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Development Board Questions

Stages Of A Nonprofit Organization’s Development

Most nonprofit organizations go through predictable life cycles. Like other living organisms, they start live, grow, develop into adulthood and mature. For each stage in the life cycle, there are certain challenges, successes and developmental issues. This article is a short overview of organizational life cycles.

A. Start Up

A group of volunteers has a vision and a passion, and develop a project. This model is called “Founding Board.” The work is done by volunteers. Volunteers do the program work, and many of the same volunteers govern the organization by serving on the board. This can become confusing, especially as the organization starts to grow, and core volunteers become stretched by the combined workload of program activity and board service. Critical to early success is the vision of the founding group, and the power of that small core to both carry the work and invite others to become involved. Usually, after a year, or two (or more), the founding group will become tired and burned out, and it will find it cannot sustain the work or the momentum. If the organization is to be successful, it needs to expand the level of support for its project work so that it can hire staff. The organization needs to build a few core sources of financial support.

Or, the charismatic leader builds the organization. The work develops because of the way the founding leader articulates the mission, describes the program, and draws others because of the power of the leader’s personality. This model of development is called “Founding Leader” or “Founding ED.” The program is often strong and compelling, and the founding leader is able to draw funding and other support to the program. Most founding leaders are exceptionally gifted at building the programs, articulating the case to the community and funders. They are sometimes less skilled at organization building and developing systems. Founders can serve from a few years to decades. Organizations will usually hit a crisis point where a certain level of structure is needed, and the organization has outgrown its earlier framework. If the organization is to be successful, it will look at its paid and volunteer leadership, analyze the structure, and make changes that might be required in order for the organization to continue to grow.

B. Organization Building

At this stage, the organization has made some changes. Whether “Founding Board” or “Founding Leader” model, the organization usually finds a number of developmental challenges ahead:

Board development – the board shifts from more “hands-on” program activity to policy and fund raising. Some members find this change exciting, and they work to bring more people onto the board who are focused on these areas. Others miss the programmatic work and find that transition difficult. These issues are seldom articulated, but they are usually present. Boards that bring on a new Executive Director are usually excited about the new staff leadership, but they often find themselves frustrated when the new ED is “taking over” what board members and committees previously handled. Boards can lose people, or bring on people who don’t quite fit during this “shakedown phase.” It helps if board members understand that there are a range of options: board service, committee or program volunteer work. Boards usually benefit from training and consultation about issues like roles and responsibilities, fund development and the line between policy (board) and operations (ED). The board’s developmental challenges at this juncture are finding ways to bridge the gap between program board and policy board – developing strategies for recruiting new people, and building a stronger, more structured governing body. Change should be paced and carefully managed, and the board should be encouraged to analyze its progress.

As an organization builds, the staff is going through a change process similar to the board’s. Whether the organization is working with its first, second or even third Executive Director, there are a few key developmental challenges. Programs have developed and are usually strong. However, funding at this point is often a challenge, and many organizations find that their program growth has outstripped the budget. The ED must manage the budget, with the board’s oversight; and the ED and Board Chair need to focus on building board fund raising capacity to bring in new revenue that will diversity the budget. This can be a challenging dance. The ED is working to build and manage programs, which often means developing a staff. Nonprofits nationally struggle to pay competitive salaries, and often face high turnover rates. The ED and staff usually find that they are working many long hours to handle the different programmatic and administrative tasks. Critical to short and long term success will be the ability to outline goals, define tasks. Identify responsible parties, and prioritize the workload. Here, organizations learn the skills of deferring much needed projects and activities, and saying “no” and “not now.”

Successful organization building results in an effective, well focused policy board; strong board leadership; successful fund raising activities that include board, staff and volunteers; strong ED leadership; a skilled staff, effectively managing programs; a diversified budget with some cash reserves; and good planning that guides decision making and anticipates areas of concern.

C. Organizational Maturity

At this stage, the organization has a clear mission, well established high quality programs, strong reputation, effective leadership with board and staff, good systems, and a diversified base of funding. The challenges that the maturing organization faces are to maintain the programs and services in a way that continue to be responsive to community need and a changing environment. Many things need to be tended: programs, board, staff, and finances. The systems are in place, the challenge is to continue to grow the programs and the organization while maintaining what is in place. This must be done while maintaining momentum and keeping the work fresh. The biggest challenges to this phase include: unanticipated threats that cause serious harm; poor decisions that result in financial difficulty; problematic leadership (ED or board) that is not addressed; lost momentum and problems with relevance.

About the Author

Anne Hays Egan is an organizational development consultant to nonprofits. She is based in Santa Fe, NM and Buffalo, WY. She has worked with hundreds of nonprofits throughout the United States, focusing on strategic planning, organizational development, evaluation and interagency service network development. Anne works primarily with health and human service and children’s providers and funders of those services. She has published newsletters for the sector, as well as books and chapters. She has presented papers internationally to Independent Sector, International Society of Third Sector Research and United Way of America. Her work has been cited in nonprofit management association networks, funding networks and association groups. She is the former published of the Digest of Nonprofit Management, and Tools for Nonprofits. She provides information, resources, newsletters, fund-raising plan outlines, and many other materials from her website,

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