How Failure Changed How I Think About Nonprofit Work

(Photo by iStock/Wachiwit)

In the autumn of 2019, I arrived full of energy and excitement for a board meeting of the nonprofit Beautify Earth. Founded in 2012, the Santa Monica-based nonprofit empowers civic engagement by facilitating street art in public places. I felt we were on the verge of explosive growth: An early campaign to “beautify” utility boxes in Los Angeles by turning them into small murals had received national attention, garnered community plaudits, and motivated the board and staff. We were a rocket-ship ready for take-off—I could just sense it.

I felt confident because I had been in the same position before. I am the CEO of a 100-person data-driven executive search firm. After bootstrapping for a few years after our founding in 2010—a period during which we honed our value proposition and business model—my organization began doubling in size every two years after we hired a talented sales executive to do business development (instead of relying on my rolodex and word-of-mouth). I told the board that I wanted Beautify Earth to replicate that growth strategy. Our value-proposition was clear, and we were ready to take the message to large donors. And so I convinced my fellow directors to hire an experienced executive from the private sector and set her loose as a fundraiser. The position would chew up a large portion of Beautify Earth’s budget—and some of the trustees and directors were skeptical—but I assured them that it would more than pay for itself.

Looking back, I cringe at my blind exuberance and optimism. In that crucial early meeting, I laid the seeds for my proposal’s eventual failure. We hired a talented sales executive, set her loose, and it all failed. After three months, we decided to let her go, with no major gifts in the bank, and a large depletion of our operating budget. Beautify Earth has since recovered and continues to do great work, but the opportunity cost in terms of time and budget was significant. 

What happened? I had a formula that I knew from my own company was viable. Why had it failed to translate into the nonprofit context? First, we overloaded our new hire; a small nonprofit with a limited budget, we succumbed to the temptation to ask her to do three different jobs. Second, we never agreed as a board on how we would measure success for the role. Fundraising takes time; yet we lost patience after our new hire was unable to bank any major gifts in the first three months. Finally, we overestimated our ability to innovate as a board. Staffed by artists, entrepreneurs, and other creatives, the board naively assumed we would be immune to the reactionary impulses that holds many boards back. But in the end, we never went “all-in” on a new fundraising model; we weren’t willing to risk our established means of success in search of a future reward. 

We now approach innovation in a totally different way. Through introspection and conversations with my fellow directors, I have taken away three major lessons from the failure that I believe will make me a better nonprofit leader.

Be Focused

We drowned our new hire with too many tasks. Nonprofit leaders tend to be extremely cost-conscious, particularly when it comes to nonprogrammatic spending. It’s almost painful for us to authorize funds—we feel acutely each penny that isn’t going directly toward community impact. As a result, it can be difficult to define a new hire’s role, especially at a small nonprofit. In an effort to get our money’s worth, we ended up throwing everything and the kitchen sink into the development officer job description, which led to a dissolution of focus. Michael Porter once defined strategy as “choosing what not to do,” and good hiring requires ruthlessly reducing the number of variables where you expect perfection. But although I’m a professional recruiter, and I would never craft a flabby job description for my clients, I violated this central principle for Beautify Earth.

Because the board worried about spending so much on one role, we tried to use the position to solve two separate, unrelated problems, and spread her too thin. A separate challenge we were facing was finding canvases for public art, locating walls of buildings and owners willing to allow a street-artist to construct a mural on their property. We not only asked the new hire to take on this responsibility, but when we found a candidate in the for-profit sector we liked, she asked to work three-quarter time, and we agreed. She needed make up the compensation loss from moving to a nonprofit role, with a side-hustle, but it ultimately diluted her focus on the core task.

However, we also failed to align our organization’s efforts with her role. The nonprofit consultancy Bridgespan has found that high-growth nonprofits (paradoxically) tend not to have diversified funding sources, but rather target one source, such as small-dollar memberships or large donors. Yet instead of asking new key members of the team to go “all-in” on our large-donor fundraising strategy, they continued to spend most of their time growing our small-donor membership base. They were never truly invested in the development officer’s success, and, at one point, the organization even asked our new hire to help her contact and reactivate lapsed members. This left our new hire doing three different jobs: sourcing walls, growing memberships, and large-donor fundraising. This was not a recipe for success.

Be Patient

Another mistake I made was not clearly defining what “success” would look like. Because of pushback against a year’s funding for the position, the board compromised on a three-month trial period—but without specifying how we would assess the role after that period.

After three months, I saw many promising signs. In the for-profit world, I’m accustomed to six-to-nine month sales cycles, and I had known it would be difficult for the development officer—especially slowed by the onboarding process—to land any major gifts in her first cycle. For a role like this, you can only focus on process in the early months, not outcomes. The development officer had taken several meetings with major donors, and I took this as a sign that we were on the right track. 

However, many of the other directors simply weren’t willing to continue funding a position without a clear ROI. In retrospect, I should never have agreed to the initial compromise of a three-month experiment and should have waited until I had the support to make it successful. As we had a diverse set of board members, ranging from artists to architects, few with direct experience managing a development officer, I should have invested the time to in more detail explain what a normal sales-cycle looks like and how long it takes. I could have asked a consultancy to present to the board, sharing benchmarks from comparable organizations of how long major fundraising initiatives tend to take to achieve an ROI. A three-month check-up was fine and probably wise, but it should have been focused on intermediary, process-based targets. But I should have insisted we either do it right, or not at all. 

Nonprofits can often become spoiled in their early years. Frequently born out of community grassroots efforts, they become accustomed to having many things for free: Event spaces are donated, dinner speakers offer discounts, and lawyers and accountants offer advice pro-bono. But at a certain point, nonprofit boards need to professionalize and be prepared to make investments. Spending money to bring in money is a big transition, the organizational equivalent of an adolescent coming to terms with the fact that their parents have decided to close the checkbook. We weren’t ready to make that transition at Beautify Earth. 

Be Innovative

This speaks to perhaps our most systemic failure as an organization: We weren’t committed to supporting the sort of transformation we had tasked the development officer with achieving. We thought we were, but we weren’t. In The Innovator’s Dilemma, Clay Christensen observes that the very leaders who are responsible for an organization’s historical success often block the innovation required for the organization to continue to succeed, calling the well-meaning managers and leaders “antibodies” because they attack anything novel introduced into the organization. Christensen therefore advocates for independent autonomous units to undertake major innovation far from the oversight of incumbent managers, either through “skunk-work” or subsidiary or spin-off companies. To be successful, these independent units “cannot be forced to compete with projects in the mainstream organization for resources.”

After we let the development officer go, we took a hard look at our future. We realized that one of the tasks we had set this position—trying to line-up walls and other public spaces for street artists—was not optimally conceived. Rather than hire an individual to pound pavement in search of canvases, it would be far more efficient to turn Beautify Earth into a web-based platform where artists, property owners, and sponsors could connect. We imagined functionality on the website where wall-owners could consider sketches from artists about the mural they wanted to create, and donors could then fund the chosen project. 

But as a board, we had learned our lesson. There was no way we were willing to take the risk of investing in the R&D and experimentation needed to make this vision a reality. And our recent failed experiment with the development officer helped us to be more honest with ourselves to admit this. So we decided to take a page out of Christensen’s book. We empowered one of our original founders, Evan Meyer, to form a separate, for-profit entity. He could find his own investors, and hone the business model on his own. Six months later, and this spin-off, BeautifyEarth.com (we are BeautifyEarth.org), kicked off a pre-seed round of $350,000. It’s also having an impact—in the first three months of the website launching hundreds of walls have been registered on the platform as available canvasses for murals, a number far exceeding the total number of canvasses we typically source in the nonprofit arm. We couldn’t be more thrilled.

Do It Right, or Not at All

Innovation is hard in the for-profit context; my experience is that it’s even harder for a nonprofit. No one wants to “move fast and break things” at an organization committed to helping fix problems and heal society. But the challenges facing society at this current moment demand that nonprofits find novel solutions. My hard-earned advice to other nonprofit leaders is somewhat paradoxical: Don’t be scared to try to innovate, but be very wary of how difficult it will be to succeed. With that attitude, you will avoid the half-measures and compromises that so often hamstring innovation efforts. And unlike my failed efforts, do it right, or not at all.

Read more stories by Atta Tarki.