I recently read an article in the Wall Street Journal debating whether charitable organizations should operate more like businesses.
Charles R. Bronfman and Jeffrey R. Solomon, chairman and president, respectively, of the Andrea and Charles Bronfman Philanthropies, presented the "yay" argument, while Michael Edwards, a senior fellow at Demos offered the "nay" argument.
In a nutshell, Bronfman and Solomon argue that running philanthropies more like businesses will improve efficiencies, accountability and mission delivery. Edwards counters that running a nonprofit like a business will have a negative impact on the poorest populations, eliminate the creativity that is necessary to make a nonprofit effective, and result in more accountability to corporate donors than to service constituents.
Personally, I think Edwards misses the mark by a long shot.
Charles R. Bronfman and Jeffrey R. Solomon, chairman and president, respectively, of the Andrea and Charles Bronfman Philanthropies, presented the "yay" argument, while Michael Edwards, a senior fellow at Demos offered the "nay" argument. In a nutshell, Bronfman and Solomon argue that running philanthropies more like businesses will improve efficiencies, accountability and mission delivery. Edwards counters that running a nonprofit like a business will have a negative impact on the poorest populations, eliminate the creativity that is necessary to make a nonprofit effective, and result in more accountability to corporate donors than to service constituents.
Personally, I think Edwards misses the mark by a long shot.
His position that an open ended and creative approach to nonprofit management is more appropriate than a more business like approach is, in my opinion, an invitation for fraud, embezzlement, lack of accountability and poor governance. Efficiency and “creativity” are not mutually exclusive.
Additionally, NGOs that don't show a “return on investment” in the form of service delivery are organizations that have a very limited future. Every donor, whether it be a large corporate funder or an individual dropping five dollars into a kettle, expects that his donation will be used efficiently and effectively. To imply that charities that don't operate with a traditional business model are somehow less beholden to their donors than they are to their consituents, is quite simply false...thank God! I don’t think there is a charity on earth that would agree with Edward's suggestion that a nonprofit's only obligation is to the population it serves. Doing so would basically be an admission that the organization isn't attending to its mission, because the donor and the recipient of services both have the same expectation: fulfillment! If a charitable agency can't prove it is working towards that end, it shouldn't exist.
Edwards offers Occupy Wall Street as a successful example of the "creative" model. To me, this is just absurd. One of the primary reasons the movement is starting to fall apart is because its message is so unclear (in addition to charges of financial mismanagement, drug use and crime amongst its ranks). There is little, if any, actual infrastructure and even fewer common goals behind the movement. Any business or nonprofit that replicates this model wouldn’t last a year in today’s competitive environment. Occupy Wall Street is proving to be a perfect case study against Edward's suggested approach. Getting attention doesn't always equate to success.
Edwards also goes on to paint the civil rights movement as a shining example of how the grass roots, creative approach is best suited for change. In my opinion, one of the biggest reasons the civil rights movement was so dramatically effective was because it evolved into a well organized and well planned effort. It had a visible and strong leadership structure, an unambiguous cause, and very clear, consistent and measurable objectives.
I don’t think that anyone would disagree that most social causes start at the grass roots level. Someone, somewhere feels passionate enough about an issue to begin playing an active role in facilitating change. Thus, a grass roots movement is born. But that doesn’t mean they shouldn’t take a strategic and planned approach to the matter.
I once had a professor in graduate school who was very fond of the phrase, “It’s not the plan that counts; it’s planning that counts”, meaning a good plan isn’t etched in stone. A good plan is one that allows for flexibility in order to adapt to a changing environment. To be a smart business or nonprofit, one needs to be flexible. So for Edwards to claim that a business-like approach to running a nonprofit agency eliminates that flexibility, is both myopic and naïve…in my opinion.
**The opinions shared on this blog are solely those of its author and do not necessarily represent the opinions of Goodwill of Greater Washington, its supporters or affiliates.
