The past two years have been defined by disruption, and for many individuals and organizations, the prospect of more change may be intimidating. In fact, half of respondents to a recent Innovation Process Design (IPD) survey of community foundations said they worry about overwhelming staff with process changes. In reality, however, thoughtfully examining and optimizing operations—the day-to-day organizational activities that define how an organization achieves its objectives—can actually help philanthropic and nonprofit organizations recapture time, improve accuracy, increase coaching, and otherwise enhance their community impact.

The COVID-19 pandemic has been a significant driver of change over the past two-plus years, as organizations scrambled to adjust to a rapidly evolving work environment and shifting community needs. According to the IPD survey, 92 percent of organizations installed virtual meeting systems to support a remote workforce, and 66 percent went paperless. Further, 66 percent of survey respondents reassigned job responsibilities and 61 percent overhauled operations.

Now, with two-thirds of organizations anticipating appreciable growth as the pandemic eases, changes are likely to continue through 2022 and beyond. Quite simply, organizations will have to make changes if they hope to keep up with demand. In light of that anticipated growth, 65 percent of organizations plan to bring in a major new operation in the coming year, 83 percent plan to expand or add programs, and 43 percent plan to create or execute a new strategic plan.

One of the most meaningful changes we’re seeing among philanthropic and nonprofit organizations is an increased understanding of and appreciation for the role that operational efficiency plays in their ability to positively impact their communities.

About 90 percent of a philanthropic organization’s resources are committed to operations. And while operational efficiencies have long been a driving force for commercial entities, it is a concept that has gone largely unappreciated in philanthropic organizations. That has changed in recent years, with more community organizations adding C-suite operations positions and increasing their overall commitment to process improvement, but there is still room for improvement.

Driving impact through operational change

Community organizations are all about impact, and the realization that operations and process improvement can increase their potential to effect change has motivated a growing number of organizations to focus on processes, people, policies, and systems.

According to survey participants, recent operational changes have focused on:

• Process: 66 percent overhauled donor-advised fund processes.
• People: 63 percent redesigned job responsibilities for one or more employees.
• Policy: 50 percent implemented ACH payment for grants, vendors, and/or employee reimbursement.
• Systems: 50 percent maximized existing tools including Salesforce, Outlook, FIMS, or MS 365.

Why it matters

Most nonprofit leaders see community impact as an outcome of the services and programs they offer. Yet impact can also come from how the organization does its work, and leaders are realizing that operational efficiency can dramatically increase their ability to serve their community. In fact, half of survey respondents reported achieving heightened team confidence, skill, and willingness to improve processes and push the system as a result of process improvement training, while another 50 percent reported achieving greater efficiency and effectiveness.

Consider the example of one large nonprofit that used operational improvements to enhance the impact of a program that supports non-English speaking first-time homebuyers. Prior to the changes, high demand meant that it took up to 90 days to get help, significantly longer than the process of closing on a house. After undergoing process improvement training, the organization was able to remove nearly half of the 60 steps involved in onboarding and reduce the time required to serve clients to between seven and 20 days.

In another example, a foundation CEO found that staff were struggling to get grants to nonprofits, with checks taking up to 20 days to go out. Those late checks were delaying the grantee’s ability to help at-risk children, thus limiting their impact on the community. The CEO knew there were more donors who wanted to give through the foundation, yet staff were already working evenings and weekends. There was no capacity to speed grant payments or take on more philanthropic work.

Given this situation, the team invested in a deep dive of their grantmaking process. During the process study, the team removed 40 percent of its process steps, cutting down on labor and turnaround time. Now, grant checks consistently go out the door in five to seven days, and the nonprofit program serves the needs of qualified children without disruption. In addition, staff are no longer working weekends, and the CEO can say “yes” to new donors.

Steps to increasing community impact through operations

Over the years I have witnessed numerous success stories, even from teams that were initially resistant to change. Overcoming such reluctance requires the ability to implement change in a way that will not overwhelm employees. Here are a few tips that I have found to be helpful in ensuring employees’ readiness for change. 

1. Increase operational literacy: Operations is still a new concept in the nonprofit world, and it may take employees time to grasp the intention of proposed changes. Work with leadership to increase operational literacy through the creation of a common vision. Then, communicate that vision clearly and repeatedly to help staff understand the purpose of proposed changes.

2. Make responsibilities for change clear: To make sure all staff understand their roles, include new expectations in job descriptions and performance evaluations. Then, reward those who engage in positive change and talk about change responsibilities often. It is important to stay confident and upbeat about planned changes.

3. Sponsor training: Don’t expect everyone to fully grasp their new role immediately. Employees may need help to adjust to a new way of operating. Support them with training that will allow them to develop the skills they need and to embrace their new role.

Change is a given for all organizations—be they commercial, nonprofit, or philanthropic. The speed and scale at which organizations must implement change may not always be as dramatic as what we have seen in recent years, but the ability to keep pace with and adopt change will determine a philanthropic organization’s impact on evolving community needs.

Charitable giving hit a record $471.4 billion in 2020, and was expected to grow by 4.1 percent in 2021 and 5.7 percent in 2022. Such growth creates tremendous opportunity, and forward-looking operations that thoughtfully implement operational improvements will be well positioned to make the greatest possible impact in their communities.

Lee Kuntz is founder and president of Innovation Process Design Inc. Learn more at improveprocess.net or register for IPD’s webinar series.