process results. These data provided a big-picture look at the scope of the foundation’s grantmaking, and a catalog of general outputs (the number of people served by a given grantee, for example). But importantly, they did not establish a clear link between outputs and outcomes. The organization tackled that question when they set out to create a foundation-wide, results-based measurement system. Their experience—and in particular, the work of Casey’s Education Program—illustrates the scope and depth of effort needed to create such a system, and suggests guidelines for other foundations seeking to understand their impact.


		MY TURN, Inc.: Building on Success (PDF) Margaret Boasberg and Barbara Christiansen
		In 2003, MY TURN (aMerica’s Youth Teenage Unemployment Reduction Network, Inc.) had developed a three-year business plan that envisioned significant growth in the number of communities and youth it was serving. Within two years, the organization had knocked that ball out of the park, and its leaders were energized to do more. At the same time, however, they were concerned about the speed of the organization’s growth, and their ability to attract funding. Would it be better to add programs, sites, or both? What would growth entail for their staff, systems, and existing organization structure? How much new funding would it take to grow, and how could they acquire the necessary funds?


		DATA POINT

Click on chart to enlarge		Overhead Rates: What Does It Take to Run an Effective and Sustainable Organization? Half of all nonprofits report overhead rates below 20 percent of revenues in their annual tax filings. These levels have become so familiar that they seem quite reasonable—to boards, to funders, to individual donors. But just how realistic are they? We recently analyzed the financials of four nationally-recognized youth-serving organizations. We found that the reported financials of each organization understated its true overhead costs (see accompanying chart). Interviews with the organizations’ leaders revealed funder and board member expectations about appropriate overhead levels to be a major driver behind the under-reporting. The interviewees also said that their organizations were still too lean to operate sustainably. To improve the health of their organizations, some nonprofit leaders—including a few of those profiled here—are beginning to push against unrealistic overhead expectations and increase their infrastructure investments. Their successes on this front have been aided, in part, by their own ability to articulate the need for infrastructure support, and by a growing understanding among their funders and boards that funding programmatic activities to the exclusion of infrastructure creates problems over the long term. One of the organizations profiled here, for example, has recently invested in systems and senior team, increasing non-program staff 150 percent over three years. That investment has allowed program staff to spend more of their time helping kids, and has helped its leaders refocus the organization on impact, rather than day-to-day operations. Another has invested heavily in IT, reducing system downtime and advancing the organization to a position of national leadership in outcomes tracking. Examples like these may help to encourage more nonprofits to engage in open and data-driven dialogue with funders and board members about their own true overhead costs.

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