Everything old is new again; and nonprofits should stay that way

A couple of weeks ago, I received a press release about the new Palindrome Advisors group with the subject line, “Redefining the Nonprofit Model.” Doubtless you’re all familiar with the genre: A group of business people get together and decide that the nonprofit sector hasn’t cured cancer or ended poverty because people in the nonprofit sector are stupid and lazy, and that an infusion of good old hard-headed American for-profit business practices will compensate for that.  Voilà: instant Great Society!

This particular redefinition is truly revolutionary:

One hundred advisers, including many of Silicon Valley’s elite, are coming together to disrupt the nonprofit space….[They] have committed to one full year of serving on the board of a nonprofit….[and] attending monthly salons where they will discuss the specific pain points of their assigned nonprofits and attempt to find solutions as a team….[This] is part of a larger movement . . . to make the nonprofit world more efficient….[Founder Zaw Thet states,] “This is just the start of how [we] will disrupt the nonprofit sector and create new, innovative ways for business leaders to contribute….Before [this], there was no easy path for nonprofits to find experienced leaders to help them at a board management level. A board role is not just about fundraising, but includes developing growth plans, operational efficiency, cause marketing, customer relationship management, event planning, and much more.”…In order to maximize results, [the group] carefully matches advisors to nonprofits based on their skills, interests and a nonprofit’s needs.

So let’s review:  A bunch of business people are going to sit on nonprofit boards of directors! And then periodically those business people will get together and talk about how to be better board members! As board members, they will not only fundraise, but also contribute their skills! They’ll join boards based on their interest in the nonprofit’s mission! And they’ll seek ways to improve the whole sector!

The accumulation of these radical notions caused me to swoon, but the one idea that really had me down for the count was that the entire purpose of the endeavor was to “disrupt the nonprofit space.” Do nonprofits that are trying to serve their clients really need disruption in their management to supplement the disruption of funding they constantly face, the disruption of their staff produced by those funding crises, and the disruption of their ability to operate smoothly or to secure resources when their message is being drowned out by a constant drumbeat of demands for “reinvention”?

As I fanned myself back to consciousness, I was struck once more.   This time the weapon was yet another article about hybrid corporate forms designed to enable nonprofits to earn their own revenue and stop “begging.”  Whether the discussion purports to be about Low Profit Limited Liability Corporations (L3Cs) or public benefit corporations or triple bottom lines, the argument is always the same:  Nonprofits should just get with the capitalist program, identify lucrative markets, and earn their keep like every other good red-blooded American.

This approach ignores the fact that nonprofit markets usually consist of clients who are not profitable to serve—because if they were profitable to serve, the for-profit sector would be serving them.  The better a nonprofit is at finding and serving its market, the poorer it will be, because though for-profit clients are a profit center, nonprofit clients are a cost center.

These two news items have one thing in common:  They ignore the fact that what nonprofits need isn’t more advice, it’s more money. When business people are ready to provide that—when they’re ready to serve on boards, not as agents of disruption but as securers of resources, and when they’re ready to advocate for a tax system that will underwrite the necessary work done by the voluntary sector—well, that will be news.

Author: Kelly Kleiman

Kelly Kleiman is a freelance writer on the arts, feminism, travel and social justice. Her reportage and essays have appeared in the New York Times, Wall Street Journal, Washington Post and Christian Science Monitor, among other dailies; in magazines, including In These Times and Dance; in the alternative press; on the BBC; and on Chicago Public Radio, where she’s one of the “Dueling Critics” and a contributor to the Onstage Backstage theater blog. She is also a consultant to charities and editor and publisher of The Nonprofiteer, a blog about charity, philanthropy and nonprofit management. She holds undergraduate and law degrees from the University of Chicago.

9 thoughts on “Everything old is new again; and nonprofits should stay that way”

  1. Mother Teresa went to a wealthy businessman and told him she needed money to help the poor. The man said, “That is wonderful but what is your plan?”
    Mother Teresa replied, “My plan is that you will give me money and I will use it to help the poor.”

    I always found it strange that getting funding from the wealthy usually involved providing some opportunity for them to reap some gain (publicity/prestige) over and above the tax deduction, while regular folks give out of a pure desire to help. Now that I think of it regular folks were always the ones who gave the most (in time and money) and we probably would have done better to ignore the wealthy patrons who needed so much hand holding and primping. The last thing a program needs is prema donnas, they suck up too much energy.

  2. By now the idea that all that [government, nonprofits, etc.] need is leadership by businessmen should be ranked down with the idea that all we need is a Benevolent, Wise Dictator.

  3. a press release about the new Palindrome Advisors group with the subject line, “Redefining the Nonprofit Modeledom Tiforpnon eht Gninifeder”.

    FTFY.

  4. What? You don’t think that those very productive people can improve the nonprofit sector????

    Ayn Rand rears her ugly head again.

    Seems more like the fox wanting into the chicken coop so he can make the distribution of the chicken feed more efficient.

    BD

  5. “Disrupt” is jargon word in the world of hi-tech entrepreneurs — meaning to “transform” or “change”. Mobile phones “disrupted the telephone space”.

  6. These are the same people currently trying to ruin the teaching profession. People with only a little knowledge of economics are dangerous. Though the question is, how much more would they need to become less arrogant, and why are they all quitting school before they get to that point?

    Or, are they almost all that way? I studied with the great Lee Friedman, and he didn’t have an attitude problem!

  7. Not all nonprofits have unprofitable clients–fancy universities are one counterexample: wealthy churches are another; strong HMOs like Kaiser Permanante are a third.

    The distinguishing characteristic of nonprofits is that making money is only a secondary goal. (It is a goal; all nonprofits must turn a profit; they wouldn’t exist otherwise.) The primary goal is the service they are providing. This makes it possible for them to display integrity–which is useful in services such as higher education or health care. For-profits have a much harder time with integrity–management is a short-term player and does very well when a for-profit monetizes its reputation. Non-profits aren’t immune: Aramony. But they have better antibodies.

  8. Last time they tried this, they had Gary Cooper on their side.

    I think Ebenezer’s point about mission is crucial. If a for-profit isn’t making money in its current line of business, it makes perfect sense for it to get into some other line of business instead. Nonprofits (generally) don’t get to say “hey, there’s no money in feeding the hungry/educating the masses/providing a home for great music or art/etc, let’s go and do something else.” (Well, sometimes they do, but it’s rather rather and more convoluted than in the for-profit world.)

    On the other hand, the fact the nonprofits have to put all their money back into their business can also foster a serious agency problem for the successful ones. See, for example, the lovely headquarters building of the National Geographic Society.

  9. Non-profits are forbiden from making a profit, hense “non-profit”. They are not however forbiden from bringing in more than they pay out. They can stash cash for a time in an account for operating funds, put it in a capital funds account, donate the money to another non-profit,… The catch is that it must be done according to the tax code, according to the organizations’ bylaws and voted on by the board of directors and all under the nosey supervission of the public and the IRS.

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