Denise McMahan is a guest contributor for Nonprofit Hub, and is the founder and publisher of CausePlanet.org where nonprofit leaders devour Page to Practice™ book summaries, author interviews and sticky applications from the must-read books they recommend.
According to the recent Nonprofit Finance Fund State of the Sector survey, “Forty-two percent of organizations reported that they do not currently have the right mix of financial resources to thrive over the next three years.”
This level of economic uncertainty requires the kind of adaptive leadership and system-wide reckoning that feels like a daunting task until now. Authors Steve Zimmerman and Jeanne Bell have introduced a proven method for change management called matrix mapping. The matrix map cultivates sound decision-making that embraces the entire organization’s capacity rather than one program or person.
Zimmerman and Bell have accumulated a deep understanding of how the matrix map tool is working for nonprofits thanks to five years in the field with their first book, Nonprofit Sustainability. Today, The Sustainability Mindset builds on the candid self-reflection and bold decision making created by the first title.
Intro to the Matrix Map
Simply put, the matrix map allows organizations to view both their impact and profitability at the same time. Often, during a strategic planning meeting, organizations will look at the success of their programs in one conversation and then their budget in another. The map gives them a combined look so they can make better decisions. For example, if one program shows high impact but low income, the organization can turn to other sources of income that can cover the expenses. Check out a sample of the matrix map.
Zimmerman’s Favorite Example of the Matrix Map in Action
We asked Steve Zimmerman to tell us about one of his favorite case stories where the matrix mapping process brought to light the critical observation of impact and profitability simultaneously.
CausePlanet: Would you tell us about your favorite case study that implements the matrix map?
Zimmerman: One of my favorite uses of the matrix map is to help organizations make decisions that have been put off for too long. An example of this comes from a 100-year-old social service agency that had offered mental health counseling for their constituents among several other programs including financial literacy, job training and a daycare program.
Over the years, the counseling program had fallen on hard times, but because it was the founding program of the agency, they kept re-tooling it and bringing in new supervisors to improve the program. When the matrix map was completed, it showed counseling, financial literacy and job training operating at financial deficits. However, counseling also was considered a low-impact program.
Deeper analysis showed that while the program was important for the organization’s impact, there was a lot of competition for quality counselors and the organization couldn’t match competitors’ salaries. This led to poor outcomes. What is more, the job training program showed very high impact but was relatively small because the organization didn’t have enough resources to grow the program.
The organization used the matrix map to engage in a robust discussion about the future of counseling and decided to close the program. Because it was still an important component of the organization’s overall impact, it partnered with another agency in the city to deliver those services to constituents. It then invested the money that had been utilized to subsidize counseling to expand the job training program. This included partnering with local corporations for job placement on a fee-for-service basis.
The Opportunity Cost of Decision-Making
This example demonstrates using the matrix map to highlight the opportunity cost of decisions. The leadership often thinks in terms of “Should we offer Program A or not?” when the correct question is, “Should we invest in Program A or Program B?” By investing in the high-impact program, the organization was able to increase its impact and financial viability. It would not have had the resources or capacity to do so unless it focused its program offerings. By presenting the map in this way, even those leaders who strongly supported the counseling program came around to see the organization and its constituents were better off as a result of this decision.
If you’ve historically looked at your budget and your programs in isolation of one another, Zimmerman and Bell would argue that this kind of decision-making will only lead to poor sustainability for your nonprofit. Get a copy of The Sustainability Mindset and turn complexity into clarity.