Stanford Social Innovation Review

I would venture to say that in the for-profit world, the concerns are about money as well.  In the non-profit world, the concern is money vs. the need seen in the community.  In for-profits, it’s money vs. the reality of competition.  I think neither group sleeps very well at night.

»» Posted by: Karen Wilken on November 11, 2005 12:30 AM

I agree with the spirit of your post and have spent enough time working with nonprofits in the trenches to witness it first hand. The biggest single factor effecting nonprofits is the stability of their funding. There is a ton technology that is mature, easy to use and cheap that can help create stable funding streams from individuals (which represent 80% of the $ given to charitable causes). Yet too few nonprofit leaders have taken the time to invest even the smallest amount of time to get started (literally single digit hours). I beg the nonprofits, their boards,and the foundations that support them to just get going - do something to track, communicate and fundraise online. Use free tools, use low cost fee tools, but please, please just get the nonprofits to do something.

While this might appear to be a shameless plug for Network for Good - it’s not. Visit ePhilanthropy.org for a list of all available tools and services. Listen to those old Nike ads and “Just Do It”!

Scott Case

Chairman, Network for Good

»» Posted by: Scott on November 11, 2005 06:57 PM

Great point. In many respects these larger non-profits are taking the reins as a for-profit business, charging ahead with their own marketing campaigns, and million dollar budgets, competing with national organizations that serve a different need. 

For the smaller local organizations, there is a viscous chain of events occuring.  It starts with the larger organizations raising awareness about the need for giving.  Everyone catches on and starts to give.  More organizations are formed in an effort to serve the diverse needs in a community; creating duplicated services, increased competition within local communities, and a overall sense that there just isn’t enough money to go around. 

Knowing this it comes at no surprise that the organization with the largest revenue is the United Way.  They have a national presence and are dedicated to serving local communities, investing in successful programs that are unduplicated and serve the greatest need. 

This by no means makes them great… but you have to wonder!

»» Posted by: Kelly on November 11, 2005 07:29 PM

Thanks for your comment, Karen, and welcome.  Point well taken.  Does the analogy break down at some point?  If a successful for-profit company returns a good profit margin quarter after quarter, it can expect to attract investors and its stock price to go up.  If an effective nonprofit produces measurable social capital year after year, it can expect to continue the same old scramble for funding.  The nonprofit in question might be able to attract some higher-powered board members who can bring home the lolly ($$$), making the job of fundraising marginally easier.  But it’s rare that a nonprofit will be approached by eager venture capitalists saying, “Here, take my money.  I want a piece of you.”

Welcome to you also, Scott.  I wonder if you believe that e-philanthropy has really come into its own.  I know Network for Good helps NPOs raise an impressive sum each year, but what’s the amount per organization?  Isn’t this revenue stream unlikely to diminish substantially the fundraising woes of harried EDs?

»» Posted by: Phil Anthropoid on November 11, 2005 07:35 PM

I value the insights and discussion in SSR and have used many an editorial or think piece to get my various directors on non profit Boards thinking about the sustainability of our current fundraising models.  There’s a catch-22 that I haven’t heard mentioned here.  When we do get our Boards to invest in fundraising tools from web development to better evaluation and marketing strategies, we cross the line for many influential donors who prefer that fundraising and M&G;expenses remain low, allegedly to free up monies to ‘carry out the mission.’ Often the cost of doing business spikes because a particular NPO needs to get busier developing strategy and tools that make it possible to carry out the mission. 

For instance, poverty certainly is not going away soon, (if ever) so it seems reasonable to me to do what is necessary to strenghthen those organizations that reduce poverty effectively with the best of tools. 

In the US, we get what we are willing or able to pay for.  The sector needs donors who think like investors - in it for the end game, the payoff.  Investors would not dream of expecting profit from a company that is not stable and marketable, yet directors expect nonprofits to hobble along seeking ever greater sums from donors for the same old wobbly infrastructure. 

Phil’s blog clenches it for me.  I’ve lost track of how many times and how many ways I’ve heard this discussion over the years.  We get better at our arguments from too much practice, but our practices either don’t change or they don’t change fast enough to salvage the good works. 

I’m getting out.  I don’t know what I’ll be doing, but I won’t be carrying the burden of worrying about making ends meet for my agency.  We don’t get pensions much in this business, so I’ve put a lot over the years into strenghtening staff, too.  I am one of those who fought for non-profit employees to set up their own pension plans through payroll deductions and persuaded a few to match the employee’s contribution outright or in lieu of other benefits.  So, I’m no stranger to bringing in new ideas to keep the sector fresh and viable. 

I can exit with dignity knowing that two decades in the sector have been meaningful and helpful to hundreds of individuals and scores of institutions.  However, when I look about and see what is going on in the world, am ready to lay down my arms and let a sbetter soldeir take the frontline.  We have more sophisticated names for it, but just as widespread is—the POVERTY at the root of so many social ills.  Also, now we have to deal with GLOBAL religious, cultural and social backlash on many issues and programs that were advanced by NPOS and NGOS to benefit vulnerable populations..  As a black American woman of modest family background and means, i am certainly a positive result of 20th century social change!  Regardless, I am seeing some new, unnameable social ills to season the old. 

At this stage, I wonder whether I could have done more good in the private sector building company and private wealth, perhaps employing people with living wages and first rate health benefits to better educate a generation of new men and women capable of fighting their own battles.  Then again , paying good wages and benefits might have destroyed my profitablity and thrown me out on the streets with the great unwashed!  Oh well, “ we makes our choices and takes our chances.”

Just sign me

“Passing the Baton”

»» Posted by: Naima on November 14, 2005 07:28 PM

Every time I get a mailing--a full color, good sized report--from the Pew Charitable Trust, I think how much it cost to put the publication together and how much good a fraction of that would do our small town museum. It’s a waste of good money for such a fancy mailing.

My brother works for a firm that supports the Easter Seals in a big way; that non-profit sends many of their biggest contributors on all expense paid vacations to Las Vegas every year, as a thank you gesture. Again, that is a waste of hard-worked-for money.

It’s discouraging to see these things go on and then have the same non-proifts keep asking for more.

»» Posted by: Peggy Sanders on November 16, 2005 05:33 AM

The Catch-22 you mention, Naima, is very real (I discuss it in the post titled “A Small Cost of Giving Increase” at http://philanthropy.typepad.com ).  And because we do, as you say, get what we pay for, the capitalization of nonprofits is a vexed issue.  If we measure how much we value the work of nonprofits by what percentage of our own discretionary income we give to them, we see a very sobering picture.  These numbers vary from region to region, and from income bracket to income bracket, but what is it on average, seven percent? And this includes tithing.  How much do I give to Starbucks or spend on electronic gadgets in a given year?

Peggy: Because the Pew Charitable Trusts are now a public charity, they have to meet the public support test, meaning that they need to fundraise.  I can see why they might want to attract the eyes of potential donors with their publications.  Some private foundations produce fancy publications because they have very specific audiences they want to reach and very specific goals for those audiences.  There are cases and there are cases.  What’s undeniable is that you might not feel as strongly compelled to pinch every penny when you’re sitting on top of whopping endowment.

»» Posted by: Phil Anthropoid on November 16, 2005 12:52 PM