Excellent and thought-provoking article. Thank you.
Although the article relates only to the USA, the concerns raised are very pertinent to my own organization.
I have always been interested in the application of for-profit approaches to non-profit organizations, in the interest of making the latter more efficient, more diverse even. But I fear adoption of finance-speak and practices, with little reflection about why and how much and how (or not) appropriate. Of course, the adoption of these practicies is a result of the insufficient valuing of the role of international organizations, scientific research, etc., and denial of the reasons why these should be publicly funded and minimally dependent on the private sector.
Well said, Ms. Sawyer! What Gary Jenkins’ research reveals is shocking, but can’t be unexpected: all things expensive and prestigious go mostly to those who can pay. However, I would beg Mr. Jenkins not to conflate the threat of finance’s growing dominance on boards of large, influential nonprofits with the efficacy of tools (not principles) such as strategic planning and evaluation in nonprofit management. Finally, one more argument for diverse boards. In my experience, they are more willing to explore “softer” organizational strategies, such as identifying core values, or even simply getting to know fellow directors outside their circles.
Clearly a well researched article with one gap….the many non profits that provide either funding for or direct services to diverse populations. United Way, National Multiple Sclerosis Society and the Alzheimer’s Association are just a few of those out there battling for the donors’ support and for high profile Board members.
Additionally, in 1997, I and my then partner, launched a consultancy dedicated exclusively to non profits. Our business model was to “preach” the critical nature of running a non profit with for profit business practices. Our mantra was “non profit is merely a tax status, and beyond that, every business must consistently make a profit.” Folks thought we were speaking a foreign language! The non profit community has come a long way since then.
I wish there had been someone as alert as Mr. Jenkins speaking out when hospital board make up went “business.” The demise of the community based hospital, and the privitazation of existing hospitals in the US can be laid at the feet of those who saw the existance of a medical system responsible to the people of the community as “non-viable”. With the collusion of insurance companies, who often gave support to people biased toward them in elections, these boards became heavily weighted with “good business practice” personnel, who voted themselves out of existance. I hope this can be averted in the non-profit world!
Nice article covering all aspects, though with a cautionary note. Indeed, I agree there needs to be a balance of power, not to compromise on the fundamental purpose of the non-profit. However, good governance, good financial discipline and flawless execution is much called for in the non-profit sector.
I had stepped out from my corporate career to the non-profit world. My aim was to bring in Execution Excellence as a theme in the non-profit sector. However, by and large, I felt I was not welcome. Despite the gross inefficiencies in handling programs and finances, many were still feeling comfortable because of the endless donations that will pour in anyway through some campaigns. This was in India, and I am not generalizing that for pan India nor for pan world. But the sample that I got left me very disappointed, and I got back to corporate life after a year, though my original intention was to stay in the non-profit for the rest of my career.
I see a positive light in this trend, and the extremes anyway will even out after a while!
Well said, Jacob.
Sarah, I would suggest reading Jim Collin’s “Good to Great and the Social Sectors” to answer your question about what “profit” means in a non-profit. It might be something your board, (with or without bankers and lawyers) might want to consider. With regard to your comment, “Given the often-questionable financial practices of banks and other such institutions, why should a non-profit follow their lead? Unless, however, the government can bail nonprofits out as well.”, please know that the vast major of institutions receiving a bailout paid back the money quite a while ago, along with hefty interest payments. The government made out quite well on the deal.
This is a great read. Despite what may seem like shameless self-promotion, our work is highly related. Please see my dissertation published in 2012: http://gradworks.umi.com/35/18/3518135.html
My work is specific to 2006 & 2009 however, and is broader in scope (not just looking at finance but large for-profits as a whole). I am highly encouraged by your work because it is precisely this kind of detailed and in-depth study that advances the discussion and research simultaneously. What you found here is along the lines of what I found. I too utilized the Chronicle of Philnathropy 400 (and crossed it with the Fortune 400). Our message in the end is the same, the sector needs to be mindful. Thanks for this contribution to the field.
Very good article covering all angles, however with a preventative note. In reality, I concur there should be an equalization of force, not to bargain on the basic motivation behind the non-benefit. In any case, great administration, great budgetary control and impeccable execution is greatly called for in the non-benefit division.
COMMENTS
BY Jacqueline Sawyer
ON June 4, 2015 11:41 PM
Excellent and thought-provoking article. Thank you.
Although the article relates only to the USA, the concerns raised are very pertinent to my own organization.
I have always been interested in the application of for-profit approaches to non-profit organizations, in the interest of making the latter more efficient, more diverse even. But I fear adoption of finance-speak and practices, with little reflection about why and how much and how (or not) appropriate. Of course, the adoption of these practicies is a result of the insufficient valuing of the role of international organizations, scientific research, etc., and denial of the reasons why these should be publicly funded and minimally dependent on the private sector.
BY Barbara Gibbs
ON June 5, 2015 12:11 PM
Well said, Ms. Sawyer! What Gary Jenkins’ research reveals is shocking, but can’t be unexpected: all things expensive and prestigious go mostly to those who can pay. However, I would beg Mr. Jenkins not to conflate the threat of finance’s growing dominance on boards of large, influential nonprofits with the efficacy of tools (not principles) such as strategic planning and evaluation in nonprofit management. Finally, one more argument for diverse boards. In my experience, they are more willing to explore “softer” organizational strategies, such as identifying core values, or even simply getting to know fellow directors outside their circles.
BY Lizanne Bomhard
ON June 6, 2015 04:56 AM
Clearly a well researched article with one gap….the many non profits that provide either funding for or direct services to diverse populations. United Way, National Multiple Sclerosis Society and the Alzheimer’s Association are just a few of those out there battling for the donors’ support and for high profile Board members.
Additionally, in 1997, I and my then partner, launched a consultancy dedicated exclusively to non profits. Our business model was to “preach” the critical nature of running a non profit with for profit business practices. Our mantra was “non profit is merely a tax status, and beyond that, every business must consistently make a profit.” Folks thought we were speaking a foreign language! The non profit community has come a long way since then.
BY Angela Ryan
ON June 6, 2015 06:40 AM
I wish there had been someone as alert as Mr. Jenkins speaking out when hospital board make up went “business.” The demise of the community based hospital, and the privitazation of existing hospitals in the US can be laid at the feet of those who saw the existance of a medical system responsible to the people of the community as “non-viable”. With the collusion of insurance companies, who often gave support to people biased toward them in elections, these boards became heavily weighted with “good business practice” personnel, who voted themselves out of existance. I hope this can be averted in the non-profit world!
BY Jacob Varghese
ON June 10, 2015 11:37 PM
Nice article covering all aspects, though with a cautionary note. Indeed, I agree there needs to be a balance of power, not to compromise on the fundamental purpose of the non-profit. However, good governance, good financial discipline and flawless execution is much called for in the non-profit sector.
I had stepped out from my corporate career to the non-profit world. My aim was to bring in Execution Excellence as a theme in the non-profit sector. However, by and large, I felt I was not welcome. Despite the gross inefficiencies in handling programs and finances, many were still feeling comfortable because of the endless donations that will pour in anyway through some campaigns. This was in India, and I am not generalizing that for pan India nor for pan world. But the sample that I got left me very disappointed, and I got back to corporate life after a year, though my original intention was to stay in the non-profit for the rest of my career.
I see a positive light in this trend, and the extremes anyway will even out after a while!
BY Dee
ON June 16, 2015 10:09 AM
Well said, Jacob.
Sarah, I would suggest reading Jim Collin’s “Good to Great and the Social Sectors” to answer your question about what “profit” means in a non-profit. It might be something your board, (with or without bankers and lawyers) might want to consider. With regard to your comment, “Given the often-questionable financial practices of banks and other such institutions, why should a non-profit follow their lead? Unless, however, the government can bail nonprofits out as well.”, please know that the vast major of institutions receiving a bailout paid back the money quite a while ago, along with hefty interest payments. The government made out quite well on the deal.
BY Simone Grant
ON June 16, 2015 10:19 PM
This is a great read. Despite what may seem like shameless self-promotion, our work is highly related. Please see my dissertation published in 2012: http://gradworks.umi.com/35/18/3518135.html
My work is specific to 2006 & 2009 however, and is broader in scope (not just looking at finance but large for-profits as a whole). I am highly encouraged by your work because it is precisely this kind of detailed and in-depth study that advances the discussion and research simultaneously. What you found here is along the lines of what I found. I too utilized the Chronicle of Philnathropy 400 (and crossed it with the Fortune 400). Our message in the end is the same, the sector needs to be mindful. Thanks for this contribution to the field.
BY Shri Parascorp
ON June 19, 2015 02:42 AM
Very good article covering all angles, however with a preventative note. In reality, I concur there should be an equalization of force, not to bargain on the basic motivation behind the non-benefit. In any case, great administration, great budgetary control and impeccable execution is greatly called for in the non-benefit division.