Technology as a Solution
One of the big questions that eventually confronts any successful nonprofit is now to get to scale -- how do you create an impact big enough to actually significantly address the societal problem you’re seeking to solve?
Take my old organization Taproot Foundation. As a capacity builder we were possibly the biggest in the country, providing consulting to nearly 500 nonprofits per year. Bridgespan, arguably the most intellectually impactful consulting firm, serves about 10% that many per year. But even Taproot’s size is dwarfed by the country’s 1.5 million nonprofits, and even if you leave out the million or so with budgets of less than $100,000, we were still reaching only 1% of the market per year.
It used to be that the nonprofit sector provided an effective R&D lab, and that effective programs -- such as headstart -- went to scale by being adopted and rolled out nationally by the federal government. With changes in the role of government, and as part of that a more towards outsourcing, that scaling model is now quite rare. There are other scaling models. The nonprofits that pushed for mandatory and now ubiquitous childrens car seats didn’t produce car seats -- they scaled their impact through advocacy. There are hospices providing end-of-life-care throughout the US; the original providers achieved mission scale by creating a template that other nonprofit organizations could follow.
For me, one of the most interesting solutions to scale lies in technology. As I’ve written earlier, the Salesforce Foundation has provided it software to more than 10,000 tnonprofits (either for free or at 90% off the list price).
What would be our impact if we could implement nonprofit versions of software from the likes of SuccessFactors at 10,000 nonprofits? Our answer to that question was one of the animating hypothesis for our founding.
So what have we learned?
Nonprofits are buying the software
The nonprofits and software companies find the relationship challenging because the products and services are not tailored to nonprofit needs
Several of the Saas providers have philanthropic interests and others are interested in supporting a nonprofit-focused value-added-reseller
Installing the software in an organization that has weak human capital management practices most often enables organizations to carry out those practices faster and less expensively
Few nonprofits, even those that have bought the software, have fully implemented best practices in leadership development and human capital management.
I want to thank one of our advisory board members, Jean McCall the head of HR for the Hewlett Foundation, for really pressing us on the last two of these. And I want to thank Julie Brandt and her team at the Cornerstone OnDemand Foundation for their partnership for the insights we’re gleaning working in partnership with them.
Few of the nonprofits or foundations we have spoken to in our earlier market research or current business development efforts have made the difficult transition to really strong leadership development and human capital management practice. And the software alone seems insufficient to make that change occur. From what we see, it can support a change effort, and improve the practice when the right foundations are in place, but its not a bridge from bad to good. Moreover, regardless of the sales promise or expectation, it seems particularly difficult to change the practice at an organization at the same time one is implementing the software.
So the nonprofit market’s maturity suggest that the real need is at an earlier stage: helping organizations make the profound shift towards leadership development and human capital management best practices. Coming in at the point of software sale as part of a more comprehensive solution may not be the special sauce we thought it was.
We can easily provide the consulting standalone - that was always part of what we were doing - but without the marketing and sales power of the SaaS providers as partners we need another way to educate nonprofits about this solution to their problems, and reach and enroll the best nonprofits in a cost-effective way. Or we need a way to more richly subsidize the fee-for-service component of our work.
Part of the solution is in our product offering: what we have heard consistently is a need for a relatively small, easy-to-purchase consulting starting place. The way we structured our Leadership Development & Strategic HR practice at Taproot had that same structure: a starting place for everyone that including an assessment, plan and initial implementation, complemented by a series of more in depth offerings. It feels that we’ve started targeting the latter parts of that process, but that most of the need is at the starting place.
So let us know -- if you’re a nonprofit that is using talent management software what has your experience been? What impact has it had on your organization? Who on your team has been deeply involved in the purchase and implementation process? What do you know now that you didn’t know a year or two ago about using this kind of software? We would love to hear from you!