Non-Profit Organizations

Very good article regarding Non-Profit Organizations from Kirby Anderson with Point of View.

Most successful non-profit organizations try to run with business world efficiency, but they are limited in many ways because of the funding models they must rely upon. Most of the men and women who serve on a board of trustees come from a business background, and they often cannot understand why the organization cannot be run just like a business.

Thomas Tierney recently tried to explain why non-profits often run differently from profit-making businesses. He used this thought experiment when he discovered that many CEOs of non-profits spend nearly half their time managing funding streams.

“Imagine if a typical CEO spent 2+ days a week with bankers, Wall Street analysts and venture capitalists. Now imagine that it took over 100 different sources to capitalize his business, and that none of them would ever commit to more than a single year’s funding. It would be like trying to drive from San Francisco to Boston on a gallon of gas at a time. You’d never be able to plan the fastest or most direct route and would always be looking for the next gas station.”

Thomas Tierney says that as he has “looked under the hood” of various non-profits. He has concluded that much of the balky performance is due to the donors. Often we give for personal reasons. If a family member dies of cancer, you are likely to give to the American Cancer Society. If your child made a commitment to Christ at a Christian camp, you are likely to support that camp or Christian ministry.

He also notes we often give to lots of organizations. “We need to avoid what I call ‘peanut butter philanthropy,’ spreading our resources too thin. We can’t save the world by giving one dollar to every worthwhile cause. We also need to invest in nonprofit infrastructure.”

All of this should not be an excuse for nonprofit organizations. They need to be effective and efficient. But they are different from businesses because of the funding models they rely upon.