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The Organizational Lifecycles of Nonprofits: Decline/Crisis


In the Decline/Crisis phase, the organization is facing crises in key areas, including repetitive leadership turnover, loss of major funding, a fractured board, etc. Look to Renewal for road map out of crisis. 


Standards for Excellence Guiding Principles

Characteristics and Priorities

Maryland Nonprofits' Resources

Mission, Strategy and Evaluation

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  • Evidence that products and service quality has greatly declined

  • Referrals have dropped significantly

  • No evaluation process

  •  Licensing or accrediting is at risk

  • Community questions need for or tactics of the organization

Leadership: Board, Staff and Volunteers

Four people putting items into brown paper bags

  • Board rubber-stamps decisions

  • Attendance low

  • High turnover among Executive staff and board

  • Conflict between board and staff

  • Conflict among board members

  • Cannot agree on primary mission

  • Executive Director makes all decisions without consultation with board, allows board to make all decisions

  • Executive Director inaccessible, unable to meet deadlines, priorities

  • Staff complaints/grievances

  • Consulting: Board Development
  • White M on red background Standards for Excellence Packet: Board/Staff Partnership
  • White M on red background Standards for Excellence Packet: Board Responsibilities
  • White M on red background Standards for Excellence Packet: Succession Planning
  • White M on red background Standards for Excellence Packet: Sustainability and Sustainability Planning 

Legal Compliance and Ethics

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  •  Fraud

  •  Harassment

  •  Lawsuits

  • Investigation

  • Conflicts of Interest

  • Related-party transactions

  • White M on red background Standards for Excellence Packet: Legal Requirements Checklist
  • White M on red background Standards for Excellence Packet: Reporting Misconduct and Whistleblower Protection
  • White M on red background Standards for Excellence Packet: Conflicts of Interest
  • White M on red background Standards for Excellence Packet: Code of Ethics

Finance and Operations

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  • Poor audit findings or “going concern” letter

  • Critical records (tax forms, personnel policies, client files) cannot be found

  • Staff unable to present clear financial picture

  • Unable to meet payroll

  • Behind on invoices

  • White M on red background Standards for Excellence Packet: Risk Management and Insurance
  • White M on red background Standards for Excellence Packet:: Internal Controls and Financial Policies

Resource Development

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  • Loss of more than one key funder

  • Termination of contracts

  • Loss of paying customers

  • New directions in fundraising always discussed but not acted on

  • White M on red background Standards for Excellence Packet: Resource Development Planning

Public Awareness, Engagement and Advocacy

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  • Negative press - Loss of trust with stakeholders

  • Key constituents cannot define purpose, services of organization

  • Perception or rumor organization is in crisis

  • White M on red background Standards for Excellence Packet: Educating and Engaging the Public

 

Better governance and management practices allow you to focus on meeting your mission, strengthen fundraising, improve decision-making, prepare for transition, minimize risk, and engage your board. Learn more about the Standards for Excellence Code - and embark on your organization's path to Excellence.

To see resources for other stages or to return to the Nonprofit Lifecycle home page, click below:


Diagram showing the steps of nonprofit lifecycles, starting at start-up, then growth, peak performance,  decline/crisis, and ending with renewal.

 

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