Panel Paper: Strategic Adaptation in Fragile Nonprofit Organizations: Rich, Varied, and Strategic Response to the Great Recession

Friday, November 8, 2013 : 8:00 AM
DuPont (Westin Georgetown)

*Names in bold indicate Presenter

Martin Greller and Aida Rodriguez, The New School
During the Great Recession (2008 – 2009) nonprofit organizations faced an environment which made their service missions more critical while reducing the resources to fulfill them – a situation in which strategy becomes critical. Strategic plans balance stakeholders’ demands, clarify the mission, and establish priorities that guide action. Nonprofits are criticized for not explicitly engaging in strategic planning claiming they lack the resources, time or the capacity to undertake it, coupled with fear of distracting staff and board members from their focus on mission, programming and fundraising. Thus, there is concern that nonprofits may not consider the strengths and weakness of their organization nor deliberately assess the changing external opportunities and threats they face. The Great Recession provided the opportunity to examine the approaches used by nonprofits facing a challenge that made strategy relevant. Our study examined whether the organizations were: passive and became less attuned to their environments and less successful, reactive in which case there would be change in pursuit of resources but at the risk of mission creep, or strategic where changes in capability would be undertaken to continue the pursuit of the mission while adapting to changing circumstances to do so.

Interviews were conducted with the chief executives of 26 Latino nonprofit organizations in the New York Metropolitan Area, a rapidly growing but historically less well funded segment of nonprofits. Data were collected on the executives, board composition, performance before and after the recession, perceptions of the characteristics of the strategic environment, and several dimensions describing organization capabilities.

            Results indicated that a dynamic environment was not correlated with perceived organization effectiveness but was associated with change in capabilities. Changes in capabilities were not associated with greater perceived effectiveness, perhaps because more time was required for results to become evident or because not all change is successful. Qualitative data showed the nonprofits that saw themselves as successful viewed change as part of ongoing adaptation to achieve mission (strategic). Less successful organizations described their actions as scaling back to serve the numbers their resources would allow (reactive). Nonprofits using a strategic approach selected boards for their diversity of relevant skills and deliberately engaged wide participation of stakeholders in the decisions.

            While the extent varied, there was evidence of strategy. While the process may have appeared emergent, it did address strengths and weakness of the organization’s capabilities in recognition of the changing external opportunities and threats. Furthermore, those nonprofits that were strategic not only enacted the process but also governance practices (i.e., composed boards and consultation with stakeholders) that are associated with strategic innovation in the broader management literature – practices that were themselves surely deliberate.

            Additional data are being collected to assess results three years later. These results should be available in time for the conference.