The Business of Nonprofit

Alexia Vernon asked:

Since discovering Key Club, the largest international high school service organization, as a high school sophomore, I’ve considered community service, cultivating my own and others’ leadership capacity, and fellowship as three of my chief core values. In college, I transitioned from my high school service, leading recreational activities with older adults suffering from dementia and Alzheimer’s disease, to after school adolescent development. And ultimately, dismayed that young women in my college town of Las Vegas were more likely to become pregnant and drop out of high school than in any other U.S. city, I founded a nonprofit young women’s leadership development organization. From graduate school onward, I’ve continued to seek out professional and volunteer opportunities to serve others, often times working within nonprofit corporations and more recently working externally, consulting and coaching nonprofit executives and their professional staff to achieve a myriad of professional goals.

Clearly I’m not alone in my desire to work in the nonprofit sector. The Foundation Center reports that the United States is currently home to 1.4 million nonprofit organizations. This may not come as much of a surprise, particularly during the holiday season, when many of us find solicitations from a dozen nonprofit organizations in our daily mail. However, as David Bornstein points out in How to Change the World: Social Entrepreneurs and the Power of New Ideas (my recommended book for the fall), many not-for-profit organizations and their employees suffer from being classified by what they are not rather than by what they are. Consequently, Bornstein recommends referring to organizations addressing social needs as citizen sector organizations, to underscore that nonprofits indeed arise from dedicated citizens interested in making a social impact. However they are, or at least should be, deemed a corporation as much as an organization operating in the for-profit sector.

As corporate, foundation, community, state, national, and individual funding streams are being tapped by an increasing number of emerging nonprofit/citizen sector organizations, funders are demanding increased accountability from their applicants and recipients. While I’ve seen firsthand how such demands can lead to excessive paperwork, the need to cutback services and programs along with professional staff to employ more administrators, I think that these realities can be an exciting wake-up call to many nonprofit/citizen sector organizations. While a passion for an issue or a population might justify starting an organization, it should not guarantee an organization ongoing funding. “By sharpening the role of government, shifting practices and attitudes in business and opening up waves of opportunity for people to apply their talents in new, positive ways,” citizen sector organizations have an opportunity to develop stronger business foundations and engage in more long-term, strategic planning rather than existing from grant to grant (Bornstein 6). Like most successful for-profit corporations and small businesses whose stakeholders demand that they are consistently reviewing budgets, operating with increased efficiency, and providing the best services and products to their consumers, citizen sector organizations have an opportunity to throw up and re-envision their existing, often antiquated operational paradigms. Such organizations and their leaders can merge successful models from the for-profit world that align with their organizational missions and visions. They can set their employees up to be successful by having clear policies that reflect the ideas and experiences of executives, directors, managers, AND administrators. And perhaps most importantly, they can continue to move from addressing the symptoms of social problems, as many citizen sector organizations that operate in a perpetual state of crisis mode find themselves doing, to working innovatively and systematically, to get to their sources.

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