Before we start, we have some exciting news: we’re adding fiscal sponsorship to our programs! Our goal is to combine incubation, fiscal management, and infrastructure development to increase impact.

​One of the most common questions I get from new nonprofit leaders is, “I’m ready to start my nonprofit, but I don’t know what to do next.” So here’s a guide to the phases of nonprofit development, and what to expect in each phase. I’ve included sections about what artifacts you’ll need to create, common mistakes, and tips for success. Where applicable, I’ve also indicated where we can help support you. Most of our programs were developed in reaction to a need we saw.

​Phase 1: Inception

You have an idea. You know the change you want to see in the world. You see a problem, you see a pathway to fix it, and you have plans to change the world. At this phase, you’ll want to focus on storytelling - making your mission and vision clear, articulated well, and supported with data and concrete plans to give form to your vision. In this phase, you’re also pre-funding, and part of acquiring funding is making sure you have a plan your funders can buy into and a budget that supports it well.

Artifacts you’ll need to create:

• Mission statement

• Theory of change

• Annual plan with OKRs (objectives and key results)

• Data points to indicate success

• Preliminary budget

• Business plan

Common mistakes:

• Not adding enough money in the budget for overhead costs (like payroll, fiscal sponsorship, insurance, etc.)

• Assuming that funders will have faith in your plan on the strength of your vision

• Not thinking through how you’re going to accomplish your mission well. I want a step-by-step flow of what you’re planning on doing, with whom, and how. This will inform budget and metrics, and give your funders more confidence in your plan.

• Not evaluating the landscape. Are there others already doing similar work? What makes you different? Sometimes it’s more effective to add your program to an existing org, not create a new one.

Some general tips:

• Be clear. The curse of the expert will follow you around. Use simple and concise language to describe your impact and plans so that an average middle school student can understand it. Keep asking, “why?” If you haven’t seen it, refer to Simon Sinek’s TED Talk on “Start with Why.”

• Avoid heavy LLM (AI tools like Claude and ChatGPT) usage. LLMs are really good thought partners, but your funders want to see your plans, not Claude’s. I also find that overreliance on LLMs means people don’t present concrete plans well, since those need to be developed by you.

• Get feedback early. Talk to potential partners: people in the field, similar orgs, etc. Keep a learning mindset and adapt to what the feedback indicates.

• Start small and large. Practically, you want to start off with a pilot or beta version of your full programming. That’s the small part. What can you implement now, with little or no support? It’s the MVP (minimum viable product). But also think big. What’s your objective? What can you achieve if you get your aspirational funding? That’s your ask.

Resources we offer to support you:

• Built to be funded foundational course

• Incubation coaching

Phase 2: Fundraising

You have all your materials ready. You have a great plan, and hopefully some data to back you up. This is the part where you’re speaking to potential funders to gauge interest in supporting your mission and submitting grant applications.​

Artifacts you’ll need to create:

• Grant application template: Once you have a template, the next applications will be much easier.

• One-pager LOI: Tell your story in 1 page (max 2) so funders can quickly review your plans and evaluate alignment.

Common mistakes:

• Don’t assume grant funding is easy to get. It takes strategy and time. You’ll want to find a personal backer for the first couple of years. Yes, that means talking to people and selling them on your mission.

• Be thorough about producing the documents mentioned above in phase 1. Yes, you do need them, and they are important, and you’re more likely to get funding if you’re presenting your organization as professional and well run.

Some general tips:

• It’s hard to get that initial funding. Outside of the EA community, most funders won’t touch orgs that have been around for less than 2-3 years. It’s risky. Try to find people who believe in your mission, or bootstrap a pilot to prove success, which will in turn make you more fundable. Another option is to work with partners that have a proven track record.

• If you do get seed funding, don’t assume that it will be renewed. Many seed funders don’t continue support past the first year. It’ll be up to you to prove your worth and diversify your fundraising early on.

• Maintain the perspective that you’re offering potential funders the opportunity to support a cause that’s important to them. That changes the fundraising conversations to be one of partnership, not of begging.

• Funders are looking at you as an investment. How likely is it that you’ll be able to realize the impact they want to see? In all, your conversations and presentations show them why they should have confidence in you. As much as you can, point to past performance and indicators that validate that claim.

Resources we offer to support you:

• Webinars (this year)

• Past webinars on our YouTube channel

• Grant writing support

• Incubation coaching

Phase 3: Entity Startup

Congratulations! If you’re at this point, it means you’ve either received funding and now need to put it somewhere, or you don’t need it to start and are doing good work.

This is where you need to make a decision: how are you planning on setting up your entity?​

The ideal setup is for your organization to be established as a registered nonprofit (501c3 or equivalent). This means that the IRS has evaluated your organization and determined that it meets the criteria of serving the public good. It means that your entity is owned by the public and exists to serve the public interest. To do this, you need to (1) incorporate as an entity, (2) get an EIN, and (3) get 501c3 approval. There are 2 ways to get 501c3 approval:

1. File Form 1023-EZ: This is a good fit if you’re new and have acquired less than 50k in funding so far. It’s an easy form, and current turnaround times are approximately 1 month to approval.

2. File Form 1023: If you’ve secured funding for more than 50k, or are reasonably certain you’re going to (as in funders have indicated a promise to give), you need to do the long application. You can do it on your own (that’s what I did, although I probably should have done the 1023 EZ), or you can hire a law firm to help you with this. Expect to pay 3-6k in legal fees and a turnaround time of 6-12 months.

Now, while this is the ideal setup, there are often bottlenecks to getting there. The most common are:

1. You have funds granted now, but you haven’t gotten 501c3 approval yet.

2. You don’t know how to set up the financial systems to maintain compliance.

3. You’re not sure if you’ll get funding or survive past year 1, so you want to start the project under a different organization’s umbrella.

4. You already have a for-profit but want to accept funds for a specific charitable project.

This is where fiscal sponsorship comes in. Fiscal sponsorship means that a “parent” nonprofit incubates and/or houses your organization within it. You’re essentially a part of that parent nonprofit but running your own program within it. The fiscal sponsor will take care of all the financial, legal, and HR responsibilities, leaving you with just the running of your programs. Fiscal sponsorship fees vary, but they’re all based on a percentage of donations received. Different fiscal sponsors have varying levels of involvement and insight into your daily operations. On one end of the spectrum are sponsors like BERI, Sparkwell, PPF, and ASHGRO who provide fiscal management but not operational support. On the other end sits Rethink Priorities, who handles everything operationally for you. Our program adds incubation to the mix so that the organizations we sponsor get the support they need to become healthy and independent organizations with a strong operational infrastructure (yes, we also offer that incubation support for organizations who don’t need a fiscal sponsor).​

In most cases (not for for-profit projects), fiscal sponsorship should be treated as a temporary measure on your way towards independence. If you start off sponsored, add another phase onto your journey for incorporation.​

If you’re in the situation where you’ve gotten the approval but don’t have the infrastructure, we also work with orgs to set up their operational infrastructure so that they can operate independently.​

Artifacts you’ll need to create:

• Incorporation documents

• Nonprofit approval status

• State registrations

• Bylaws

Common mistakes:

• Assuming you need to be fiscally sponsored. As I mentioned before, it’s not the ideal scenario. In my experience, people default to it because they don’t know how to get started on their own. Fiscal sponsorship is an excellent resource, but make sure you need it.

Some general tips:

• When incorporating, you’ll need to select 3 board members. At this point, just choose 3 people (1 can be you) that support your cause. They don’t need to do anything except potentially sign documents and provide their address. Later on, when you’re up and running, you can (and should) revise your board members.

• I can’t stress how important it is to have a lawyer that you like to work with. They’ll guide you through the right processes to start with, what makes sense for you right now, and be your partner as you grow.

• Be thoughtful about what type of entity you create. For example, if you’re doing a lot of lobbying (>20%), you want to incorporate as a 501c4, not c3.

Resources we offer to support you:

• Built to be funded foundational course

• Fiscal sponsorship

• Entity setup support

• Network of lawyers

• Financial and operating infrastructure setup

Phase 4: Operating

This is the phase where all the hard setup work is behind you. Now it’s time to focus on your mission and maintaining your status as a nonprofit. Maintaining compliance with nonprofit requirements isn’t intuitive or easy. Every state and country has its own rules and guidelines, and the infrastructure load becomes more important and more time-consuming as you grow. ​

Here’s what you need to be thinking about:

• State compliance: Make sure you’re registered in every state that you operate in, solicit funds from, or employ someone in. You’ll have to register with the secretary of state, and if you’re employing someone, there are 2-3 more registrations you’ll need to file.

• Maintaining a state of audit-readiness. This means that your finances are ready to be audited at any time. Your expenses need to be allocated to line items that will be reported on the 990 at the end of the year, and you need documentation to support all your expenses and that they’re all in line with charitable expense policies.

• When you’ll need an audit. Different states have different thresholds for when a financial review or an audit is triggered. You need to look at the thresholds for each state that you operate in to determine when you’ll need one. The threshold will be anywhere between 250k and $2 million.

• Travel and expense policies. This is where you establish what is and isn’t considered a part of supporting your charitable purpose. I usually recommend reimbursing people for travel at GSA per diem rates, using GSA for guidance on max spending for hotels, and flying in the lowest class available. You can change that if your board and your funders agree to the increased spend.

• Reporting and metrics: From the beginning, funders will want numbers. What is their investment providing? For some nonprofits, the number is easy: “we served 350 homeless in March.” For others, it’s harder. How do you quantify the effect of political advocacy or communications efforts? Implement some type of system to capture the numbers in advance. It’ll make it much easier to report later. I sometimes joke (but kind of seriously) that funders should pay the nonprofits for all the reporting requirements they impose…

• Operations infrastructure: Just because you have a good idea doesn’t mean you’re going to be able to implement it well. If you aren’t a strong project manager, find one to bring on your team. This is the most common point of failure for nonprofits - having a strong mission and vision but lacking the operational strengths to execute on it. You don’t want to wait until your funders give you poor feedback. At that point, you’re not likely to see renewed funding until you get your act together. No, you can’t just figure it out on your own and expect to succeed. You will make mistakes. You need a team, and a team specifically with relevant project, program, or nonprofit management experience. Experience is not easily acquired. It takes time, effort, and mistakes to gain the relevant experience. Learn from the experts. Apply industry norms and best practices. Don’t assume that you’re different.

• Use project management best practices. Everything that you’re producing is some form of project. Treat it like that. Have clear phases of how you do your work, and track it in a project management system. That will make it much easier to execute and stay on top of everything you’re working on.

• Hire the right people for the right jobs. It’s really costly to hire and then fire someone, and it’s even more expensive to not have the right people for the job to begin with. You want to make sure you know:

  1. What are the gaps in your organization that you need more capacity to fill?

  2. What kind of personality, talents and strengths (see Gallup Strengthfinders for more details about how that works) does that candidate need to have?

  3. How you can assess the candidate’s ability to do a great job before committing.

  4. How to onboard and train them properly so your new hire does well.

Resources we offer to support you:

• Operations Bootcamp

• Fractional operations support (finance, compliance, administration, grants, and more)

• Hiring and recruiting

• Operations coaching

• Fractional COO + operations team

• Referral partner network

• Financial management

• Coming soon: 10 steps to effective hiring

• Webinars (this year)

• Past webinars on our YouTube channel

To wrap it up:

Your mission deserves the thoughtfulness and support it needs to thrive. Be deliberate, and take action to make sure you’re set up for success. We at WorkStream Nonprofit are here to help you. That’s our mission: to remove operations bottlenecks to impact. And whether that’s in the ideation, incubation, or implementation phase, we want to be your partners in impact. Let’s chat!

PART 3

Where we are in the series

In Part 1, we made the case that operational infrastructure is the variable that determines whether nonprofit funding produces real impact, and that closing the infrastructure gap is a shared responsibility between funders and nonprofits. In Part 2, we looked at how the two dominant funding models leave impact on the table and what philanthropy could learn from venture capital’s approach to operational achievement.

Now we get to the question that matters most: what does a better model look like, and how do we build it?

VI. The Partnership Model – Combining the Best of Both Worlds

So, what does a better model look like?

Not solely restricted to grantmaking, with its rigid controls and starvation-level overhead. And not trust-based philanthropy taken to the extreme, where funders step back so far that they stop engaging with whether their investment is succeeding. The truth is that trust-based philanthropy has the right instincts: respect for nonprofit expertise, flexibility, decreased administrative burden, and partnership. It’s the direction the sector should be heading. But trust without structure leaves too much to chance, and the organizations that need support the most are the ones least equipped to succeed without it.

The better model is simple to name, even if it’s harder to build: trust-based philanthropy with venture capital standards. Take the values of trust-based philanthropy – the respect, the flexibility, the partnership – and pair them with the operational rigor that makes venture capital such an effective investment model. Trust the leaders. Respect their expertise. Give them flexibility. And then do what any serious investor does: make sure they have what they need to succeed, stay engaged throughout the relationship, and treat their success as your responsibility too.

That means operating on trust, but earning that trust. It means delivering flexibility within a structure that ensures organizations have what they need to use it well. It means respecting nonprofit expertise while recognizing that mission expertise doesn’t automatically translate into running an organization.

What a healthy funding partnership looks like

The table below outlines baseline expectations for a strong funding partnership. This is a starting point for both sides to understand what they’re responsible for and what they should expect from each other.

For funders: specific, implementable steps

• Provide a budget expectations guide. Give applicants a clear picture of what you want to see in their budgets: staff compensation at competitive rates; professional services (bookkeeping, legal, HR); technology and training; insurance; compliance costs; and overhead in the 25-30% range. When you name these things specifically, you give nonprofits permission to include them.

• Commit to a minimum of 12-month funding cycles. Most project grants run 6 months or less, which forces organizations into constant survival mode. A 12-month minimum gives organizations enough runway to plan, execute, and hire well. For grantees with a track record, extend it to 24 months or longer as trust is established.

• Be specific about what operational spending is welcome. Don’t just say “we fund overhead.” Tell applicants exactly what you want to see. Training. Professional services. Technology implementation. Succession planning. Fractional operational expertise. The more detailed you are, the more confident your grantees will be about including these items in their budgets.

• Read the reports you require. If you’re going to ask for reporting, commit to interacting with it. Flag concerns early. Ask follow-up questions. Connect the organization with resources when you see a gap. Reporting should build the relationship.

• Consider funding shared service providers or a capacity-building fund. Funding one service provider who supports ten organizations is often a better investment than giving each of those organizations a slightly larger grant and hoping they figure out operations on their own. A dedicated capacity-building fund that grantees can access as needed is the philanthropic equivalent of a VC platform team, and it’s the highest-leverage addition most funders can make. Fiscal sponsorship programs that pair financial infrastructure with operational coaching are another high-leverage option, particularly for funders investing in early-stage organizations that need more than money to establish their footing. WorkStream is launching one such program in September.

For nonprofits: specific, implementable steps

• Have your budget reviewed by someone with operational experience before submitting it. Specifically examine commonly missed line items: payroll taxes and benefits beyond base salary (typically 15-25% on top of salary); multi-state compliance costs if you have remote employees; fiscal sponsorship fees if applicable; professional services (bookkeeping, legal, financial review or audit); technology costs including implementation and training, not just licenses; insurance (D&O, general liability, workers comp); and a realistic line item for unexpected costs. Budget Template

• Build a basic strategic plan. Even a one-page version with your top 3 priorities, measurable goals, and a 12-month roadmap is far better than operating reactively. Without this, every new dollar is spent on whatever feels most urgent, not on what will have the greatest impact.

• Write down your core policies. At minimum: fiscal management, conflict of interest, and basic HR policies. These aren’t bureaucratic exercises. They protect your organization, your team, and your mission when things get hard.

• Identify your biggest operational bottleneck and address it prior to scaling programs. If you grow your programs without building the operational capacity to support them, you’ll break what’s working. Fix the bottleneck first. If you don’t know where to start, an outside assessment can surface the constraints you can’t see from inside the day-to-day. WorkStream’s GRIP program uses 10 Growth Readiness Indicators to identify the three highest-impact changes your organization needs prior to scaling.

• Be transparent with funders about what you don’t know. Telling a funder, “We don’t have a succession plan, and we need help building one,” builds more trust than showing only what you do know. Funders who are serious about partnership will respond with support.

What they build together

The strongest funding relationships aren’t transactional, but ongoing partnerships where both sides are invested in the same outcome. That looks like:

• Regular conversations, not just reports. Continuous dialogue about what’s working, what isn’t, and what the organization needs. These need to feel like a strategic partnership rather than performance reviews.

• Shared accountability for outcomes. Both parties invested in the same goal, and both are taking responsibility for creating the conditions that produce results.

• Access to a capacity-building ecosystem. Fractional expertise, peer learning cohorts, shared service providers, and dedicated capacity-building funds that organizations can draw on as needed.

• Graduated trust over time. Organizations that demonstrate operational maturity earn lighter reporting, lengthier timelines, and greater flexibility. This creates a positive cycle – the opposite of the starvation cycle – where investment in operations leads to better results, which in turn build trust, permitting more flexible funding, which in turn supports more operational investment.

On the question of burden

Yes, this model asks more of funders than writing a check and walking away. But it doesn’t ask as much as it might sound. A budget checklist is a one-time creation that can be reused across an entire portfolio. Connecting grantees to service providers is a relationship. A dedicated capacity-building fund is a structural decision, not an ongoing administrative burden.

And the return on that investment, more stable grantees, better outcomes, less wasted funding, lower risk, far exceeds the cost.

The VC world figured this out a long time ago. Investing in portfolio support isn’t an expense. It’s a multiplier.

VII. The Payoff – Return on Impact

Let’s come back to where we started: every funder wants maximum return on impact. Every nonprofit leader wants to deliver it. The gap between those two desires and the existing reality is the space this series has been trying to name and close.

Here’s what it looks like when the partnership works.

For nonprofits:

• Operating from stability instead of survival

• Leaders focused on maximizing mission impact instead of patching operational holes.

• Programs that scale because the infrastructure beneath them is strong enough to support growth

• Staff are paid competitively, staying longer, and building institutional knowledge.

• Financial systems that catch problems early, before they become crises

• Strategic judgments made proactively with data, not reactively in the dark

For funders:

• Dollars are going further because funded programs actually deliver on their promise.

• Less wasted investment and fewer organizations collapsing from preventable failures

• Lower risk exposure from compliance gaps and governance blind spots

• Grantees who improve with each funding cycle instead of running in place

For the mission:

The animals rescued, the communities strengthened, the movements advanced, the research completed – all of it happens at a higher level because the organizations doing the work have what they need to do it well. None of this requires more money in the sector, but it does require smarter investment of the money that’s already there.

• We’re not asking funders to become program officers in a hundred different cause areas. We’re asking them to recognize that operational capacity is the lever that determines how far every other investment goes and to treat it accordingly.

• We’re not asking nonprofit leaders to become operations experts. We’re asking them to budget honestly, seek out support before a crisis hits, and stop treating infrastructure as something to apologize for.

• We’re asking everyone in the sector to stop pretending that trustworthiness and accountability stand as opposites. They’re not. The strongest funding partnerships have both, and are built on honest conversation, realistic expectations, and mutual investment in the conditions that produce impact.

We’re not handing out cars to people without driver’s ed. We’re giving them the keys, the training, and the road map they need to make the journey well. Because we all want them to arrive.

Closing thoughts

The infrastructure gap isn’t a permanent feature of the philanthropic sector. It’s a pattern, and patterns can change. The funders who recognize this and build operational support into their grantmaking will see their dollars go further. The nonprofits that recognize this and invest in their own operational foundations will deliver greater impact, weather more storms, and build organizations that last.

This series has been a long argument for a simple idea: operational capacity is the lever. It determines how far every other investment goes. And it’s the one lever that almost nobody is pulling hard enough.

If you’re a funder reading this, the question isn’t whether to make operational support part of your grantmaking. It’s how. Start small if you need to: a budget guide, a service-provider relationship, or a conversation with one grantee about what they need. But start.

If you’re a nonprofit leader reading this, the question isn’t whether to invest in your own operational foundations. It’s where to start. Pick the biggest bottleneck. Find one piece of infrastructure to strengthen this quarter. Have one honest conversation with a funder about what you need.

The infrastructure gap closes one decision at a time. Both sides have decisions to make.

About WorkStream Nonprofit

WorkStream Nonprofit exists to bridge the gap between what funders provide and what organizations need to turn that funding into sustainable impact. Through our Growth Readiness Improvement Program (GRIP), operations accelerator, fractional operations services, and free educational resources, we help small and grassroots nonprofits build the operational infrastructure that makes their missions possible – and we work with funders who want to pair their grantmaking with the capacity-building support their grantees need to succeed.

Learn more at workstreamnonprofit.org

PART 2

The Infrastructure Gap: Why Both Funding Models Leave Impact on the Table

Picking up where we left off

In Part 1, we made the case that operational infrastructure is the single biggest variable determining whether nonprofit funding produces real impact – and that closing the infrastructure gap is a shared responsibility between funders and nonprofits. Now it’s time to look at how the two dominant funding models in the sector are actually working in practice, and where each one falls short.

There are two main approaches to institutional funding, and most funders lean heavily toward one or the other. Both have real strengths. Both also leave impact on the table – just in different ways. The goal of this section isn’t to declare a winner. It’s to understand what each model gets right, what each model gets wrong, and what we can learn from a sector that has spent decades figuring out how to make capital and operational support work together: venture capital.

IV. Two Models, Same Missed Returns

There are two dominant approaches to institutional funding, and most funders lean heavily toward one or the other: restricted grantmaking and trust-based philanthropy. Each one has real strengths. Each one also leaves impact on the table – just in different ways.

The important thing to understand is that the problems we’re about to describe aren’t unique to one model. Whether restricted or trust-based, if the funding relationship doesn’t invest in the organization itself – not just its programs – it’s limiting the return on impact for everyone involved.

The goal isn’t to pick a side. It’s to take the best of both and build something stronger.

Restricted Grantmaking

At its best, restricted grantmaking provides structure, accountability, and clear expectations. Metrics give both funders and nonprofits a shared language for evaluating progress. Reporting requirements, when done well, can actually help newer organizations develop discipline around tracking outcomes and managing finances. For early-stage nonprofits especially, some structure from funders can be a valuable learning tool – as long as funders are actually reading those reports and providing feedback, not just filing them.

Where it leaks returns:

• The compliance burden consumes mission time. A single small nonprofit may juggle 20-30 applications and reporting requirements from 10-20 funders, each with its own format, timeline, and metrics. Research estimates that most nonprofits spend 40 or more hours per quarter assembling grant reports (Sopact). That’s staff time being spent on paperwork instead of programs.

• Infrastructure is chronically underfunded. The normal overhead rate for delivering services effectively is 25-30% (National Council of Nonprofits), while actual indirect costs often run as high as 40% (Bridgespan). Most funders cap overhead at 10-15%, and 70% of nonprofits report they can only charge 10% or less (NFF 2025). That means most organizations are absorbing a 15-20 percentage point gap – or simply going without the infrastructure they need.

• The starvation cycle perpetuates itself. Funders hold unrealistic expectations about overhead → nonprofits feel pressure to conform by underreporting true costs → organizations underspend on infrastructure → results suffer → funders blame the organization → the cycle repeats (SSIR, “The Nonprofit Starvation Cycle”). This has been documented for over 15 years and it’s still the sector’s most damaging structural pattern.

• Short timelines prevent strategic investment. You can’t hire quality employees on a six-month runway. You can’t implement new technology systems knowing your funding expires in a year. Short grant cycles force organizations into survival mode, where every decision is about getting through the next quarter rather than building something that lasts.

• Contractors replace employees out of necessity, not strategy. When budgets are tight or runways are short, organizations default to contractors because they can’t justify a full-time hire. But contractors are inherently less invested in the organization – and the organization is less invested in them. The result is constant turnover, lost institutional knowledge, and a cycle of onboarding and retraining that consumes the very time and money the organization was trying to save.

• Reimbursement-based funding creates cashflow crises. When grants are structured as reimbursements rather than advance funding, the organization needs cash on hand to start the work before getting paid for it. For small nonprofits already operating with razor-thin reserves, this creates an impossible bind – they need money to spend money, and they don’t have it.

• Reporting without feedback is a one-way street. When funders require detailed reports but never respond to them, reporting becomes compliance theater. The organization spends significant time producing something that nobody reads, learns from, or acts on. The time would be better spent on the mission.

• Trust is never built. Even organizations with years of strong performance find themselves re-proving their worth annually. At some point, a track record should earn an organization graduated trust – lighter reporting, longer timelines, more flexibility. When it doesn’t, the message is clear: no amount of performance will change this relationship.

What this looks like in practice:

• An organization gets funding for a program but not for the software to run it efficiently – the result is more internal chaos, not more impact

• An organization is asked to report with detailed metrics but isn’t given funds for the tools or staff to track them – so reporting becomes guesswork

• An organization can’t invest in infrastructure without a solid runway – leadership is too busy fighting to be “fed” to focus on building something sustainable

• An organization gets access to funding but can’t hire the right people because the runway is only six months – so they either hire no one or hire someone they’ll lose

• An organization uses contractors for key functions because the funding timeline is too short to hire staff – every six months they’re retraining someone new, losing continuity, and spending more on the churn than a salaried employee would have cost

Trust-Based Philanthropy

At its best, trust-based philanthropy is a powerful corrective to the problems above. It gives organizations the flexibility to allocate resources where they’re most needed, reduces administrative burden, respects the expertise of nonprofit leaders, and creates space for innovation. The data supports this: 93% of recipients of large unrestricted grants reported that the funding strengthened their ability to achieve their mission, and 80% encountered no challenges managing the funds (Center for Effective Philanthropy, three-year study).

But – and this is critical – those results come from organizations that were extensively vetted before receiving funds and that largely already had the operational infrastructure to deploy large grants strategically. For organizations without that foundation, the picture is more complicated.

Where it leaks returns:

• It assumes operational competence that often doesn’t exist. This isn’t a criticism of nonprofit leaders – it’s a recognition that most founders started their organizations because they’re passionate about a cause, not because they have training in financial management, HR, compliance, or organizational design. Nobody taught them what operational excellence looks like for a nonprofit, and the funding model doesn’t require them to learn.

• There’s no early warning system. Without any accountability structure, problems that could be caught and corrected early – a budget shortfall, a compliance gap, a staffing misalignment – go unnoticed until they become crises. By the time anyone realizes something is wrong, the damage is done and the funded impact is lost.

• Nonprofits don’t know what they need to ask for. This is one of the most underappreciated dynamics in the sector. Org leaders don’t request operational support because they don’t know it exists, don’t know they need it, or don’t think they’re allowed to spend funder dollars on it. The funders don’t check for it because they’re trusting the organization to know what it needs. The result is a gap that neither side sees – and funded impact that quietly disappears into it.

• Nonprofits artificially lower their costs. Organizations trying to look like attractive investments strip their budgets down to the minimum. But funders who are committed enough to invest in a program would almost always prefer to fund the extra 5-10% that makes the organization effective – they just don’t know it’s needed because the conversation isn’t happening.

• Many funders skip both the vetting and the support. The strongest trust-based models combine flexibility with rigorous upfront evaluation and ongoing relationship. But many funders who adopt the trust-based label do only the easy part – removing restrictions and reporting requirements – without doing the hard part: understanding each organization’s operational readiness and providing the support needed to succeed. That’s the worst of both worlds.

• Backsliding shows shallow commitment. During the pandemic, 66% of foundations loosened grant restrictions and 64% reduced reporting requirements. But only 21% sustained all of those changes, and only 7% of foundation leaders say the most visible trust-based grantmaking model has influenced their own approach (Chronicle of Philanthropy). For nonprofits that restructured their operations around the expectation of continued flexibility, this reversal creates real instability.

• The funder’s own investment is at risk. When grantees aren’t implementing best practices for HR, legal, compliance, or multi-state registration, it creates liability exposure that neither party sees coming. An organization operating out of compliance isn’t just hurting itself – it’s creating risk for every funder whose name is associated with it.

What this looks like in practice:

• An organization requests funding for a fiscally sponsored research project but forgets to include the fiscal sponsorship fee – now salaries are short and the program is compromised before it starts

• Payroll taxes and multi-state compliance costs are left out of the budget entirely – the organization is technically out of compliance and doesn’t know it

• No line items for bookkeeping, financial reviews, legal counsel, insurance, or marketing – because nobody told the organization these were things they should be budgeting for

• An organization receives a large unrestricted grant but has no strategic plan – dollars get spent reactively on whatever feels most urgent, with little lasting organizational improvement

• An organization scales its programs with new funding but doesn’t hire operations support – the founder is still wearing six hats, now with twice the workload, and becomes the bottleneck for every decision

The three knowledge gaps that drive these problems:

Across both models, the same underlying dynamic shows up again and again. Nonprofit leaders commonly don’t know:

• What norms they should be following – operational, financial, legal, and governance standards that are well-established but never taught

• What type of expertise they should be requesting and paying for – bookkeeping, legal, HR, compliance, strategic planning, technology implementation

• Whether it’s even responsible to use funder dollars to pay for these things – leaders self-censor their own budget requests because they feel guilty asking for infrastructure support

That third one is the most damaging. It means the starvation cycle isn’t just structural – it’s psychological. Organizations are voluntarily underfunding themselves because the sector has taught them that operational investment is something to hide rather than something to be proud of.

The bottom line: Neither model is wrong. But both are incomplete. Restricted grantmaking provides accountability without investing in the capacity to deliver. Trust-based philanthropy provides flexibility without ensuring the infrastructure to use it well. The sector needs a model that does both – and that’s where venture capital comes in.

V. What Smart Investors Do Differently – The VC Parallel

If the funding relationship between institutional funders and nonprofits feels broken, it helps to look at a sector where the investment relationship works – and ask why.

When a venture capital firm invests in a startup, they don’t just write a check. They provide board representation, operational advisors, access to fractional executives, financial oversight, and introductions to talent and partners. They do this not because they don’t trust the founder – but because they understand something that the philanthropic sector has been slow to learn: capital alone doesn’t produce results. Capital plus operational capacity does.

The numbers are telling. In the VC world, the ratio of people making investment decisions to people helping portfolio companies succeed is roughly 5:1 (Power of VC Platform). For every person deciding where the money goes, five people are working to make sure that money produces a return. And the first hire on most portfolio support teams? Hiring support – because getting the right people in place is the single highest-leverage operational investment you can make.

Now compare that to institutional philanthropy. A program officer evaluates an organization, recommends a grant, and moves on to the next one. The nonprofit receives the funding and is expected to figure out the rest on its own. There’s no operational advisor. No fractional executive. No help building the financial systems, hiring processes, or governance structures that will determine whether the funded program actually succeeds.

The mindset difference

VCs think of their capital as an investment that should produce returns. Every dollar they deploy is a dollar they expect to see multiplied – and they actively protect that investment by ensuring the company has what it needs to execute. They don’t see operational support as a cost. They see it as a multiplier.

Funders, by contrast, tend to think of grants as donations to a cause rather than investments in an organization’s capacity to deliver impact. That mindset difference shapes everything – how much due diligence happens upfront, how much support is provided after the grant, and how much attention is paid to whether the organization has the infrastructure to succeed.

Shifting from a donation mindset to an investment mindset doesn’t mean funders should start treating nonprofits like startups. It means they should start asking the same question VCs ask: “What does this organization need – beyond capital – to deliver the return we’re both hoping for?”

The professionalization gap

And the professionalization needs to happen on both sides of the table. Better grant decision-making processes, yes – but also better post-grant support. That means:

• Providing templates and tools that help organizations build budgets, track outcomes, and manage compliance – rather than expecting them to figure it out from scratch

• Giving actual feedback on reports and financials, not just collecting them – so reporting becomes a two-way learning process rather than a one-way compliance exercise

• Connecting grantees to resources, partners, and consultants who can help with the operational challenges funders aren’t equipped to solve themselves

• Automating what can be automated (checklists, templates, shared resources) and investing human time where it matters most (relationships, strategic conversations, problem-solving)

Some funders are already moving in this direction – building embedded operational support into their grantmaking strategy and funding shared service providers across their ecosystems. They’ve recognized that funding a service provider who supports ten organizations is often a better investment than giving each of those ten organizations a slightly larger grant and hoping they figure out operations on their own.

What VCs would never do

It’s worth naming what the VC parallel makes obvious by contrast. A venture capital firm would never:

• Fund a company without looking at the team’s operational capacity, financial systems, and growth plan

• Assume the founder knows how to build organizational infrastructure just because they have a great product idea

• Provide capital and then disappear, checking in only when it’s time to decide whether to re-invest

• Cap the company’s spending on operations at 10-15% of the investment and expect it to scale

• Require quarterly reports but never read them or provide feedback

And yet this is standard practice in institutional philanthropy. If a VC treated their portfolio companies the way most funders treat their grantees, they’d be out of business in a year.

What this means for the sector

The point isn’t that philanthropy should become venture capital. The missions are different, the incentives are different, and the measures of success are different. But the underlying principle is the same: if you want your investment to produce returns, you have to invest in the organization’s ability to deliver them – not just in the work you want them to do.

For funders, this means building operational support into the grantmaking model – whether that’s direct support, funded access to service providers, or a dedicated capacity-building fund that grantees can draw on. For nonprofits, this means recognizing that accepting help with operations isn’t a sign of weakness – it’s what every successful startup founder does, and it’s what will make your organization stronger.

The VC world learned this decades ago. The philanthropic sector is just starting to catch up.

Wrapping up Part 2

Both restricted grantmaking and trust-based philanthropy are responses to real problems – and both contain real wisdom. But neither model, on its own, addresses the operational capacity gap that determines whether funding actually produces impact. Restricted grantmaking provides structure but starves organizations of the resources they need to build it. Trust-based philanthropy provides flexibility but assumes a level of operational maturity that many organizations simply don’t have.

The venture capital world has spent decades figuring out how to combine investment with operational support. Philanthropy doesn’t need to copy that model wholesale – but it can absolutely learn from it. The principle is simple: if you want your investment to succeed, you invest in the organization’s ability to deliver, not just in the work you want them to do.

What’s next

In Part 3, we’ll pull all of this together into a better model – one that combines the values of trust-based philanthropy with the operational rigor of venture capital. We’ll lay out what funders and nonprofits each need to do to make it work, and what the payoff looks like when they do.

About this series

This article series has been a long time in coming. Most people who I’ve spoken to over the past 6 months have heard me talk about it. It’s about a topic that I feel strongly about. Working with many nonprofit leaders, I consistently encounter similar problems over and over again. Some of them I can do something about - and I do. That’s what created our Growth Readiness Improvement Program (GRIP), operations accelerator, and fractional operations support. When I see a problem, I feel compelled to fix it (that’s the Responsibility and Arranger Strengthfinders theme in me!). But there are some that I can’t do anything about - except write about it.

This series is about years of watching the gaps in fund distribution and management. It’s about focusing on what goes wrong, and more importantly, what goes right. It’s about proposing pathways forward that bring the best of funders and nonprofits together and propose a healthy way of funding impactful organizations.

By writing this, I’m hoping that each funder and nonprofit leader who reads it will develop a slightly different perspective on their part of the funding circle and make stronger and more financially resilient organizations.

PART 1

The Infrastructure Gap: Why Operations Determines Impact

I. The Shared Opportunity

Every funder wants maximum return on impact. Every nonprofit leader wants to deliver it. But across nonprofit sectors, impact is leaking – not because programs are weak or leaders aren’t dedicated, but because the operational infrastructure that connects funding to outcomes is chronically underbuilt. Nonprofit leaders feel it every day – stretched thin, under-resourced, and spending more time on survival than on mission.

From what I understand, funders don’t choose to fund an organization because it’s good and penny-pinching and paying low salaries. They fund organizations because they are investing in the impact and they like the results.

So why is it that the norms for nonprofits to feel compelled to skimp on “basics”? In my previous post about effective operations we explored how spending money on overhead actually increases impact - which is what the funders want to see. Which leads to the next question: Do the funders want the nonprofits to have a higher impact and spend their funds on operations to do that? Or do they want to keep the operational percentage lower, but reduce the impact the organization has? You can add some more questions here - for those who are solely impact-driven, do they care if you use your funds wisely? And if they don’t have insight into how you’re using your funds, how can they make sure they’re maximizing their impact investment? More importantly, why aren’t the answers to these questions easy - and how do we improve the communications between funders and recipients about this?

It’s my belief that we need to answer “yes” to most of these questions - but everything needs to be in moderation. Extremes are almost never good. I want to see the funders investing in operational overhead, to make sure they’re measuring impact, and giving the nonprofits guidance about appropriate expenditures. I want the organizations to ask for what they truly need, have the financial bandwidth to get appropriate operations support, and have guidance from the funders about what that might look like. Additionally, a lot of our nonprofit founders and leaders don’t have prior nonprofit entrepreneurial experience - I’d like to see them have the right support to make informed leadership decisions. There is no one better placed than the funders to provide that support and guidance.

This series explores a simple thesis: When funders pair trust with support and nonprofits invest in their own operational foundations, the result is more impact per dollar, more stable organizations, and stronger partnerships.

Think of it this way: We wouldn’t hand someone the keys to a car without making sure they know how to drive – not because we don’t trust them, but because we want them to arrive safely. The same principle applies to funding nonprofits.

II. The Return on Impact Gap

When we talk about nonprofit effectiveness, the conversation almost always centers on programs – what the organization does, who it serves, and what outcomes it produces. But programs don’t run themselves. Behind every effective program is an operational foundation that determines whether funding actually translates into impact.

Think of it like a building. The programs are what people see – the floors, the rooms, the activity inside. But without a solid foundation, plumbing, and electrical, the building can’t function no matter how beautiful the architecture. Operations is the foundation, the plumbing, and the electrical of a nonprofit. Without it, programs can’t deliver at their full potential, funding can’t be deployed strategically, and leaders spend their time holding things together instead of moving the mission forward.

Operational infrastructure isn’t a “nice to have” that organizations can build later when they have time. It’s the difference between a program that scales and one that collapses under its own weight. It’s the difference between a leader who builds something lasting and one who burns out trying to hold it all together. And from a funder’s perspective, it’s the single biggest variable that determines whether a grant produces the impact it was designed for – or quietly disappears into operational chaos.

In an ideal world, every funded nonprofit would have these operational foundations in place:

• A clear strategic plan – so decisions are proactive, not reactive

• Sound financial systems – so leadership can make informed decisions with real data

• Internal controls – so accountability is built in, not dependent on outside oversight

• A leadership pipeline – so the organization doesn’t depend on any one person

• Competitive compensation – so the organization can attract and keep the right people

• Technology and data systems – so the organization can measure, learn, and improve

• Adequate cash reserves – so a single setback doesn’t derail months of programming

These aren’t luxuries. They’re the operational basics that allow programs to deliver on their promise. When they’re in place, funders see real return on their investment and nonprofit leaders get to focus on mission instead of survival.

Yet the Nonprofit Finance Fund NFF 2025 State of the Sector Survey shows some worrying data:

• 36% of nonprofits ended 2024 in an operating deficit – the highest rate in a decade

• 52% hold three months or less of cash on hand.

• Only 41% of organizations can pay all full-time staff a living wage. For nonprofits with budgets under $250,000, that drops to just 28%

• 68% reported staff burnout as a challenge (24% major, 44% minor).59% cited leadership burnout as a challenge.

• Over two-thirds had difficulty employing enough staff for both program and administrative work.

• 69% said local cost of living is a management challenge.

This matches what I see on the field: nonprofits don’t have the funding flexibility to thrive. They’re operating in starvation mode, which is terrible for long term planning. That creates a sector-wide return on impact gap. Not because programs are weak or leaders aren’t dedicated – but because the infrastructure supporting their work has been chronically underbuilt.

Every missed compliance requirement, every program that can’t scale because there’s no one to manage the workflow, every talented employee who leaves for a livable salary – that’s impact that was funded but never fully delivered. It’s return left on the table.

The good news: this is a solvable problem. A randomized controlled trial by the Compassion Capital Fund demonstrated that when organizations receive targeted capacity-building support, their operational effectiveness measurably improves (Compassion Capital Fund Evaluation). The gap isn’t permanent. It’s an underinvestment – and the fix is straightforward: invest.

III. Three Shared Responsibilities in a Funding Partnership

There’s good news in all of this: operational gaps aren’t permanent conditions. They’re the result of patterns that can be changed – patterns in how funders invest, how nonprofits budget, and how both sides communicate about what’s actually needed. Closing the gap starts with redefining whose responsibility it is.

The honest answer is that it belongs to both funders and nonprofits. Funders can’t build an organization’s internal systems for them, and nonprofits can’t fund their own infrastructure when every dollar they receive is earmarked for programs. Closing the gap requires a partnership – one where both parties understand their role and hold each other accountable for the outcome.

In our experience working with dozens of nonprofits across cause areas, three shared responsibilities define the strongest funding partnerships:

1. Resourcing the mission – honestly

Funders have the responsibility to provide adequate capital – not just for programs, but for the infrastructure that makes programs work. Nonprofits have the responsibility to build budgets that reflect what things actually cost, rather than artificially lean numbers designed to look like a more attractive investment.

This sounds simple, but it’s where the breakdown starts. Nonprofits understate their costs because they think it’s what funders want to see. Funders accept those understated budgets because they assume the organization knows what it needs. Neither side pushes for the honest conversation about what the work truly requires – and both sides pay for it later when the organization can’t deliver.

The fix starts with both parties committing to honesty over optics. Funders should signal – clearly and repeatedly – that they expect to see realistic budgets including operational costs. That means explicitly calling out what they want to see: staff paid at competitive rates, line items for professional services like bookkeeping and legal, investment in training and technology, and adequate overhead percentages that reflect the true cost of running an organization. When funders name these things specifically, it gives nonprofits permission to budget for them – and removes the guesswork about what’s “acceptable” to ask for. Nonprofits, in turn, should stop treating infrastructure as something to apologize for and start treating it as what it is: the foundation of their impact.

2. Ensuring sound governance – together

In theory, governance is the board’s responsibility. In practice, many small nonprofits have boards that are still learning the role themselves. Board members may have been recruited for their passion for the mission rather than their experience with organizational oversight. They may not know what questions to ask, what financial red flags to look for, or what governance structures should be in place.

This creates a gap that somebody needs to fill. Funders aren’t responsible for running an organization’s board – but they are well positioned to set clear expectations for what good governance looks like: an engaged board with defined roles, basic financial oversight, written policies for the areas that matter most (conflict of interest, fiscal management, HR), and a leadership structure that doesn’t depend entirely on one person.

For nonprofits, the responsibility is to take governance seriously even when it feels like a distraction from the “real work.” Building a functional board, writing policies, and establishing oversight structures aren’t bureaucratic exercises – they’re what protects the organization, its people, and its mission when things get hard.

3. Maximizing return on impact – deliberately

This is the responsibility that both sides most often neglect. Funders focus on selecting the right organizations and programs to fund. Nonprofits focus on delivering those programs. But neither side consistently asks the question that matters most for return on impact: how far will these dollars actually go once they’re inside this organization?

The answer depends almost entirely on the operational layer between funding and outcomes – the systems, processes, staffing, and infrastructure that determine whether funded programs actually produce the impact they were designed for. A dollar invested in a well-run organization goes further than a dollar invested in one that’s held together with duct tape and good intentions. Not because the mission is better, but because the machinery to deliver on it is stronger.

This is where the biggest returns are hiding. A nonprofit with a strong program and weak operations will always underperform a nonprofit with the same program and strong operations. Funders who want to maximize how far their dollars go should be looking at operational infrastructure with the same rigor they apply to evaluating programs. And nonprofits who want to deliver more impact should be investing in their own operational capacity with the same urgency they bring to program work.

Both sides should be asking: “What would it take for this organization to operate at full capacity?” And then investing accordingly – not as overhead, but as the highest-leverage spend in the entire portfolio.

Wrapping up Part 1

The infrastructure gap is real, it’s costly, and it’s solvable. Every dollar of impact that leaks through an operational gap is a dollar that was funded but never fully delivered – and the data shows that this is happening across the sector at a massive scale. But it doesn’t have to be this way.

The fix starts with recognizing that operational capacity is a shared responsibility. Funders bring the resources and the standards; nonprofits bring the honesty and the commitment to building strong foundations. Neither side can close the gap alone. Together, they can.

What’s next

In Part 2, we’ll look at the two dominant funding models in the sector – restricted grantmaking and trust-based philanthropy – and examine why both of them, despite their very different approaches, end up leaving impact on the table in remarkably similar ways. We’ll also look at what one sector has figured out that philanthropy hasn’t: how venture capital invests in operational success.

Effective operations are an important part of any impact-focused organization, and even more so for resource-constrained nonprofits. I don’t think anyone will argue that point, and I’ve seen a trend in increased realization of the importance of having a strong internal infrastructure.

Beyond just a “feeling,” or common sense, there’s a lot of data supporting the fact that a well-run organization has increased impact. This study randomly selected organizations from a set of 454 nonprofits. The orgs that received capacity-building support experienced significantly higher levels of growth than the orgs that didn’t receive that level of support. The big consultant groups (McKinsey, BCG, Bain) all have dedicated programs to strengthen nonprofit infrastructure, recognizing that organizational health drives mission success. Specifically, McKinsey‘s research found that healthy organizations deliver 3x the returns of unhealthy ones. In nonprofits, 91% of staff at healthy organizations say they’re achieving their mission, versus just 60% at struggling ones.

But implementing good operations isn’t as simple as it sounds - it requires:

• The ability to think in operational systems

• Knowledge of how others can help

• Experience dealing with similar challenges

• Understand available resources

• Being aware of best practices

• Having the talents and abilities to implement all of them.

But there are too many barriers to success

And that means that there are too many barriers to effective operations. Primarily:

• People don’t know what effective operations actually means

• People think they can do it on their own, start from first principles, and be as successful as those with robust experience

• Organizations lack the funds to bring in specialists.

It’s a challenge - and one I believe that’s worth fighting for. Every step that each organization takes to improve internal operations is a leap for that organization’s impact.

Currently, nonprofit ops isn’t doing so well

In my work, I get to interact with many nonprofits and operations professionals. And what I’ve seen isn’t so encouraging - only a quarter of our nonprofits are operating with excellence. We need to do better. We owe it to our causes. Of 41 organizations that I work with and am familiar enough with the operations to grade, only 25% are operating with excellence, and 51% are below an acceptable level (C and below).

My numbers aren’t outliers. They’re actually pretty similar to Bridgespan’s analysis of 274 highly funded nonprofits. The Stanford Survey on Leadership and Management found that only about 1 in 10 nonprofits have all the foundational elements in place to maximize their impact. The operational gap is real, and it’s widespread.

So let’s fix the problem

My perspective on life in general is that there is no such thing as an unfixable problem. We can, and are morally bound, to take the steps necessary to ensure operational excellence.

1. Get better at staffing

The problem: I think people are generally aware that they need operations staff. That, at least, has been a pretty positive trend in the industry. The biggest problem is that they don’t know who to hire, so they often hire inadequate candidates.

The most common cause: There are many different types of operations. Most EDs aren’t aware of what nonprofit operational needs are, and that’s especially true with first-time founders and EDs. So while they might hire an “operations professional”, they might be hiring the wrong type, which means that they’re not getting the support they need. See my prior post about the different types of operators. Nonprofits are also 4x less likely to spend on staff training.

Some Solutions (different ones will work for different situations - choose 1 or more):

• Identify your operational needs - when you know what you need your new hire to do, you’re more likely to screen effectively and hire right. Most wrong hires start off with skipping this step.

• Don’t start off with a full-time hire - get a specialist for the specific type of support you need. It’ll be more cost efficient and you’ll get better results.

• Make work tests and work trials a part of your hiring process. They should mirror what your new hire will be expected to do.

• Invest in training or coaching - there’s not enough time to waste in figuring things out on your own. Training is a shortcut to being an expert faster. Take a look at our operations accelerator training program.

2. Turn everything into a process

The problem: Lack of defined processes creates a feeling of chaos and overwhelm, uncertainties about performance, and undefined success.

Making processes is just like making lists. You’re taking a lot of details that your mind is trying to keep track of, and putting them into an order that makes sense. Just like putting your to-do list on paper calms your brain and makes you more productive, creating processes around your workstreams makes you and your team more productive, efficient, and calm. It provides an element of control, which means that chaos disappears. We humans thrive on structure, and so do our organizations (see this article about the effect of lean six sigma in a food bank). The problem is that it takes time to step back and map out a process. Many will argue that there’s no process, it’s just something different that needs to happen every time. I’ll argue back that there’s a general pattern to how work flows, so even though the details are different, the process is documentable.

Common Causes:

• Most of the visionaries I work with tend to trust their employees to do a fantastic job. The employees, on the other hand, are anxious to please, but are lacking direction from their leader. It might feel like a good culture to trust your employees implicitly, but that trust is misplaced. They need a leader to hold them accountable. (Note: please do trust your employees, just hold them accountable and maintain a degree of skepticism in order to maintain quality)

• A lot of thought goes into what needs to happen, but not how. That creates inefficiencies, little to no transparency in work and work quality, and definitely doesn’t focus on maximizing throughput.

Some Solutions:

• Document the workflow. I like making visual maps of how work flows from conception to completion. That will create a lot more clarity.

• Partner with someone organized. The visionary brain is by nature not ordered. Every visionary needs to partner with someone who can complement them with operations and process. Even though I specialize in process, when I have my nonprofit visionary hat on, I need someone to help me turn it into a process (thanks, team!).

• Focus on what “output” you can check and look for every step of the way - that will give you something more tangible to focus on in the process.

• Take small steps for creating standard operating procedures (SOP) and yes, it’s ok to keep them high level. It might be easier to make it as you’re actually working on something. People often catch inefficiencies or opportunities for improvement just by doing that.

• When you’re finished with a project, do a post-mortem. While it’s still fresh, write down how you did things and why, what went well and what went wrong, and ideas and suggestions for next time. Your future self will thank you.

3. Make software your friend.

The problem: Most organizations aren’t using technology to help them work more efficiently. That creates more opportunity for things to fall through the cracks and limits your impact to the amount of hours you have. From a lean six sigma perspective, we want to maximize throughput while decreasing opportunity for errors - and technology is great at helping us do that, although it’s sadly underutilized.

Common Causes:

• Licensing costs. While cheaper than hiring a human, people try to go with the lowest cost or free software.

• Going back to the process problem: without a clearly defined process, it’s unclear how to utilize technology to make it helpful.

• New systems are overwhelming. No one (at least that I know of) likes change. Finding new tools requires you to research options, analyze them, and implement them - which all take time and effort.

Some Solutions:

• Sign up for TechSoup to get discounts on many software programs.

• Try to translate estimated time savings into reduced staff time. Then you can turn that into numbers based on salary, and now you have a budget of how much you can spend on software. You’ll usually spend only a fraction of the salary amount.

• Start small; you don’t need to implement a huge tech project to start with. Pick one thing to optimize at a time. What would make that process easier? Is there some kind of software that can help you manage that? Most likely, something already exists. You don’t need to overcomplicate it.

• Don’t pick the best software, pick the one that you and your team are most likely to use. That makes it the best. When you do implement it, make sure it’s adopted across the team. A tool that only some people use (especially if it’s a project or contact management tool) is almost useless.

• Just like with hiring, document the processes you’re trying to support. How can technology help you automate? Eliminate errors? Save time? You only know the right answers once you’ve defined the problem you’re trying to solve for.

It’s also worth noting that the lack of technology is especially pronounced in regard to nonprofit marketing and branding, having a social media footprint is very important for any organization trying to create social impact and/or attract donors. It’s easy enough to do with the right talent and technology, but is sorely neglected.

Bottom line:

If you’re a visionary with a mission to change the future, your best chance of bringing your vision to fruition is to pair with a strong operator. Don’t skimp on quality here, the right operations partner will give you the foundation and structure you need to thrive.

Even if you don’t have the resources to put your ideal infrastructure into place, start with one small change at a time, and you’ll see your organization strengthen one step at a time.

Although many orgs are cash-constrained, the scarcity mindset is counterproductive. It’s more efficient and effective to invest your time in constant operational improvements. You’re not the first one to walk this path; use the supportive community around you, lean into the hive mind, and keep taking one step at a time on the road to constant improvement.

In the nonprofit community, organization narratives often emphasize models, evidence, and strategic clarity. While those are important components, there’s one element of the organizational strategy narrative that is still consistently underestimated:

Your Story.

From tech innovations to consumer products, your story is the lens through which others understand your identity, impact, and purpose. Funders, collaborators, and your own team all look to your story to find alignment.

Your organizational story isn’t marketing fluff. It’s a critical piece of communication to connect with your audience.

We All Tell Stories, Whether We Mean to or Not

The earliest records of human culture and communication are found in stories that were handed down orally for generations. Think about the Bible, the Epic of Gilgamesh, and Egyptian mythology. We’ve evolved to learn things through listening to stories. Even now, there’s something fundamentally heartwarming about sitting around a campfire and telling stories. Since the beginning of recorded history, humans have used stories to preserve knowledge, share values, and foster a sense of community. Our brains have literally been wired to understand the world through stories.

The advances of the technological generation haven’t changed our core brain structure. Yes, numbers and metrics are useful - I’ll be the first to tell you how important they are. But when you’re trying to connect and communicate with others, you need to connect through a story. And that’s what I’d like you to focus on the next time you need to explain to someone what your organization does or why you founded or believe in it. What’s the story you want them to hear?

No, you don’t need to start from scratch or pick up the pen to write a new novel. You already have many of the components developed. Every organization is already telling a story through:

• How it describes its mission

• Its strategic plan and theory of change

• The metrics it uses

• The examples and case studies it highlights

• The language its leaders use

• The updates it shares (or doesn’t share).

Your job is to bring these details together into a clear organizational story. Shape the narrative intentionally, or others will shape it for you.

We’re also wired to take disconnected details and clues and shape a story, connecting them in our heads. So, if you’re presenting facts, but not the narrative behind them, you’ve lost control of the conversation.

Why Your Organizational Story Matters
(Especially in the Nonprofit World)

A clear, honest story helps people understand:

• Why your work exists

• What problem you are addressing

• Why this approach makes sense

• How you measure progress

• Where you’re headed

• Why support is high-impact.

Funders don’t just invest in logic; they invest in results and mission alignment.

Partners don’t just join missions; they join when they feel the mission and values are aligned, and they’re part of the bigger picture.

An effective organizational story aligns, increases transparency and communication, builds trust, and fosters an emotional connection to the core organizational mission.

The Building Blocks of a Strong Organizational Story

A well-told story connects your narrative to your operational backbone. In practice, that means weaving together:

1. Mission, Vision, and Organizational Strategy: Your north star – Your mission explains what you do and for whom, your vision paints the future you’re working toward, and your organizational strategy connects the two. A strong story doesn’t just list these statements; it shows how they fit together, why you’ve chosen this specific path over alternatives, and how your day-to-day decisions reflect the tradeoffs you’re willing to make to stay aligned with that bigger picture.

2. Theory of Change (ToC): The core of your story - A good theory of change helps listeners follow the “if → then → therefore” logic that underpins your work. A strong narrative explains the ToC in plain language, without losing rigor.

3. OKRs: Your directional markers - OKRs (objectives and key results) are a list of goals that show what you’re working toward in the short term and how that leads to long-term impact.

4. KPIs: Proof of success - Anyone can claim results; KPIs (key performance indicators) quantify them. They demonstrate that your story is grounded in measurable progress rather than aspirational rhetoric.

5. Who You Are and Why You’re the Right People for This Work – Your story isn’t complete without the humans behind it. Share the experience, values, and lived perspectives that shape how you approach the problem you’re trying to solve. Explain why your team, board, volunteers, and community partners are well-positioned to do this work with integrity and care, and how their backgrounds and commitments strengthen your ability to deliver on the mission.

With all these elements incorporated, your organizational story becomes relatable, actionable, credible, and inspiring.

Authenticity Is Non-Negotiable

In the nonprofit ecosystem, authenticity is essential. You’ll get more support and more external and internal buy-in if you’re transparent with the facts, even if they’re not ideal. People care about accurate reasoning, transparent uncertainty, and thoughtful communication. This means your story should always be:

• Honest about limitations

• Clear about uncertainty

• Transparent about risks and assumptions

• Grounded in data

• Written with integrity and respect for the audience’s intelligence.

Authenticity doesn’t mean being informal or overly vulnerable. It means being real within a professional context.

While the outline of your story and its contents are the same, there’s one more element to keep in mind as you’re telling your story: Perspective. Who is your audience? What do they need to hear? You won’t tell the same story to a 4-year-old that you would to a 16-year-old. Each retelling of your story should have your audience in mind and be tailored accordingly. For example:

• Funders want clarity, reasoning, and measurable progress.

• Partners want alignment and a sense of where they fit.

• Clients or communities served want to know how your work directly supports them.

• Internal team members want to understand the “why” behind decisions.

Your job is to share the right story for each audience, while staying consistent with your mission and values.

Your Organizational Story is a Strategic Asset

A strong narrative is leverage. Organizations with clear, compelling stories grow faster because people quickly understand and support them.

Organizations without clear stories hit friction, even when doing excellent work.

So, what’s your story? Take time now to intentionally define and shape your organizational narrative. Share it with your team, your funders, and your partners. Make sure it reflects who you are and why your work matters. Let’s hear what you have to say.