Nonprofit Board Lane Changes
In the last six months, I have been talking with a lot of colleagues in the nonprofit world and inevitably the stress imposed on the agency by the board of directors will come up. We are officially six years past the date when COVID was declared a pandemic and coming out of that period, nonprofit organizations were exhausted. Many small nonprofits (and some large ones) folded, others grew, and many are still struggling to adjust their programs and operations in the post COVID era. Some artificial stability came in the form of forgiven Payroll Protection Program loans and others also saw windfalls from the Employee Retention Tax Credits. After a year or two of stability in our national politics, nonprofits were then again thrown into the crisis by the persistent and erratic public policies that have resulted in the challenges of inflation, government funding cuts and delays, and growing demand for services (1). Further complicating the work of nonprofit organizations is that there has been an acceleration in the amount of charitable giving that never reaches the field but is diverted to asset accounts such as Donor Advised Funds (DAFs) and Private Foundations. One study found that in 2024, DAFs and Foundations together took in 38% of all individual giving in the United States, almost double what they took in ten years earlier. In the next two years that is estimated to grow to half of all charitable giving. Think about that —half of the “philanthropy” of the wealthiest individuals will not reach nonprofit organizations in a timely manner (2). No wonder the surface tension on many nonprofit boards is at an all time high and with one missed fundraising campaign goal or grant denial, the tension spills over into open conflict.
Last month, I reintroduced the nonprofit developmental stages framework I used extensively in my consulting practice of a decade ago (3) and, in this article, I want to overview the work of nonprofit boards as tied to the developmental stage of the organization and suggest what leaders might focus on this high stakes moment in time.
Startup Nonprofits are those nonprofits working to test an idea and raise enough capital to pilot and sustain the idea long enough to create some face validity for the program. The board associated with a start up nonprofit is a working board. With no staff, limited resources and no delegated expertise the board members are the de facto staff, building the program design, fundraising and operational systems. Less time is spent by the board thinking about strategy then implementing the founders’ ideas. For organizations of this stage, financial, social, and program capital are often tenuous at best and given this point in time, the strategic conversation must center on the feasibility of continuing as a startup nonprofit. The frank conversation that is demanded of the board and founders is the nascent organizations capacity to maintain the current trajectory and grow the idea towards maturity. The start up headwinds will only get stronger as donors and foundations prioritize funding established programs over new programs. The lane change required by the board may be to move over to the slowest lane or perhaps the pull off the road all together. Slowing down, delaying full launch, reimagining your organization (perhaps as a for profit corporation) or suspending operations must be the collaborative conversation.
Emerging Nonprofits face a similar challenge as startups even though the program idea is tested, replicated and is starting to attract resources. This second stage wrestles with building an infrastructure to sustain its existence at a micro or small scale. Boards in this stage continue to be largely working boards (some functions may be delegated if there are paid staff members). The strategic conversation demanded by emerging nonprofits, at a time of crisis, is still about organizational viability. In this environment, it might be difficult to accelerate and change into a faster lane so it may mean keeping your speed steady. Alternatively, it is possible for an emerging nonprofit to exit the freeway and be acquired by another organization.
Scaling Nonprofits are stable, and wrestle with how to grow either by deepening services, widening services, or replicating services. What is most distinctive about this stage is that the Board of Directors has delegated much of the operations to paid staff and advisors and strategy becomes the dominant function of the board. The disconnect and tension that is occurring at this time of crisis is that too many boards have delegated their understanding of strategy, organizational development, and finances. I have seen it dozens of times, the board delegates strategic planning to the Executive Director and, perhaps, a consultant. The process might include a board planning session or two, where board members are content to see their thoughts on a white board and woven into a draft document. But too often that is the point where the board engagement trails off or ends. This leaves the board with a superficial understanding of the organizational strategy. On the financial side, boards are often myopically concerned about building financial reserves (savings), which gives a false sense of financial security. Then as the crisis of inflation, government funding cuts and delays, and growing demand for services unfolds, it is as if the nonprofit board hits black ice and spins out of its lane. Shaken on the side of the road, the nonprofit board reacts from adrenaline rather than thoughtful purpose. The strategic conversation demanded at this moment in time is a reset conversation between the board, agency leadership and advisors. The board must return to strategy and begin to think differently about strategic investments needed to preserve the organization’s core. A related conversation is to reframe financial analysis from a comparison conversation about generating margins above all else and start talking about growth. This conversation must reimagine at least a portion of organizational reserves as investment capital to be strategically used to buffer the changing program and funding landscape.
Leadership Nonprofits, who, beyond scale, break through into a leadership position, need to have conversations about how best to lead the field. Because nonprofits in a leadership role often have the advantage of financial assets, reputation, and civic reach, they have an obligation to be the first responders flashing their lights and clearing the lane for others. Boards of leadership organizations must reframe their role from governance to leadership. When the nonprofit community is fragmenting, leadership nonprofits have a responsibility to build the field through research, advocacy and community organizing.
We are in challenging times and the systems supporting nonprofit organizations are buckling. The degree to which we recover is the degree that we bring down the tension in nonprofit board rooms and remind ourselves what lane to belong in and respond accordingly. Until we recognize that all nonprofit organizations are in different lanes on the same road, guidance in the board room will seem undifferentiated and lead to otherwise preventable accidents and deaths.
~Mark
References:
(1) Nonprofit Finance Fund. (2025) 2025 State of the Nonprofit Sector Survey.
(2) Flannery, H. (2026, February 10). Donor-Advised Funds and Foundations Could Eat Up Half of U.S. Individual Gifts by 2028. Institute for Public Policies.
(3) Fulop, M. (2026, February 3). Collaboration and Nonprofit Developmental Stages.
I have spent my career building connections and supporting collaborative work. I was fortunate enough to be introduced to systems thinking as part of my graduate work in public health and have used community development skills in virtually every position I have held. If you need a meeting facilitator, trainer or someone to help design a process, the reach out and connect.
