Stages of Nonprofit Organizational Development II

This is an update of the popular article “Stages of Nonprofit Organizational Development.”  It includes more information about organizational development life cycles and how to manage them. Most community organizations that serve older adults are in one of these stages of organizational development.

Most nonprofit organizations go through predictable life cycles. Like other living organisms, they are created, live, grow, develop into adulthood, and mature. For each stage in the life cycle, there are certain challenges, successes and developmental issues. This article is a short overview of organizational development life cycles.

A. Start Up

Most nonprofit organizations are started to fill a need. A group of volunteers has a vision and a passion, and develop a project.  Nonprofit professionals may see an unmet community need and create a new nonprofit.  Many home care, retirement and “active senior” programs developed this way. Or, someone creates a foundation through a bequest or other funding mechanism. Most nonprofits are created by people passionate about a cause, unmet need or issue. They are often, but not always volunteers.

In start-ups begun by people passionate about a cause, they develop what is often called a “Founding Board,” sometims with a “Founding Executive” or “Founding ED.” The board is often small, comprised of people that share the founder’s passion. Board members often have programmatic expertise, and the board is often not highly diversified with broad representation. Work is often done by the founder and some volunteers. However, if funding is strong from the beginning, there may be a fully funded executive and key staff.

In the case of smaller nonprofits, volunteers often do the program work, and many of the same volunteers govern the organization by serving on the board. This can become confusing, especially as the organization starts to grow, and core volunteers become stretched by the combined workload of program activity and board service. Critical to early success is the vision of the founding group, and the power of that small core to both carry the work and invite others to become involved. Usually, after a year, or two (or more), the founding group can become tired and burned out, and it will find it cannot sustain the work or the momentum. If the organization is to be successful, it needs to expand the level of support for its project work so that it can hire sufficient staff. The organization needs to build core sources of financial support.

Or, the charismatic leader builds the organization. The work develops because of the way the founding leader articulates the mission, describes the program, and draws others because of the power of the leader’s personality. This model of development is called “Start Up” or “Founding” stage, with a founding leader and/or founding board.  The program is often strong and compelling, and the founders are able to draw funding and other support to the program. Most founding leaders are exceptionally gifted at building the programs, articulating the case to the community and funders. They are sometimes less skilled at organization building and developing systems. During this first stage, the organization is usually less formal, with few established structures and systems.

Founders can serve from a few years to decades. Organizations will usually hit a crisis point where a certain level of structure is needed, and the organization has outgrown its earlier framework. If the organization is to be successful, it will look at its paid and volunteer leadership, analyze the structure, and make changes that might be required in order for the organization to continue to grow.

  • The organizational crisis point often includes one or more of the following issues:
  • Program growth requiring expansion and differentiation with staffing;
  • Organizational structures and systems required for organizational development;
  • Board growth, expansion and greater diversity needed;
  • Funding growth and diversification more appropriate;
  • Greater sophistication in community outreach and marketing needed.

B. Organization Building

At this stage of organizational development, the organization has accomplished some important goals. Often,as the agency moves toward organization building, it has built most of the following:

  • Strong program/s that have a good following and can demonstrate results;
  • Committed board and staff leaders;
  • Beginnings of strategic and business plans developed or developing;
  • Core funding in place, with areas of new needed funding identified;
  • Sense that the organization has “outgrown the old” and needs to build the organization and its structures and systems.

Once it moves forward with this building stage of organizational development, it usually finds a number of developmental challenges ahead:

Programs and Services.  As the organization builds, it will need to build programs based on effective models, such as the PACE model for older adult programs.  Organizations often find themselves needing to refine programs to address both community need and budget. There is a greater emphasis on program outcomes and demonstrating positive results.  At this point, many organizations work to limit the level of unfunded program activity.

Structures and Systems. Senior staff and the board often identify the need to create more structure, often through more defined departments, goalsetting and staffing. People often address the need to create plans and policies, to include: strategic plan, business plan, board policies, staff/HR policies, and policies covering funding and budget.

Governance or Board Development.  The board shifts from more “hands-on” program activity to policy and fund raising. Some members find this change exciting, and they work to bring more people onto the board who are focused on these areas. Others miss the programmatic work and find that transition difficult. These issues are seldom articulated, but they are usually present. Boards that bring on a new Executive Director are usually excited about the new staff leadership, but they often find themselves frustrated when the new ED is “taking over” what board members and committees previously handled. Boards can lose people, or bring on people who don’t quite fit during this “shakedown phase.” It helps if board members understand that there are a range of options: board service, committee or program volunteer work. Boards usually benefit from training and consultation about issues like roles and responsibilities, fund development and the line between policy (board) and operations (ED). The board’s developmental challenges at this juncture are finding ways to bridge the gap between program board and policy board – developing strategies for recruiting new people, and building a stronger, more structured governing body. Change should be paced and carefully managed, and the board should be encouraged to analyze its progress.

Staffing. As an organization builds, the staff is going through a change process similar to the board’s. Whether the organization is working with its first, second or even third Executive Director, there are a few challenges. Programs have developed and are usually strong. However, funding at this point is often a challenge, and many organizations find that their program growth has outstripped the budget. The ED must manage the budget, with the board’s oversight; and the ED and Board Chair need to focus on building board fund raising capacity to bring in new revenue that will diversity the budget. This can be a challenging dance. The ED is working to build and manage programs, which often means developing a staff. Nonprofits nationally struggle to pay competitive salaries, and often face high turnover rates. The ED and staff usually find that they are working many long hours to handle the different programmatic and administrative tasks. Critical to short and long term success will be the ability to outline goals, define tasks, identify responsible parties, and prioritize the workload. Here, organizations learn the skills of deferring much needed projects and activities, and saying “no” and “not now.”

Successful organization building results in the organization’s ability to build multiple systems over a period of a number of years. These include program goals and structures; a policy-oriented board; successful fund raising activities that include board, staff and volunteers; strong ED leadership; a skilled staff, effectively managing programs; a diversified budget with some cash reserves; and good planning that guides decision making and anticipates areas of concern.

As they move through the organization-building process, most successful organizations will build skills in a number of key areas of the organization, to include: mission and vision, planning, programs and services, governance, staffing, budget, fund raising, communication and other areas. The author has developed a group of organization-building sustainability benchmarks, which can be found on

C. Organizational Maturity

At this stage, the organization normally has a clear mission, well established high quality programs, a strong reputation, effective leadership with board and staff, good systems, an effective budgeting process, and a diversified base of funding. The challenges that the maturing organization faces are to maintain the programs and services in a way that continue to be responsive to community need and a changing environment. All of the benchmark areas should be tended if the organization is to be vibrant and sustainable in its maturity. With strong benchmarks and effective structures and systems, the challenge is to continue to build the organization while maintaining what is in place.  Organization building to a mature organization does not necessarily mean growth in programs and budget, as it often does with a developing organization. Building could mean more targeted programs, new collaborative partnerships, greater responsiveness to stakeholders,  and innovation.

This must be done while maintaining momentum and keeping the work fresh. The biggest challenges to this phase of organizational development include one or more of the following:

  • Resting on one’s organizational laurels;
  • Unanticipated threats that cause serious harm;
  • Los momentum, programmatic stagnation, and problems with relevance;
  • Poor decisions that result in financial difficulties;
  • Weak leadership (ED or board) or leadership that does not fit for the organization’s phase, structure, developmental issues and culture.

Most organizations do not maintain a steady state maturity. They usually change, grow or die. Ongoing discussions with board, staff, volunteers and other stakeholders can keep an organization in touch with its base and aware of key issues. Evaluation provides organizations the opportunity to gather confidential feedback from different stakeholder groups, and uncover problems that may be difficult for people to discuss in an open forum or meeting.

Most important to successful organizational maturity is a board and staff leadership team deeply committed to the mission and programs; well grounded in structures and systems; able to articulate the case with a growing group of funders; and committed to innovation, collaboration, diversity and a corporate culture of excellence.

Anne Hays Egan
New Ventures Consulting
EzineArticles Expert Author



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This entry was posted in Communities, Nonprofit Leadership, Organizational Development. Bookmark the permalink.

8 Responses to Stages of Nonprofit Organizational Development II

  1. Laura says:

    I love reading your blogs.. Its awesome..!

  2. Jolean says:

    Nice post Anne..! I feel that understanding where an organization falls in its cycle of development and how to build capacity along the way is an effort that must be made. Leaders of a nonprofit must work together to articulate a vision for the organization at every stage of the nonprofit’s life and find the best ways to make it a reality..:-)

  3. Carmen says:

    Very well written–A very helpful synopsis of the life of a nonprofit.A must read for all nonprofit consultants and management service organization personnel..

  4. Cycling combo set says:

    Thanks man. It is special hearing

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  6. Paris Saint Germain says:

    Cool post . Cheers for, posting on my blog man. Ill email you some time. I did not know that!

  7. Tony Lee says:

    This organization development info is great! Very pleased to find out about this, thank you for informing us about this. Great work!

  8. M Hutcheson says:

    You have made some good points there. I looked on the internet for additional information about the issue found a number of other sites that address similar concerns about caring for your elderly parents. Great to have these resources.

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