The Opportunity Matrix

How do nonprofit leaders evaluate opportunities? In the last blog post on The Adaptable Nonprofit part of the post dealt with the question of how to think about piloting new programs. Clearly, how much time and money you spend evaluating opportunities should be in the right relationship to their potential scope and impact. That impact runs two ways: “what is the potential scope of social outcomes” (external) and “what is the potential impact on your organization” (staffing, finances, strategic direction etc.). Below is a very brief synopsis of the range of inquiry from simplest to full business plans and then two easy to use resources (tables) for you. First is an opportunity matrix for nonprofits – it uses red flag, green flag, neutral columns and enables nonprofit leaders to quickly generate dialogue and get a temperature check on an opportunity. The second table incorporates classic venture capital questions and mistakes into the same easy to use table format.

What should you have before you experiment? Staff proposing new ideas and projects should at a minimum provide (these will be developed further in the upcoming post on learning from clients and funders):

· Core benefit/core value proposition
· A positioning statement (for whom the product/service is targeted, the value they’ll derive, and how it is distinct-better than other existing offerings)
· A perceptual map or customer persona describing whom is to be served – whose needs will be met?
· Fill out the Opportunity Matrix table, Venture Capital table, or both
At the other end of the spectrum and depending on the scale of the intended project there should be a business plan with full financials and comprehensive cost allocations. (,

Use the tables below to quickly discover how promising or risky your new venture may be and whether you want to invest more staff and leadership time into further discovery. You’ll be well on your way to a thoughtful (and time efficient) approach to piloting new programs or strategic directions. This initial pass via the tables will suggest further exploration or a quick change of direction.

Opportunity Name: xxx                                                 Opportunity Description: xxx

Opportunity Evaluation:

Category Criterion Red Flag Neutral Green Flag
Financial Can be pursued with limited financial resources?      
High expected financial returns (earned revenue or gifts)?      
Low level of financial risk?      


Solves a strong constituent/client need?      
Large target market? Enough people need this problem solved?      
Easy for people to switch to our service?      
Can we generate reliable revenue (earned and gift)?      
Can we deliver at the right quality level?      
Can we reach people with this need (awareness, distribution)?      
Organization Fit with our organizational structure?      
Fit with our culture and mission?      
Fit with our strategy?      
Fit with our core capabilities and competencies?      
Competitors Little competition (current and future)?      
Can we deliver with excellence – better than competitors?      
Collaborators Do we have the right collaborators?      
Context Fit with broader environment (economic, legal, political, cultural, technological)?      
Experience Similar to past successful/unsuccessful attempts?      

An even leaner approach is the Venture Capital Opportunity Matrix – this matrix provides another valuable lens on evaluating opportunities.
Social Sector parallels in italics





Red Flag Neutral Green Flag
Management & Talent Does management have the passion, execution skills and experience?      
Length of the product development plan. Social sector – will it take so long to launch that funders lose interest or market need changes?      
Market & Service


Is the product/service sufficiently unique to mitigate competitive pressures?      
Is the addressable market sufficiently large to justify the investment? Is there enough demonstrated need for the new program?      
Market not yet ready for the product/service. Do constituents feel they have a problem or is it only our great idea?      
Not enough product/service differentiation      
Economics & Funding Can you raise enough capital? Social sector – can you raise growth or capacity capital to support infrastructure and operations for this opportunity?      
Do the economics of the business/program support an attractive return on capital? Social sector – is there a strong ‘social return’ and a sustainable financial model?      
Length of the sales cycle (cash flow issues). Social sector does it tie up more cash than it generates – maybe in the form of restricted grants?      
Strategy Does the investment fit with the strategy and scale of the venture firm? Social sector – does the project fit with your mission and current  strategic direction?      
Intensity of the competitive response      

The Adaptable Nonprofit – Keeping Pace – Setting the Pace

To be adaptable sounds pedestrian, even boring, in a time where all sectors speak constantly about innovation as the ultimate individual and organizational capacity. Innovation is said to be all around us but simultaneously innovation still seems like something magical and far away that only mighty individuals or mighty organizations can attain – we aren’t all going to be Muhammad Yunus, Steve Jobs or Teach For America. While there is an argument to be made that adaptation and innovation are nearly identical because really very, very few products, services or processes are truly breakthroughs, but rather tweaks and adaptations of what already exists, that is more philosophical than I want to be here. I want to frame this post around adaptation because I think it helps bring the conversation closer to our lived challenges and aspirations in organizations.

Why do we care? Continue reading

Your 21st Century Development Team

Is it any different to run a small to medium size development team today than 20 years ago? Has anything important been learned?

These two PowerPoint presentations discuss two areas I would like to see every development team incorporate into its’ strategy.

The 21st Century Development Team(1) first area concerns integrating the work of development with the fundamentals of nonprofit finance in the effort to correctly capitalize an organization. In that section you will find grateful attribution to the longstanding work of The Nonprofit Finance Fund and it’s staff.

The 21st Century Development Team(2) second area concerns the important, subtle and sometimes difficult dynamics between the important players in nonprofit development work – CEO’s, development directors and board members, and is discussed by bringing forward the practice of ‘Two Way (Performance)Scorecards’.

Please check out the slide presentations and let me know what you think.

Governance, Leadership and Sunk Costs

Scene: Board Meeting

Director 1: Thanks for providing these numbers. I see we continue to lose money on the prevention program – what can we do about it?

Director 2: The problem is nobody knows about this program. I was speaking with a local last week who had never heard of it! Are we doing anything to get the word out?

Staff member: Two years ago we paid for a marketing consultant. Last year we hired an assistant for Stan to free him up to get out in the community and promote it. Just last month we bought Google ad words for $5500.

Director 2: Great – how are the results?

Executive Director: Client numbers are down and the program’s deficit keeps climbing – although less steeply than last year. We were discussing this in the management team and we think there are a couple of key donors who would really get behind strengthening the program with both a city-wide billboard campaign and an additional full time counselor to finally enable us to offer wrap around services. So we’d like to propose…

New Director (interrupting): You mean this program has had continually increasing investments over the last three years, continually declining client numbers, increasing deficits and you want to add 50% more to the funding and hit on two major donors to support this?! I’d much rather propose we eliminate it and focus these resources somewhere more productive.

Chorus: Are you crazy?! We have invested in the high six figures in this program – we can’t let that investment go to waste! (This is the attachment theory of management and governance – i.e. emotionally attached to past investments)

Haven’t you been through a milder version (hopefully) of this in a staff meeting, board meeting and in your own mind? Don’t be too sure your organization isn’t falling prey. We get very attached to what we have invested in (think marriage and kids). A sunk cost is an unrecoverable cost for which you are already liable. Sunk costs have been or will be paid regardless of the decision whether or not to proceed with the project. Therefore they are irrelevant to the current decision and should not be included in the analysis (tell this to the emotions and values you have invested heavily in a project over some years).

Here is a famous example from Robert H. Frank which shows how the sunk cost fallacy can sneak up on you.

Cornell University has two sets of faculty tennis courts, one outdoor and the other indoor. Membership in the outdoor facility is available for a fixed fee per season. There is no additional charge based on actual court use. The indoor facility, by contrast, has not only a seasonal fee, but also a $12 per hour charge for court time. The higher charges of the indoor facility reflect the additional costs of heat, electricity and building maintenance. The indoor facility opens in early October, a time when the Ithaca weather can be anything from bright sunshine and mild temperatures to blowing sleet and snow. The outdoor courts remain open, weather permitting, until early November. During good weather, almost everyone prefers to play on the outdoor courts, which are nestled in one of Ithaca’s scenic gorges.
Demand on the indoor facility is intense, and people who want to play regularly must commit themselves to buy a specific hour each week. Having done so, they must pay for the hour whether they use it or not. Here is the problem: You are committed to an indoor court at 3:00PM on Saturday, October 20 (you have paid for it-sunk cost), the only hour you are free to play that day. It is a warm, sunny autumn afternoon. Where should you play, indoors or out?

You’ve probably guessed by now that you should enjoy the outdoor court with a clean conscience. Here are two common examples of sunk costs:

Fixed overhead expenses. Overhead expenses are associated with activities that are not directly attributable to a single business activity but instead affect many different areas of the organization. They are often allocated to the different business activities for accounting purposes, for cost analysis or for reporting to grant makers. To the extent that these overhead costs are fixed and will be incurred in any case, they are not incremental to the decision and should not be included in analysis.

Past R&D expenditures. When you have already devoted significant resources to develop a new program, there will be a tendency to continue investing even if market conditions have changed or otherwise demonstrated it is unlikely to be viable. That rationale that is sometimes given is that if the program is abandoned the money that has already been invested will be “wasted.” In other cases, a decision is made to abandon the project because it cannot possibly recoup the investment that has already been made in it. Neither argument is correct: Any money that has already been spent is a sunk cost and therefore irrelevant to the future.

So, you want to be the new Development Director…

So, you would like to be the new Development Director…

Recently I both enjoyed and took part in an extended discussion on the Chronicle of Philanthropy’s LinkedIn group. This discussion began by referencing the recent report by the research and consulting firm Compass Point titled ‘Under Developed’ that mentions 50% of senior fundraisers want to quit their jobs and further describes that organizational cultures which don’t value or understand philanthropy are to blame. This discussion was quite appropriately focused on the challenges in the development field and included more than a few common complaints, but with 50% of Chief Development Officers wanting out and 67% of CEO’s and executive directors transitioning each five years, effectively understanding the development professional’s perspective is a skill boards and CEO’s had better start practicing.

There was an apt image underlying many of the comments – the development officer as canary in the coal mine. From one point of view the canary points us to wider underlying conditions, giving members of the development profession the opportunity to step out of the victim role and de-personalize, but at the same time the real life canary in the unsafe coal mine first suffers and then dies!

The original post in the discussion put forward the sensible question, “OK we have all read the study now what do we do?” If you imagine yourself as an incoming/transitioning Chief Development Officer what do you need to see before you sign up? Let’s also think of the points below as points of negotiation and improvement for those Development Directors already mired in suboptimal situations. These suggestions assume that you are highly competent and knowledgeable in the field as described by Simone Joyaux in the discussion. Here is a very partial list.

1) Will I be a full member of the management team? If not this is probably the wrong place.

2) If the organization has a CFO or parallel role is the CEO clearly and actively supporting that she and I need to be sitting in the same room on a regular basis and working together based on our complementary roles? We are both engaged in capitalizing the organization. If not – red flag.

3) Will I be invited to every board meeting and presenting something at most meetings? If not this is probably the wrong place.

4) During the hiring process has the CEO offered out of herself, or responded positively and competently to my request, to specifically discuss her role in the development process, including real detail on how we will work jointly (how much time per week does she spend on fundraising, how often do she and I meet and how long are the meetings) to meet revenue goals? If not this is probably the wrong place.

5) To quote Tom Ahern from the LinkedIn discussion: “Will I have dictatorial control over donor communications?” (Again we are assuming you have the talent and experience to do this.) If not – where does the control lie – what specifically is my level of control and input. If the response is unsatisfactory or vague this is probably the wrong place.

6) Is the head of the board’s development committee and/or board chair part of my hiring process and have they provided me an opportunity to lay out what I consider the necessary conditions for successful development (as in the items above and more)in this organization? If not – serious red flag.

Shifts Happen – Leadership Transitions

Your CEO of 14 years just gave four weeks’ notice. If you speak with people whose roles put them in touch with multiple nonprofits (senior staff at nonprofit associations and networks, leaders at Community Foundations, nonprofit centers, United Way leaders, serial board members, and consultants) you will hear an oft repeated tale: “CEO/executive director turnover is debilitating and borders on epidemic”. These anecdotal reports are backed up by the research (Daring to Lead 2011 report shows 67% of nonprofit CEO’s plan to depart within a five year time frame). One third of incoming leaders are following a predecessor that has been fired. So many transitions appear fraught with “collateral damage” and more drag on organizational momentum, relationships and credibility than necessary.

Does it have to be this way? Sorry to bear bad tidings but certain specific portions of the transition story are inconveniently wired at this time. These wires have to do with the quantity of transition. There is a lot of it and three big factors (among others) suggest this will continue for some time. First; there is a generational leadership shift that continues as baby boomer leaders retire or are forced out having over stayed their welcome, second; there are simply too many sub-scale organizations that are structured for fiscal and talent struggles and high turnover, and third; if the economy continues to ever so slowly inch towards old labor market norms, the current slight drag on transition rates (“Will I find something else?”) will diminish.

The potential good news is around making these leadership transitions less debilitating and even opportunities for realignment and excellence. The potential good news is not about whipping out your garden variety succession plan. Where these exist they tend to be too narrowly conceived (identifying interim leadership, a few points about the search process, maybe identifying a transition committee). Good research exists on robust succession planning but is rarely utilized. Utilizing good succession planning templates is important but let’s be a bit more creative and identify a few critical elements, which, If you are able to implement, will both reduce the likelihood of unwanted transitions, reduce the sting when they happen, and increase the likelihood of discovering positive opportunities in the process. This is not a comprehensive succession planning document.

1.    Get smart about the inherent tensions and dynamics of the CEO and board roles (see nice post from Al Cantor written as to the CEO). All organizations need a mutual accountability tool to be used as a two way scorecard/performance metrics between the CEO and the board. Not just the board evaluating the CEO! This ignores too many realities of what is needed for success (namely a working relationship) especially in small and medium size nonprofits. This tool will be adjusted for the context of each organization but at its core needs to include a two way (ongoing – not crisis) communication plan; two way metrics around CEO and board performance as ambassadors for the organization, as fundraisers, as developers of a talent and leadership pipeline, as financial stewards, and as guardians of the purpose/mission and current strategic plan. Each organization will create its own specific performance metrics in these areas.

2.    Once you are inside the intensity of a transition process do not lose sight of the human relationship risks and opportunities. This means other senior staff can be wounded and even lost due to inattention or perceived slights; donor, board and external partner relationships can rapidly flip from understandable anxiety to lost credibility; depending on your business even clients may be lost if a crisis of confidence ensues. Minimizing these risks requires a communication plan that is sensitive to all key constituents and rapid communication amongst the transition committee. It requires a large heart and some patience for the emotional issues that often surface in these situations.

3.    Do not let your organization skip the step of rigorously reviewing the role to see if smaller or larger adjustments are needed. Make sure these changes arise in an active relationship to the current strategic plan and organizational priorities. This gets forgotten in crises.  This step is especially critical if the departing CEO is the founder. Depending on your specific situation and context a more fully fledged organizational assessment may be in order. In some situations this is not the right thing to do.

4.    Do not let the board abandon ship once a new hire is made! Your new leader absolutely needs close accompaniment in the first 90 days. This takes skill, sensitivity and in my view usually needs help to set up a guiding framework. Ciampa and Watkins well researched work (Right from the Start: Taking Charge in a New Leadership Role) provides helpful guidance: lay a foundation, build credibility, secure early wins, get oriented etc. If you already have consulting help with the process this can also be an important step to find guidance for and is frequently neglected.

Get these four areas right and you have dramatically reduced your risks and dramatically increased your chances for a positive transition. Next Post: So You want to be the new Development Director…

The Most Important Thing

Welcome to the impact Consults blog. This blog will attempt to make the following contributions to individual readers and to the broader nonprofit sector:

Comment on current topics of relevance across the nonprofit and social enterprise sectors, particularly those impacting small and medium size organizations, bringing a perspective born of my own background and experience set.

Propose new perspectives and responses to these issues from the perspective of someone who has founded and supported start-ups, built and led nonprofits and is now advising, coaching and consulting.

A regular feature of this blog will be to briefly introduce key business concepts, more traditionally connected to the private sector, and discuss and propose their importance for nonprofit leaders at this time. I hope you will decide to share with colleagues Impact Consult blogs you find valuable.

The Most Important Thing?

What is “the most important thing” for a strong, sustainable, even transformative nonprofit organization, or more boldly – nonprofit sector? There isn’t one. In that way it is a lot like investing. Howard Marks, legendary co-founder and chairman of Oaktree Capital Management and University of Pennsylvania donor, wrote a wonderful book on his investing philosophy called The Most Important Thing. He begins with a few thoughts on investing that are highly applicable to the art of nonprofit leadership and governance.

“What, exactly, is “the most important thing”? As I meet with clients and prospects, I repeatedly hear myself say, ‘The most important thing is X.’ And then ten minutes later it’s, ‘The most important thing is Y.’ And then Z, and so on.”

His book discusses twenty most important things. He continues:

“The fundamental notion is unchanged: they’re all important. Successful investing (as in sustained above average returns) requires thoughtful attention to many separate aspects, all at the same time. Omit any one and the result is likely to be less than satisfactory…It’s not my goal to simplify the act of investing. In fact the thing I most want to make clear is just how complex it is. Those who try to simplify it do their audience a great disservice.”

Einstein had his own version of this thought: “Everything should be made as simple as possible, but not simpler.”

Is it harder to excel in the nonprofit sector? Is it harder to lead and manage effectively? Let’s not make it a contest but instead take a moment to reflect on why the sector exists at all.

  1. There has been a wide spectrum of social and community functions over the course of the last century which government, business and increasingly the “natural fabric of community” are not sufficiently providing.
  2. Why are government, business and the natural fabric of community not sufficiently providing? Because many of these functions or services are hard to make a profit at, others are just plain hard to do in a rapidly evolving society, and it is particularly hard for large governmental entities to meet nuanced local needs in a targeted and adaptive fashion.
  3. Individuals have always and will continue to be inspired to meet needs (social entrepreneurs) which they see around them and to imagine a better, more creative, more alive, and more just social order. Good!

These three factors and others (lower pay, lower status in the heroic American myth, a time of contracting government resources, competition from the private sector) imply that nonprofit leaders, aspiring leaders, boards and funders need to resist the temptation to oversimplify. What makes a nonprofit great (impactful in a sustainable way) vs. hunkering down and just surviving? I maintain “the most important thing” is the ability to simultaneously generate and sustain excellence in a daunting variety of management, leadership and organizational tasks. In upcoming posts I will dig into these areas in more depth and in relationship to ongoing events, trends and challenges important to nonprofit leaders, aspiring leaders, board members and funders. Next post: Shifts Happen – Leadership Transitions