The Language of Nonprofits

Last night I attended a joint Net Impact Boston/Young Nonprofit Professionals Network event called "The Role of Philanthropy in Solving Social Issues." It featured Phil Buchanan, CEO of the Center for Effective Philanthropy in Boston. While the talk was promoted as being about philanthropy, Mr. Buchanan spent most of his time actually speaking about the "distinct value" and purpose of nonprofits and foundations as separate from their for-profit counterparts. In fact, much of Mr. Buchanan's talk was centered on a discussion of why nonprofits and businesses cannot and should not mix.

One major point of contention for Mr. Buchanan was the idea that all we need to do is take the best practices from the business world, apply them to the nonprofit sector, and instantly nonprofits will be more effective.  This was interesting to me because, while perhaps a bit oversimplified, this explanation is actually the reasoning I used to get into business school, and I think many of my classmates would agree with me. I've worked in nonprofits where the organizations' leaders had no idea how to manage the financials, or had no leadership and management training--and the organizations suffered for it. So why wouldn't I want to go get my MBA, learn how they do it in the business world, and then bring those ideas back to my nonprofit?

Interestingly, Mr. Buchanan said that while nonprofits can and must always find new ways to be effective, "business doesn't have a monopoly on effectiveness." And in fact, to assume that business principles automatically apply to nonprofit scenarios is to deny that the economics of each organization are actually different. For-profit entities have one basic performance measure; no matter what a business sells or what industry it's in, that company can be compared to other businesses using one common language: Profit. A company, no matter how ethical or charitable it might be, would never consistently charge less than what it costs to provide a service or product. And yet, this is what nonprofits do every day.

Mr. Buchanan went on to say that thinking we can have one common metric for performance in nonprofits is foolish: even if we could show that "my donation planted these trees," it's impossible to compare across different projects. Because of this, we cannot assume that taking the language of business (ie: profit) and transposing it onto a nonprofit organization will work. This was one of the big themes of the night: Nonprofits and foundations must resist the temptation to use business jargon when evaluating and implementing their programs, and instead develop their own language (a big example given was the term "Venture Philanthropy," which Mr. Buchanan said was basically a poorly-used business analogy to venture capital that made no sense).

This led into the second big theme of the night: nonprofits have a distinct purpose (separate from business and government) and it needs to stay that way. Mr. Buchanan likened nonprofits to your friendly uncle at the business dinner table who leans over and tells you, "you've had one too many drinks tonight." Nonprofits, he said, often do things that governments and businesses can't or won't do, and for that reason they need to operate differently. Sure, nonprofits should be impact-driven and they should be effective, but they need to develop their own way of getting there. And impact, he said, is not just a business term--it's about getting results, and that's something that everyone wants.

While there were many points throughout the night that I agreed with, by this stage in the talk, I got the feeling that things were taking an unexpected "us against them" turn. Yes, I can see that nonprofits are unique entities and shouldn't just replicate the business world--but should we really keep our nonprofits so separate from business and government that they don't interact? With so much talk these days about partnerships and exchange between nonprofits and for-profits, it was surprising to hear someone so clearly advocating such a distinct divide.

All this talk of nonprofits versus for-profits really hit home for me because this month I start work as a corporate philanthropy intern for a major beverage company. Given what he has said about the distinct purpose of nonprofits (and the fact that business should essentially stay out of the way), I wondered what Mr. Buchanan thought about corporate philanthropy? In general, he said he's found corporate philanthropy to not be very effective. While some companies appear to be doing real work in this area (he mentioned Levi Strauss as an example), most are not. In fact, Mr. Buchanan said that overall he believes corporate philanthropy is not philanthropy--that it's more about a strategic alignment of a brand and a cause than doing real work. He said it's "healthier" to have boundaries around nonprofits, business and governments, and that in fact there is something "scary" about companies being able to define what social causes are important.

My follow-up question to him (which I was unfortunately unable to ask at the time) is: what's so wrong about a strategic alignment of brand and cause? Just because a company is blurring the boundary between itself and nonprofits doesn't mean it's not doing good things. If WalMart wants to deliver low-cost organic produce to the masses, for example, should we say no just because this initiative is coming from a big box store? Sure, not all corporate philanthropy efforts are as effective as they could be, but neither are a lot of nonprofits. It just doesn't seem ok to dismiss for-profit community efforts just because that support isn't coming from the nonprofit sector.

In the end, it was a thought-provoking evening and Mr. Buchanan was an incredibly engaging speaker. He raised some very important questions, and he got me (and the rest of the attendees) thinking, which is always exciting. But now I'm curious: what do you think about the type of relationship that should exist between nonprofits and business? Should we have a clear division, or are partnerships the way to go? I'd love to know your thoughts.

Some additional points and resources that Mr. Buchanan raised in his talk:

  • Concern about nonprofit impact metrics: Mr. Buchanan said that finding a common language to discuss impact was a huge challenge, with no right answer. He mentioned the Center for What Works, New Philanthropy Capital, and Root Cause as three organizations engaged in conversation around this issue.
  • Nonprofit mergers and joint ventures: As you know from a recent post of mine, the topic of mergers in the nonprofit sector is a popular one. Mr. Buchanan addressed this issue by suggesting that all nonprofits ask themselves, "How can we create the most impact?". If that means a merger, that's what an organization should do. However, he cautioned that collaboration is simply a means to an end (and the not the end itself), and that nonprofits should not collaborate just for the sake of collaboration.

Social Entrepreneurship 101

Hi all, I came across this great intro presentation on the basics of social entrepreneurship and how to get a job in the field. It was put out by the Kelley School of Business at Indiana University. It's maybe a little specific (since it looks like it was put out with Kelley students in mind) but it's still an interesting resource. Plus, I always love seeing MBA career centers actually promoting "non-traditional" career paths like social entrepreneurship and CSR.

For those of you looking for these kinds of jobs, what strategies and tips have you found most useful? What advice would you give to other job-seekers?

-Ashley

The World is a Mess

There's an incredible video making its way around the internet called "The Girl Effect," and it starts with this statement: The World is a Mess. I've watched this short clip a bunch of times, and it never fails to give me chills. Check it out here:

Pretty powerful, isn't it?

As the video closes, a sentence comes up on the screen: "Invest in a girl and she will do the rest". This got me thinking: who out there is really investing in girls?

The good news is that a lot of organizations are. The Girl Effect is, in fact, a collaborative effort between the Nike Foundation, the Novo Foundation, and a handful of other international organizations. Beyond just this project, there are many other well-known NGOs also working to promote education and economic empowerment for women and girls around the world, including Room to Read and Heifer International (both of which have terrific girls' education and gender equity projects). Of those with a U.S. focus, two of my favorites are Girls on the Run and Girls Inc (more along the lines of girl empowerment and confidence building). In the end, it seems that a whole host of domestic and international organizations understand the value of putting girls first.

But this good news is, in my opinion, also the bad news. A quick search on Guidestar for nonprofits with the word "girl" in their title produced a list of 20,177 results. Ok, so I recognize that this isn't the most scientific of all surveys, but it raises a crucial question: At what point are there just too many nonprofits out there doing the same thing? Yes, in theory lots of organizations should mean more resources, more innovation, more impact--but does it? Or does this huge contingent of girls' organizations (or any kind of cause for that matter) simply dilute everyone's collective efforts? The nonprofit community seems divided on this one. While some folks clearly think that this redundancy concern is a non-issue, the topic of nonprofit mergers is increasingly on the front burner. Interestingly, a February 2009 Bridgespan Report stated that mergers should not just be a tool for nonprofits in tough times:

...nonprofit mergers often come about through default—due to financial distress or leadership vacuums. At the same time, relatively few nonprofits are using M&A strategically, as a way to strengthen organizations' effectiveness, spread best practices, expand reach, and to do all of this more cost-effectively. Yet the potential for M&A to create real value in the nonprofit sector exists, particularly if more philanthropists take on the mantle of matchmaker and help nonprofits explore and evaluate M&A opportunities.

To me, the idea of nonprofit mergers seems obvious: given the increasingly competitive fight for fundraising dollars, it makes sense that we'd be entering our own form of nonprofit natural selection, truly a "survival of the fittest." But therein lies the rub, as they say: how can organizations--already strapped for financial and staff resources--ensure that they have the skills and strategy in place to guarantee that these mergers are not doomed to fail from the outset? Looking back five years or ten years from now, what will we say made the difference between mergers that worked and those that didn't? 

And here's where you come in: what do you think about the issue of "too many" nonprofits? Are mergers the way to go? Do you have other examples of two organizations becoming one--and it being a success? I'd love to hear what you think.

Other Related Resources:

Call for Submissions

Are you a summer intern working in CSR, nonprofit management, or venture philanthropy? Do you work in fundraising, cause marketing or social enterprise? If you're working to create your own community of change at your workplace or school, The Changebase wants to help share your story. If you're interested, contact me and we can talk more about details: what you'd like to say, questions to cover, word limit, etc.

Remember, The Changebase is meant to be a resource for learning and sharing, and that can't happen without your input!

-Ashley

Ethics and MBAs

Rule #1 of business school: Q: What is the #1 responsibility of management?

A: To maximize shareholder wealth.

I remember hearing this from one of my professors for the very first time; fresh-faced and ready to change the world through my new business education, I was immediately thrown back: surely this can't be the only goal of management, I thought. What about concerns for customers, for employees, or for the environment or society?

As it turns out, if you ask any MBA student at any MBA program, you're bound to get the same answer to this question. And while it may not be 100% true (even the most straight-laced finance concentrators would agree that this idea is oversimplified), the theme of maximizing returns to shareholders is recurring and prevalent. And it raises a second, important follow-up question:

What does it say about MBA students if this is the most important question they learn to answer during their two years of school?

Over the last few months, as news of corporate scandal, greed, and bankruptcies continues to make headlines, my business school class discussions have taken somewhat of an ethical turn. Through conversations about Enron and greed, McDonald's and nutrition, and Google and online privacy, it's clear that my professors want us to think about how we would handle real-life decisions where the line between right and wrong is blurred. But in my opinion, none of them have quite gotten there yet. Yes, we need to be discussing these issues, but to say that a few isolated classes are sufficient to ensure my classmates and I have strong, ethical compasses is surely a stretch.

I've been thinking and reading a lot about this recently, and it appears that others have been too. Harvard Business Review has been hosting an especially interesting online debate featuring a series of posts on "How to Fix Business Schools". One of my favorite posts in this series is from Angel Cabrera, the president of the Thunderbird School of Global Management, called "Let's Professionalize Management". In his article, Cabrera advocates the institution of a business version of the Hippocratic Oath, a basic do-no-harm for management. And here's the kicker:

A professional ideology of service to the greater good is not at odds with the principle of shareholder value creation. It actually grounds shareholder value morally and it integrates it in a richer multidisciplinary context. It reaffirms the importance of shareholder value as both a source of societal prosperity in itself as well as an indicator of other forms of value. But it acknowledges that businesses create multiple forms of value and it attributes to managers responsibilities that go beyond profit maximization.

I just love this paragraph. The idea of grounding shareholder value in a moral context just resonates with me. As a "conscious consumer", I support companies like Target because I have witnessed the kind of commitment they make to the community; while I may not own Target stock, I would like to believe that its shareholders feel proud to own a part of a company that's doing good things.  And that last sentence about "multiple forms of value" in measuring business success is so true.  

So it seems that others are recognizing the inherent flaws in this oversimplified question and answer set. But where do we go from here? One of the steps I'm most excited about is my own school's entry into the U.N. Initiative Principles for Responsible Management. Boston University School of Management now joins over 200 other schools committed to "responsible management education, research and thought leadership globally".

In the current academic environment, corporate responsibility and sustainability have entered but not yet become embedded in the mainstream of business-related education. The PRME are therefore a timely global call for business schools and universities worldwide to gradually adapt their curricula, research, teaching methodologies and institutional strategies to the new business challenges and opportunities.

Certification is a great start, but I'll be curious to see what the next steps look like. In the meantime, I wonder: how are other business schools approaching and integrating the topic of ethical leadership ? What success stories can you share from your own classroom experiences? What have you seen that hasn't worked? And how much do you hate that stupid shareholder wealth question?! I certainly do.

A few more interesting resources on Ethics and MBAs: