The greatest challenge facing nonprofit organizations is a scarcity mindset and the underinvestment that comes from it. When checked at an early stage, the scarcity mindset is only a hindrance, but for too many nonprofits, it gives rise to a vicious cycle of short-termism that can threaten even the most storied organizations.

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Breaking the Nonprofit Starvation
Cycle
September 15, 2016
David Johnson
Interim Executive (CRO, COO, CFO)
Restructuring and Turnaround Advisor
Abraxas Group LLC
www.abraxasgp.com

2. “Nothing could be worse than the fear that one had given up
too soon, and left one unexpended effort that might have
saved the world.”
‒ Jane Addams
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Abraxas Group LLC
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3. A Scarcity Mindset
• The nonprofit industry is severely inhibited
by a mindset of reflexive scarcity and
incrementalism.
• Nonprofit leaders, and boards, see enticing
options, but many cannot see a feasible
path toward pursuit of those options.
• The challenge now is for nonprofits to take
control of their destinies and remake
themselves to better serve their missions.
For nonprofits to reach their full potential, the
scarcity mindset must be overcome.
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Abraxas Group LLC
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4. • Nonprofit funders have increased
pressure to reign in overhead
expenses.
• This pressure has created a vicious
cycle of underinvestment at many
nonprofits.
• As a result of this underinvestment,
many nonprofits are falling behind.
– Staff Morale
– Program Reach
– Donor Development
Funder Pressure:AVicious Cycle
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Source: The Bridgespan Group

5. • Nonprofits facing budgetary pressures are
tempted to understaff programs and keep
salaries at below market levels
Losing the Hearts and Minds of Employees
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Salary
Support
Development
• Employees willing to accept the low pay also find
a lack of staff development opportunities, as well
as overworked managers unable to assist
• Employees feel increasingly underappreciated
and overworked

6. Building a Strong Core
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• A viable nonprofit is one with sufficient
core mission support to expand.
• The goal should be to not only deliver
excellence in current program offerings,
but to expand and innovate.
Source: Nonprofit Assistance Fund

7. Unprofitable
• Funders dictate terms
• High turnover, low morale due to lack of
funds for salaries and development
• Program innovation stalls
• Severe underinvestment in technology,
marketing, and public relations
Profitable
• Sought out by funders
• Prized employer, able to attract, retain and
develop talent
• Program innovation accelerates
• Strategic investments strengthen
organization
No Margin, No Mission
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While nonprofit organizations do not exist to make a profit, a
positive margin (program revenues + donations – total expenses)
is essential for the long-term health of an organization.

8. Programs
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Mission / Margin Analysis
Low High
High
Low
Margin
Mission
Failure to periodically assess the “fit” of programs operated by a nonprofit can do
much to undermine an organization’s viability.

9. Strategy
What is the goal?
Competencies Funding
Components of a Nonprofit Turnaround
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Team
What are / should
we, be good at?
What resources are
available?
Who will implement
the plan?

10. Trade-offs
• Turnarounds are always challenging, and in
many ways the turnaround of a nonprofit is
especially difficult.
• Painful decisions are necessary:
 Laying off staff
 Closing down programs
 Etc.
 It is exactly these decisions which lay the
groundwork for a stronger, more vital
organization in the future.
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Abraxas Group LLC
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The one common thread of successful turnarounds is the need to put an end to the
status quo. There can be no return to the old way of doing things.

11. 120 Year Old Social Service
Agency
• Interim COO
• Managed turnaround
• Organization is now under
new leadership and is
Substance Abuse Treatment
Provider
Alternative Elementary
School
• Board Member
• Oversaw development of
strategic plan
• Growth has accelerated,
and morale is improved
• Advisor
• Developed strategic plan in
concert with leadership
• Organization returned to
profitability and key
initiatives are underway
Driving Change in Nonprofits
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Abraxas Group LLC
www.abraxasgp.com

12. • David Johnson is a career change agent who has served as nonprofit
organizations as an advisor, board member, executive coach, and
interim manager.
• David has several publications to his credit and is a regular speaker on
the topics of change management, performance improvement,
turnaround and restructuring. He received his MBA from the
University of Chicago and completed his undergraduate studies at
Fairleigh Dickinson University.
David Johnson
Abraxas Group LLC
www.abraxasgp.com
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Email: david@abraxasgp.com
Ph: 312-505-7238
Twitter: @TurnaroundDavid