The nonprofit sector has never faced more difficult challenges — or had the potential to create greater impact — than it does today, argue William F. Meehan III, director emeritus of McKinsey & Company, and Kim Starkey Jonker, president and CEO of King Philanthropies, in their new book, Engine of Impact: Essentials of Strategic Leadership in the Nonprofit Sector.

But for nonprofits — by 2025 projected to need up to $300 billion more annually beyond currently expected revenues in order to meet demand — to benefit from the largest intergenerational wealth transfer in U.S. history (an estimated $59 trillion expected to change hands between 2007 and 2061), they will have to "earn the right to expand [their] role and maximize [their] impact" in what Meehan and Jonker refer to as the coming "Impact Era."

Maintaining focus is key:

They emphasize the importance of a well-crafted mission statement, and caution organizations against mission creep, even if avoiding the latter means saying no to a new funding source.

According to the Stanford survey, few funders require (or fund) impact measurement, and only 57 percent of nonprofit executives and staff regularly use findings from evaluations to refine their theory of change or adjust their overall strategy. Taking such a step, as well as making unpopular decisions and saying no when necessary, requires insight and courage, write Meehan and Jonker — qualities exhibited by the likes of successful social entrepreneurs such as Drayton, Landesa founder Ron Prosterman, and AIL founder Sakena Yacoobi. Indeed, they are the kind of essential leadership qualities that "even inexperienced" funders can recognize, the authors write, and as such they should be included in funders' grantmaking criteria.

Read the full article on Engine of Impact by Kyoko Uchida at Philanthropy News Digest