Friday, November 03, 2006

"Non-profits should be run like a business"

How many times have we all heard that one? From board members, relatives, U.S. Senators from Iowa, ad nauseum. Like most non-profit professionals I used to roll my eyes and get defensive every time I heard this piece of sage advice, and hence used to get eyestrain a lot.

Some folks in our field are firing back to say: run like a business? Why aim so low? The clearest exponent of this view is someone who's never worked in non-profits: business consultant and writer Jim Collins in his monograph Good to Great and the Social Sectors: Why Business Thinking Is Not the Answer. I've read it and he makes a valid point: most businesses are not run well. That's the nature of the free market, for every successful Southwest Air there are several sluggish stupid failing airlines. People telling non-profits to operate "like a business" always cite the few smart winners while forgetting that the norm is mediocrity, like sports fans who remember Mickey Mantle and grumble that today's players can't carry his cleats. (No they can't and neither could 99% of the players in 1960, because he was MICKEY FLIPPING MANTLE, duh). If the business world was so beautifully well-run would Dilbert cartoons be pinned up in a million cubicles?

But honestly that response, while accurate, is responding to a straw man - this cliche is not actually trying to tell non-profits how good to be but something different. Through some instructive experiences I've come to the idea that folks parroting it are completely wrong in the way they usually mean it and dead on the money in a different way.

Most often that statement is rooted in the idea that non-profits are not operated in a business-like manner: that we don't do "real budgeting" or have to comply with normal legal standards or ever fire poorly-performing staff, etc. Perpetrators of such silliness invariably turn out never to have worked for a non-profit and are astonished to discover that we don't actually operate in the same manner as Aunt Bea's annual bake sale for Opie's scout troop.

Spend any amount of time working for or with smart successful businesspeople however, and a blunt truth is inescapable: that the non-profit sector needs to learn their essential skill of setting and enforcing choices and priorities in our work. We talk endlessly about that nowadays, boy do we ever -- walk past a non-profit-management classroom and "strategic planning" and "SWOT analysis" will pop into your head like that old TV jingle you can't stop humming -- but we don't yet truly get it in the way successful businesspeople do. Deep down we still think that our noble self-sacrifice in accepting lower salaries than we "could be making in the corporate world" exempts us from the free-market dynamics which focus the minds of those poor soulless automatons over in Dilbert-land.

And so we write four-paragraph-long mission statements, and lovely business plans which never get read again, and my favorite the strategic plan which declares _ten_ top priorities (half of which begin "Address issues of..."). We start big new programs because we've heard that "foundations are throwing grant money at that", without bothering to research what foundations are and are not actually willing to fund in that subject. (Let alone penciling out what the new program will cost when the startup grant ends and we can't bear to shut it down because it's become so essential that we meanwhile re-framed our mission statement to include it).

Poorly-run businesses do those things, and the market punishes them until smarter businesses kill them off. The same, eventually, is true for non-profits. The most-important thing we can learn from the successful businesspeople is how to make a disciplined, reality-based plan and stick to it. So the next time one of them acts like we don't do real accounting, perhaps we should show them a couple of FASB circulars and then ask for help with what they do actually do better than us.


a fundraiser said...

Excellent post and great responses. We had a similiar debate over this kind of story on my nonprofit fundraising blog. Several responses and back and forth from other bloggers:

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