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5 lessons from the Wounded Warrior Project

Every now and again we get a news story about a big nonprofit organization that is abusing its money or power. There was the three-part series in the Washington Post on The Nature Conservancy back in 2003. There was the report last year by ProPublica and NPR on how the American Red Cross misspent funds allocated for relief efforts after the earthquake in Haiti. And last week, the New York Times did a story on the Wounded Warrior Project (WWP).

The article highlighted the organization’s lavish spending on travel, retreats, and compensation. It examined the organization’s drive to model for-profit businesses, with a focus on generating profits to scale its work. And it discussed the organization’s drive to produce results – and how that drive produced an intense and aggressive culture.

The article is constructed in way that makes a compelling case. The reporter got unflattering stories from former employees, and further evidence of questionable behavior from current employees. He was unable to get a quote from the founder, who supposedly left the organization when another executive took the organization in a different direction. It was noted that Charity Watch has given the organization a “D” rating for the last four years, and of course, the infamous Charity Navigator was cited in reference to the organization’s inflated overhead percentage.

Honestly, I don’t know a lot about the organization. I’ve never been much involved or informed about veterans affairs (other than the incredible need for support for our troops coming home from overseas). I’ve heard of the Wounded Warrior Project. I know that it has had amazing growth since its inception. I know it’s got amazing brand recognition. I know it’s an interesting case study of how to scale an organization. And I know that there’s a lot we all can learn from the organization’s presence in the news of late.

Here are six basic lessons that other organizations should learn from all this:

1. Life isn’t fair.

We all know the disparities between charitable organizations and for-profit businesses. Through both investment and management practices, non-profits are put at a severe disadvantage for growing their work and solving programs at scale. And these practices are driven by misguided expectations, whether we like them or not (and we don’t by the way). If a for-profit spent money the way WWP did (and they do – and worse – all the time), it wouldn’t matter, as long as investors made money. A charitable organization that spends money on paid advertising and administration and salaries and defending its overhead expenses, even with the aim of growing its work? Wasteful and unforgivable.

Granted, I still believe in cost-effectiveness and not wasting money – especially when you are entrusted with another’s money to produce results – and it seems like WWP crossed the line of efficiency. But still, these guys followed all the advice non-profits get about being more like a business – metric-driven, results-oriented, more tightly managed – and they got torn down because of it. (Okay, so they got torn down for not doing it well, and for fostering a wasteful, aggressive, demanding culture, but you get my point…)

Damned if you do, damned if you don’t. The system is rigged against you, and until the rules can be changed (see below), you need to play along.

2. Reputation matters.

The way charitable organizations work – responding to societal needs and serving underprivileged communities – makes them dependent on donations from others to cover the cost of doing business. As such, you need people to want to give to you. If they don’t like you, they won’t want to give to you. And so you need to make sure people like you.

If you treat people poorly, they won’t respond well. This goes for internal relationships – employees, Board members, staff, volunteers – as well as external ones – donors, funders, partners, vendors. Especially in a sector that was established to do good, organizations should foster compassionate relationships within themselves and with others outside.

Because let’s be honest: people talk. Current employees talk, former employees definitely talk. Funders talk with each other about grantees, and they talk to other organizations. These people could either be allies who spread your message and garner you more support, or they could be dissenters who spread doubt about your work, your intentions, and your worthiness of their support. It all depends on your own choices about how to treat others. But at the end of the day, your reputation will determine whether people like you or not, and thus whether they support you or not.

Besides, you never know when journalists might come along digging for information. What what will they find when they do?

3. Beware the Pursuit of Success.

In order to succeed at achieving your mission, you have to grow to respond to the problem at scale. This means generating more revenue, hiring more staff, and doing more work. It’s a lot of effort, but the benefits of success for a nonprofit organization are huge: more impact, less problem, and a better world.

The problem with growth is that organizations can sometimes falter in their pursuit of it. This often happens because of how organizations (and the people who run them) think growth happens. Too many organizations think the answer to their problem is more money, or changing their work, or changing their brand, and in doing so, they move away from the mission and values that define them. They end up fixating on the ends without regard for the means.

The WWP was committed to growing, and to do so they adopted a focus on metrics and revenue. But the New York Times piece paints this focus as creating mission-drift, misguided goals (see below), and a hostile work environment.

Moreover, if you’re really doing all that growth, it means that you’re connecting with more and more people – donors, funders, staff, volunteers, beneficiaries, etc. This bigger base of support is a huge asset, but it also means more visibility. And while more visibility can be an asset, it can also be a liability: more talk, more eyes watching, more scrutiny. This is why the bigger organizations are easier to target for scandals – your Nature Conservancies, your Sierra Clubs, your American Red Crosses, and your WWPs. (Remember: reputations matters.)

They say to be careful what you wish for, but you should be more careful about how you pursue it…

4. We need solid measures of impact.

This isn’t news. (None of what I’ve written so far is, really.) Still, if a large, “metrics-driven” organization like WWP can be accused of making up or faking its numbers, then what about a smaller organization with less resources dedicated to monitoring and evaluation?

Organizations need to use reliable and verifiable data to measure their progress. They should track outcomes (not just outputs) and they should track process indicators as much as performance indicators. And in doing so, they should get a better sense of their cost-effectiveness so we can move away from simple (and useless) measures of efficiency like overhead percentages.

Monitoring and evaluation is a huge challenge for nonprofits who are pushed to spend all of their money and resources on doing the work, and aren’t provided the resources needed to measure its effectiveness. The irony is that those who provide the money want to know that their money is being spent well, but they won’t pay to have someone figure that out.

Which leads me to my next point.

5. We need help to dispel the myths around overhead.

I’m not gonna rehash the overhead problem here (because you read more about it here) and of course I’m not surprised that it was discussed in the WWP piece.

What did surprise me, however, is how the WWP took heat for actually doing something to try and dispel the overhead myth.

Here was an organization that had the resources to do something on behalf of the whole sector – something that is desperately needed and would greatly enhance the success of all nonprofits everywhere trying to do good for the world – and their actions to spread awareness and solve the problem were painted as selfish and unethical. They were portrayed like a big bank lobbying for less regulations so it could make more profits and threaten the entire economic system for its own gains. Except if nonprofits didn’t have such tight restrictions on overhead percentages then the world would actually get better, not worse.

Would WWP benefit from less restrictions on overhead? Maybe. They seemed to be doing just fine financially and getting away with a higher-than-normally-allowed overhead rate under the current conditions. Would the entire nonprofit sector benefit from someone going to bat on their behalf to remove those restrictions? Absolutely.

Unfortunately, it seems that if an organization tries to remove the overhead limits, it may be perceived as self-interest. So if not us, then who? I guess the lesson here is that nonprofits need other allies to help fight this battle on their behalf. We need some funders to step up, we need some donors to spread the word, we need some affinity groups and alliances to speak out, and we need key leaders across the sector to make a concerted effort to build support for the cause. The battle is daunting, but it must be won, and there must be a strategic, coordinated movement to win it.

 

I’ll be completely honest: reading news like the WWP piece makes me incredibly frustrated, disappointed, and even pessimistic (which is not my nature). It’s a challenge for me to find the silver lining here, but I think the best we can do is learn from what happened so we do things better in the future. If anyone else out there has thoughts on how we can learn from this and improve the sector, share your thoughts below.

Here’s to a brighter future.

case for support, communications, fundraising, messaging, planning, rationale, theory of change

How to define your organization’s unique value

In my last post, I discussed how a theory of change can help your organization to focus its mission. This is the result of better defining your organization’s unique niche within the system in which it operates.

But how do we identify our organization’s unique value proposition? What parameters can guide us to determining our unique niche within the system? What will tell us how we can be most effective at creating the change we wish to see?

There are three components to a unique value proposition:

  • The benefit you offer to your constituents
  • How you are solving the problem
  • How you are different from others

The first describes the good stuff you do or provide, while the second identifies how that good stuff actually responds to the need and solves the problem you’re tackling. The third point is about how you distinguish yourselves from others working on the same issue, whether it be in approach, methods, or focus (thematically or geographically).

The theory of change is critical for laying the foundation of understanding about the problem, the other actors in your problem space, and the difference approaches to solving the problem and creating your vision.

Then when it comes time to define an organization’s unique value proposition, I ask questions around three areas:

Competencies. What is your organization good at? What skills and technical expertise does your staff bring to the table? What have you accomplished in the past as evidence of this? And conversely, what are you not good at? In what areas are you weak that you are less likely to be successful? Where have you not been successful or where have others been more successful than you in the past?

Need. Sure, you may be good at something, but is it needed? When you look at the system in which you work, do your strengths align with one or more areas that will contribute to transforming the system? How does your work make a significant contribution to solving the problem in the long run? How is what you’re doing today going to make it easier for people tomorrow? And conversely, in what ways does your work not solve the problem? What other approaches are needed that you will not do or that you are not prepared to do?

Position. So you’re good at something, and that something can help solve the problem, but is this something that others are already doing? Is what you’re offering different from what is already being done? If so, can you define and demonstrate those differences? Conversely, are there areas of need where others are not intervening that fit your competencies? Is there something that needs to get done that no one else is doing and you could do successfully? Could you adapt your organization to do what’s needed?

By looking at what an organization can do well, how what it does affects change, and its positioning relative to others, it becomes much easier to understand the unique value proposition. This in turn makes it easier to attract support for your work, because it is important, effective, and unlike anything else out there. And who wouldn’t want to support a worthy cause like that?

Do you know your organization’s UVP? Do you have a clear theory of change that helps you understand your organization’s purpose and positioning? How would understanding your organization’s UVP help you with your messaging and fundraising?

If you’re interested in developing a theory of change that does all of the above, check out The ToC Workshop, a special eight-week program designed to help you get the most out of a theory of change for your organization.

messaging, planning, rationale, strategy, theory of change

How a theory of change should inform your mission

Many of my clients have difficulty articulating their work in a clear, concise, and compelling way. In my initial conversations with these potential clients, it quickly becomes clear that they do not fully understand the rationale behind their work, or how their work has broader, longer-term impacts on the problem they’re trying to solve. This isn’t unusual, but it is a problem for the organization. This lack of understanding leads to a lack of focus, a lack of clarity among staff and Board members, and a resulting lack of collective purpose and drive. And so inevitably I end up working with these clients on developing a theory of change, one that brings greater clarity, greater focus, and greater cohesion to the organization.

Working with one organization, I was approached by a Board member who was brought in to participate in the process. She asked me a keen question: how might developing a theory of change affect the organization’s mission?

To answer this, let me back up a bit. When an organization is created, it is created with a purpose (hopefully a singular one). The organization’s statement of purpose is what we call a mission statement. It defines what an organization does and what problem it aims to solve. The mission may evolve over time, but the essence of the mission generally remains consistent for the organization.

Most founders of nonprofits have a clear purpose in mind – they know what the organization will do and what it hopes to achieve – but they may not understand the bigger picture. They don’t consider much outside the scope of their own organization’s work, or worse yet, they believe they can solve the whole problem by themselves. But the truth is this: every organization works within a larger system of actors who are working on the same issue.

Some of these actors are working on the same issue from a different angle, but some are taking the very same approach, though they may not be aware of each other. In fact, some organizations aren’t even aware of other groups working in the same geographic area on the same issue with the same partners or constituents! And when this happens, and there are redundant and even competing organizations, it becomes difficult to define an organization’s unique value proposition – what does it offer in solving the problem that no one else can or does?

In other cases, organizations have been doing the same work for years and years with no seeming reduction of the problem. In this situation, they fail to understand the larger system and how their organizations are actually creating impact. How does your organization’s work actually solve the problem in the long-term? Systems are complex, with many different interacting parts. Transformation of the system will require thoughtful planning, clear focus, and working with others who are tackling the same issue. Without knowing the system and its different points of leverage, how can you truly understand what is needed to create lasting change?

This is where a theory of change comes in. A theory of change is not a statement of what will happen when your organization achieves its mission. A theory of change describes what is needed to transform the entire system in which your organization works. It goes beyond the work of your organization because your organization alone cannot solve the problem (despite what you may think). In fact, the vision of the system is your organization’s vision statement, but hopefully it is not unique to your organization and instead is shared by the other actors working in the system. Because you are all working in the same system towards solving the same problem. A theory of change not only provides a view of the system but also where your organization fits within it.

I think of the theory of change as the nonprofit equivalent of a business plan. A business plan is used by for-profit companies to define what the company is about – its product, its customers, and its operations – but it also describes the market it will enter. This way the business owners (and potential investors) will understand how the new business will compete and survive in the long term by providing a unique value to the marketplace. Similarly, a theory of change describes the system an organization is entering and what unique value the organization contributes to the system.

So will a theory of change alter an organization’s mission statement? Actually, yes, it might. Ideally, a theory of change is done as part of the organization’s formation – like with business planning – so its mission statement accurately reflects its unique role in the system. But since most if not all organizations do the theory of change after their mission statement, the theory of change will likely alter the mission somewhat. Not usually in its essence, but in its focus and how it is articulated.

(Side note: It’s backwards to do a mission statement or strategic plan before doing a theory of change – like planning your route to a destination without first looking at a map of the region – but most people don’t know of a theory of change until after they form an organization and a funder asks them what their theory of change is….)

For instance, in understanding the system, your organization may realize that there is a particular need that you alone can fill, and that may become a more important element of your organization’s work. Conversely, there may be areas of your work that overlap with other organizations’ work, and you may cease those programs or at least spend less resources on them, focusing your mission on what is unique to your organization. If parts of your organization’s work tackle different aspects of the system, you may decide to focus on just one, narrowing your mission. Or through the theory of change development process, you simply may gain greater clarity on the true value that your organization can provide, and reframe your work through that lens.

The particular Board member who asked me the question got to experience some shifts to her own organization’s mission. Again, the essence was the same but the focus and purpose was more specific and focused. The organization understood what needed to get done, where it could add the most value, and how it could best solve the problem, and that led to greater articulation of its mission.

I’ve seen organizations shift their missions in light of a new theory of change, but in the end, the organization benefits from a greater comprehension of what needs to get done and how it can best add value to transforming the system into their vision.

Does your theory of change bring greater clarity to your organization’s mission? Does it take a broader view of the system and identify your organization’s unique value within it? Does it help you articulate your organization’s work and purpose?

If you’re interested in developing a theory of change that does all of the above, check out The ToC Workshop, a special eight-week program designed to help you get the most out of a theory of change for your organization.