There once was a beloved community theater that had graced its small Tennessee town for decades. Performances were packed, donations flowed freely, and the organization was a source of local pride. But behind the scenes, a storm was brewing. Years of financial mismanagement and declining ticket sales had created a deep financial hole. The long-time executive director, a charismatic figurehead, had masked the problems with her charm and optimistic projections. Many board members failed to realize there were massive problems lurking underneath the surface.
When she unexpectedly retired, the board of directors was shocked to discover the organization teetered on the edge of insolvency. The D&O insurance had lapsed, donors had walked away, and the organizational culture was like a Shakespearean tragedy! The once-thriving theater was in desperate need of a turnaround.
This scenario isn’t uncommon. Nonprofits, like any organization, can face crises that threaten their very existence. Financial strain, declining donor support, mission drift, or ineffective leadership can push an organization to the brink. This is where a nonprofit turnaround becomes essential.
What is a Nonprofit Turnaround?
A nonprofit turnaround is a strategic process designed to rescue an organization from a crisis and restore its ability to fulfill its mission. It involves assessing the organization’s problems, developing a comprehensive plan for change, and implementing that plan effectively.
Turnarounds often require a shift in leadership, restructuring of operations, and a renewed focus on the organization’s core values and goals. The process can be complex and demanding, but it’s a necessary step to ensure the nonprofit’s survival and continued impact. If you’ve found yourself in a nonprofit turnaround, it’s important to get a plan together (flailing wildly never worked for anyone in a crisis)! Fortunately Kotter’s tried-and-true 8 steps to organizational change provides a great road map for a board or new executive director who find themselves up to their ears in a big ol’ mess!
Kotter’s 8 Steps: A Framework for Successful Turnarounds
John Kotter’s 8-Step Process for Leading Change offers a proven framework for guiding organizations through major transformations, including turnarounds. Let’s explore how each step can be applied in a nonprofit context:
1. Establish a Sense of Urgency:
Why it’s important: Complacency is the enemy of change. Board members and executive directors must create a shared understanding of the organization’s dire situation.
Example: Present clear financial data showing declining reserves, donor attrition, or program cuts to the board and staff. Provide financial information that shows how long the organization has until it becomes insolvent. Bring data to board meetings and staff meetings, and plan for an external communications plan that acknowledges the challenges but very specifically provides donors and stakeholders with your strategic path forward. And for the love of all things good in the world, don’t act like this isn’t a turnaround!
2. Form a Powerful Guiding Coalition:
Why it’s important: Successful turnarounds require strong leadership from a committed group.
Example: Assemble a team of board members, staff, and external experts who are passionate about the organization’s mission and possess the skills needed for change.
3. Create a Vision and Strategy:
Why it’s important: A compelling vision provides direction, while a clear strategy outlines the steps to achieve it.
Example: Develop a vision that articulates the organization’s renewed purpose and impact. The strategy should include specific goals, timelines, and metrics for success.
4. Communicate the Vision and Strategy:
Why it’s important: Transparency and consistent communication build trust and buy-in from stakeholders.
Example: Hold town hall meetings, send regular updates to staff and donors, and use social media to share the turnaround vision and progress.
5. Remove Obstacles and Empower Others to Act:
Why it’s important: Identify and address barriers that hinder change, and give people the authority to make decisions.
Example: Streamline decision-making processes, eliminate unnecessary bureaucracy, and provide training and resources to staff.
6. Produce Visible Symbols of Progress:
Why it’s important: Early wins create momentum and demonstrate that change is happening.
Example: Celebrate small victories, such as securing a new grant, launching a successful fundraising campaign, or improving program outcomes.
7. Stick with the Process:
Why it’s important: Turnarounds are marathons, not sprints. Stay focused on the long-term vision.
Example: Regularly assess progress, make adjustments as needed, and celebrate milestones along the way.
8. Nurture and Shape a New Culture:
Why it’s important: A healthy culture reinforces the changes and ensures sustainability.
Example: Recognize and reward behaviors aligned with the new vision, promote collaboration, and foster a learning environment. This may lead to staff and board attrition, and that’s ok.
Conclusion
Nonprofit turnarounds are challenging but essential for organizations facing crisis. When a turnaround is imminent, boards and executive directors can create a roadmap for change by mobilizing stakeholders and revitalizing their organizations to continue making a positive impact in the world through these eight easy steps.