Ira Weissman – Chapter Twelve

Ira Weissman

Operational Excellence in Non-Profits


FY 2009 proved to be an extremely trying year for non-profits. With major philanthropists cutting back on their giving, and states and foundations cutting back on their grants, non-profits are having a difficult time continuing to provide services. This is especially telling as state and federal social service programs are being cut, adding more burden onto non-profits to pick up the slack and help those in need.

Adding to these problems is the demand for meaningful metrics in nonprofit organizations. Prior to four or five years ago, the main metric for non-profits was the ratio of program-to-administrative costs. However, funders began to demand metrics tied to accomplishments. New types of metrics were required to satisfy funding agencies and a new generation of philanthropists. This is especially daunting to the small and medium non-profits who provided social services and are not used to thinking in terms of measureable accomplishment.

This chapter will help the reader to:

  • Identify non-profit processes and metrics that will help the nonprofit organization to succeed and satisfy its major funding sources.
  • Learn how use a SIPOC chart to become more effective.
  • Tie your vision to your processes and the metrics to show whether or not the organization is working towards its vision in the most effective manner.
  • Identify opportunities for improvements.

Vision Statements and Customers

The first step in applying operational excellence tools is to understand an organization’s overriding vision. Most for-profits and non-profits alike have a vision and vision statement that help guide their activities. In the for-profit world, a vision eventually leads back to the profit/survival motive, irrespective of the product or service being sold. This in turn leads to the customer, who buys the product based on desires and needs. The for-profit then builds its activities around those desires and needs.

The vision of the non-profit typically defines a state of society where a client’s condition is improved by the service the organization provides. Because of the broad span of activities that non-profits cover, it becomes very difficult to define who is the “customer.” The person or group paying for the services is not always the individual or group receiving the benefits of those services. Should the non-profit focus on the needs and wants of the people receiving the services, or the demands of the people/groups paying for the services?

A local community orchestra’s vision or mission typically involves expanding the local community’s appreciation of orchestral music while providing an opportunity for musicians of all levels to play, learn and perform music with and for others. Who are the orchestra’s customers? Is it the people who buy the tickets to attend the performances, individual donors who give annual or ongoing gifts to the orchestra, a foundation who gives a grant to support ongoing activities or special programs, or even the orchestra members themselves?

Next, consider a parole board whose mission is to enhance public safety by making carefully considered parole decisions and successfully transitioning offenders back into the community as law-abiding citizens. Additionally, the parole board’s mission may also include partnering with governmental, non-profit and private agencies to connect exprisoners with vocational, mental health and other services to break the cycle of crime. Who are the customers of the parole board? Is it the parolee, the prison system, the public, the partnering agencies, or the crime victims and their families?

It quickly becomes evident that each non-profit has at least two main customers: the people and groups who donate to the organization (donors), and the clients who utilize the non-profit’s services. Further, it may be necessary to separate the donors into institutional and individual donors. It is important to make these distinctions because each one of these groups may have different needs and priorities, which may not fully align with one another. Thus, it becomes even more important to have a strong vision statement so that both the donors and clients understand what the organization is trying to accomplish and how it is going to achieve its goals.

Identifying the Needs of the Customers (Donors and Clients)

Once the customers have been defined, each group of customers’ needs must be identified. Too often, the needs are described in such general terms that the non-profit is unable to focus its efforts to meet the expectations of its donors and clients. This can lead to the belief that the non-profit is not being effective in its activities. To translate a need into a more quantifiable goal, a Critical to Quality (CTQ) Tree is ideal.

A CTQ Tree seeks to move from the general to the specific by uncovering the drivers of the need. For example, a client of a credit counseling program may seek financial freedom. How does one convert that into something tangible? In the case of a client, it may be a case of asking where does it hurt the most (i.e., what things cause the individual the most problems). Examples might include harassing bill collectors, poor credit rating and lack of available money. These in turn need to be framed in positive statements and broken down one more time to get to activities that are quantifiable. Below is an example of a CTQ tree showing how the broad desire of financial health can be broken down
into specific, measurable characteristics.

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