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Nonprofits: Choosing a Path for Growth
Topics: Social Enterprise-Nonprofit OrganizationsSocial enterprises are traditionally organized along one of two lines: The affiliation model favors decentralized control, while the branch model concentrates control at a central headquarters. In analyzing some three hundred social enterprises, HBS assistant professor Jane Wei-Skillern and Duke-based colleague Beth Battle Anderson found that many nonprofits that had expanded or were considering doing so preferred the branch model, even though it is characterized by slower growth. To learn more, Baker Librarys Carla Tishler interviewed the pair. An excerpt from Wei-Skillern and Andersons remarks follow.
While our survey did not explore the reasons for choosing branching over affiliation, some nonprofits may prefer branching because it allows the nonprofit leader to exert the most control since the new organizational units are established and managed centrally. This level of control is conducive to protecting the organizations brand and reputation and coordinating overall strategy and operations. A high degree of control might be particularly desirable when the program being implemented is complex or relies heavily on intangibles; when an organization is in the early stages of growth and is interested in testing and refining its model in new locations; or when a nonprofit has less ambitious, less geographically dispersed expansion plans.
We were not surpised that our research suggests that there is no single, optimal structure for nonprofit geographic expansion. Rather, different structures appear to have different strategic implications, and nonprofits must consider how these implications align with their particular organization and expansion goals. In addition to branch organizations being smaller, being less ambitious, and growing more slowly, there were some notable differences across the branch, affiliate, and plural (organizations with both branches and affiliates) structures. For example, although plural organizations reported signifi-cantly greater advantages than pure branch or affiliate models, they also claimed to have faced greater challenges and seem to require stronger, more committed leadership. And branch organizations reported more challenges with human-resource issues, while affiliates asserted greater challenges in governance.
These patterns do not necessarily apply to all nonprofits, but they suggest that nonprofit leaders should anticipate some of the distinct challenges that seem to be associated with particular organizational structures.
For more information, visit http://hbsworkingknowledge.hbs.edu/item.jhtml?id=3697&t=nonprofit.
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