Last week, Nonprofit and Voluntary Sector Quarterly published an article by David Suarez, PhD. titled, Street Credentials and Management Backgrounds:Careers of Nonprofit Executives in an Evolving Sector, in which Dr. Suarez identifies four types of nonprofit executives categorized based on management skills and nonprofit experience.
The nonprofit sector contains many executives who are oriented toward mission-driven nonprofit work, but only half have a management background.
Suarez finds that in nonprofit organizations, it is more common for executives to have nonprofit experience, while management experience remains relatively uncommon. After considering this finding and examining Suarez’s four types of nonprofit executives, one cannot help but wonder: are we hiring the right people? If we’re not hiring skilled managers and we’ve obtained a reputation of inefficiency, perhaps a solution lies simply in hiring more well-versed managers.
I’ll go over my take on Suarez’s four type of executives briefly below, but for much more information and to read about his other findings, check out the article.
The Nonprofit “Lifer” (high nonprofit, low management) – Suarez calls these folks stereotypical nonprofit leaders. They are drawn to a social problem(s), but are more interested in direct work with the organization’s clients than organizational management. With their mental divide between the nonprofit sector and other sectors, I’d guess these leaders might lean toward a more conservative view of sector evolution than the Substantive Expert.
The Substantive Expert (low nonprofit, low management)- These leaders are less concerned with their sector of employment, and are specialists in specific disciplinary areas. Despite having minimal management backgrounds, they usually have significant academic credentials. We see these kinds of executives frequently in museums and similar institutions. (As a surprising side, much of the art world was upset recently when MOCA appointed a Social Entrepreneur as Museum Director instead of a traditional Substantive Expert)
The Social Entrepreneur (high nonprofit, high management)- This person is not to be confused with the definition of the rare social entrepreneur made popular by Martin and Osberg. In fact, this type of executive is nearly as common in the nonprofit sector as the Nonprofit Lifer. These folks, however, have more of an interest in the organization’s plans for scale, replication, and sustainability than Nonprofit Lifers- according to Suarez. They are high on nonprofit experience, ascribe to a nonprofit ethic, and have management training.
The Professional Administrator (low nonprofit, high management)- Like the Substantive Expert, the Professional Administrator is not married to the concept of working in a nonprofit environment. These folks have management experience, but do not have a particular draw toward the nonprofit sector over the for-profit sector– or are at least more flexible in their sector of employment than other types of executives.
I believe that we should continue to aim to hire Social Entrepreneurs. They are, after all, skilled managers with an orientation toward social missions. The problem, perhaps, may lie in how we are employing executives that fall in the other three categories. Though it may not make sense to deny Nonprofit Lifers the “hands-on” jobs that they desire, hiring managers should consider that sometimes the right kind of employee is more dependent on the position than on the candidate’s sector of preference.
For instance, we often hire Substantive Experts (low nonprofit, low management) to take on heavy nonprofit management jobs without question. Or we hire a right-brained drama-aficionado to manage the budget for a nonprofit theater without considering a more suitable candidate for this left-brained task. For some reason, we let the bond of a shared desire for social good fuzzy up our judgement.
After all, who wants to say ‘no’ to a job candidate who desires to make a difference? I don’t think we always have to. But I do think that if we want the sector to evolve, we must hire folks that can help our organizations grow.
Another possible solution for nonprofits? Invest in more professional development and create managerial opportunities for current employees so that even Nonprofit Lifers who are comfortable with the sector feel the need to push the boundaries of sector constraints and encourage organizational growth.
Nonprofit Management Ideology: Are You Liberal or Conservative?
August 16, 2010
When discussing the future evolution of the nonprofit sector with colleagues and classmates, I often explain myself and then say, “but that’s coming from a Nonprofit Lefty…”
Everyone wants nonprofit progress, but there are different trains of thought in the nonprofit world about which practices and mentalities will get us there.
Nonprofit right: On one hand there are folks that are set on keeping the sector ideologically separate from the others. They advocate the more conservative and traditional practices that got us to where we are today– such as championing low administration costs, hiring predominately folks who work only for nonprofit organizations or are experts in the field, and drawing out the moral differentiation between the civic sector and private sector. When I think of a nonprofit thought-leader focused on reform and progress from a more “conservative” standpoint, I think of Rosetta Thurman.
Nonprofit left: On the other end of this nonprofit political spectrum, there are organization leaders that favor a more inclusive definition of the nonprofit sector which merges practices with other sectors and approaches each social mission as its own unique battle. This point of view advocates an entirely fresh way of thinking and allows for a complete evolution to something new (if that’s what’s best). For better or worse, this often means taking a lot more risks. Dan Pallotta is a prime example of a nonprofit thought leader on the left side of the spectrum.
Definitions of the word liberal include broad-mindedness; having political or social views favoring reform and progress, and being not bound by authoritarianism, orthodoxy, or tradition. Though I’m a self-described nonprofit liberal, I don’t always agree with folks like Dan Pallotta. Ideology reform, however, is at the core of many of my nonprofit beliefs. I believe that:
- Calculated risks that challenge sector constraints are absolutely necessary and breed progress
- Publicizing individual nonprofit failures is critical and the benefit to the sector of sharing failures far outweighs individual organization’s potential donor loss for making the mistake
- High administration costs may be necessary in the future and a sign of competitive, forward-thinking organizations
- Social change-makers are not just nonprofit workers. Donors and connectors are change-makers as well
- Business leaders may bring the most innovative ideas to organizations in the future and nonprofit leaders’ skill sets may bring the most innovative ideas to the business world
- Nonprofits are businesses
- Social change belongs to all sectors, and intersectoral partnerships– when they aren’t effective market solutions– will be powerful tools for learning and evolution for all sectors
- Because nonprofits have different missions, they cannot always be grouped together or taught to abide by specific nonprofit management rules
- We must lower the education barrier for nonprofit management positions
- Nonprofits must try very hard to attract talent, and that talent will pay off in the end.
More conservative nonprofiteers have their own educated guesses grounded in nonprofit tradition and sector differentiation. And in fact, the conservative ideology has gotten us far. After all, there are over 1.5 million nonprofit organizations in the United States- most of which develop and adhere to a more conservative approach because a) it’s tried and true, or b) out of sheer necessity. For one, it’s easier to get foundation funding with low administration costs- and hey, if the system ain’t broken, don’t fix it.
And maybe the system’s not broken… but it can certainly be improved to make organizations more effective and sustainable. This is something both “liberal” and “conservative” nonprofiteers seem to agree upon.
Where do you stand on the nonprofit management ideology spectrum? Do you value the merit of popular nonprofit practices and tradition, or do you believe that the future of nonprofit leadership lies in a more open-minded approach?
*image from ttoes.wordpress.com
I’ll be honest: when I left my full-time gig at the Science Center in order to become a full-time graduate student last year, I was terrified by how this change would alter my own viewpoints and how I am perceived as a professional. I was concerned that I wouldn’t be taken as seriously if a majority of my time (the “full-time” part) was spent studying sector management as opposed to actively working in the sector.
Even as I am halfway into my graduate school experience, I can already look back and say that I had a right to be as terrified as anyone undergoing a big change (especially when thinking that my experience might be like this)– but I’d never take back the change in perspective that I’ve undergone for the time-being. I know full-well that by this time next year, the status will switch back and I will return to the full-time working world (oh, the magic of a professional degree; the point is to go back). But I will always understand the importance of thinking like a graduate student. Here’s why:
1) It forces you to see the big picture. There are things going on in every industry and the way we do business is always evolving. Currently social media, communication, soft skills, and Gen Y’s public service motivation are shaking things up in the nonprofit world, but even after those things run their course, there will be something else. When you are a graduate student you see these things– and what’s more: you see their collective effect on the industry because you spend nearly every day piecing together the puzzle. Thinking like this is extremely valuable because it helps you to mentally tackle many sector problems at once, and scientifically, this kind of thinking helps build up solutions more creatively than tackling one at a time– which is often done in a working environment. Thinking like a graduate student in this sense means always keeping an eye on the bigger picture of the industry as a whole, and it will result in creative solutions and a more complete understanding of where your difficulties lie.
2) Grad students have built-in microscopes or telescopes. That’s like having science tools built into their brains (for a few years), folks! This is directly related to point #1. People often joke that grad students always think what they are doing is important, even though it’s not. What’s really happening here (and the reason we grad students think what we’re uncovering is so important) is that we have a different perspective. As mentioned above, in professional degrees, we zoom out on the sector. Academic degrees tend to zoom in on a part of the sector. Either way, grad students are thinking in a way that is not common in workplace environments (whether it’s with their internal microscopes or a telescopes). Thinking differently spawns innovation. Grad students see something non-graduate students don’t see (and often vice-versa). There’s terrific potential here. When faced with a problem after graduate school, I’ll strap my telescope back on and see if I can think about things differently.
3) It makes you aware of your own strengths and interests. In graduate school, you can pursue your own interests within your degree. Beyond MPA student, I have no role defining my duties in one specific area (I can choose as I go). There is a lot of freedom in these programs to make yourself an expert on whatever strikes your interest. Similarly, in graduate school you must do everything from public presentations, to writing case studies, to leading debates, to drawing graphs to illustrate possible solutions to market failures. You learn quickly where you shine… and also where you stink. The bottom line lesson here, however, is to keep exploring and taking up new challenges in the working world. It may lead you to interesting solutions to problems. And trying new things helps you learn a lot more about yourself and how you handle certain situations– it’s teaching me a lot at any rate!
4) It gives you a feeling of purpose (which helps you live longer and makes you better at your job). I have two years while I’m obtaining my degree to challenge perspectives, share crazy ideas freely, and sink my teeth into the sector. I feel a sense of purpose when exploring skills required to improve the sector. Feeling a sense of purpose does more than reduce your risk of getting Alzheimer’s and help prevent depression. It actually makes you live longer. Studies have shown that purpose motivates us to accomplish things and grad students spend two years (or more) devoted to developing their purpose and career goals so that they can work hard for you (or themselves) after they graduate. What can people who aren’t in graduate school do to develop this mindset? Make time to focus on what you are doing and why.
5) It keeps you humble. Folks tend to feel like they are improving in their careers based on how many people are reporting to them throughout the years– or at least I felt this way a bit before I came to grad school. Now, nobody reports to me. I study with a lot of accomplished people and I take classes from distinguished professors. This is humbling. Also, full-time graduate students often take a financial hit to attend school (even if they are employed by the university or working a part-time job– or in my case, both). I’ve worked in hierarchical environments and I’ve started at the very bottom– but being broke, living on ideas, and being surrounded by thought-leaders is every bit as humbling as it is romantic and drive-inspiring. I will strive to keep this perspective and treat everyone as an accomplished classmate, regardless of their background or experience. Good ideas come from everywhere, and there’s no need to get cocky about my own.
There’s generally a big difference between the skill sets of for-profit and nonprofit marketers. Quite simply, for-profit marketers aim to encourage people to buy. Nonprofit marketers encourage people to give– and those two things are pretty darn different, and these tasks often require contrasting skills and mindsets.
For-profit marketing is much more tried-and-true than nonprofit marketing and for some obvious reasons. Below are the circumstantial truths for-profit markets often rely upon in order to ensure success (or at least the likelihood of it).
In for-profit marketing, more often than not:
1. There is a set price for goods and services as determined by the market. For-profit companies set prices of goods and services relative to the supply and demand for a good. In other words, companies set prices at an equilibrium point where they can get the most amount of money for a good without losing business because the price is too high. Nonprofit donations, while they often tend to be tied to the health of the overall economy, do not have this set price (or a set “ask”). We can say, “It costs $125 to buy a costly college textbook for an aged-out foster youth,” but nonprofit marketers and fundraisers actually hope that individual donors give more money than that. In short, there is no fixed price to end individual transactions– making the transaction a tad more difficult to market in a traditional sense. Therefore, nonprofit marketing is often limited, as they cannot say “give us $100 dollars, and we will give you tangible good X.” … which leads us to point #2 below. By contrast, the amount of money pursued by nonprofit marketers depends upon knowledge of individual donors/donor base rather than market value of a good.
2. The actual goods are tangible and/or measurable: “I will give you product X for amount Y.” Often a private company is directly promoting a specific product or service (“buy this shampoo”), while a nonprofit organization aims to promote awareness of a social cause and through that, the organization’s individual programs (“alleviate homelessness by giving to our organization”). Because nonprofit outcomes are not always measurable, it creates a problem with the “X in exchange for Y” mentality that for-profit marketers bank upon when attracting customers. For instance, what’s the set price for curing cancer? Making a donation to a nonprofit organization means making a contribution to solving a bigger problem. It’s not a measurable, quick-fix exchange with customer satisfaction guaranteed. In fact, sometimes the donor doesn’t even directly benefit from the service provided by the organization– and even more contrary to for-profit marketer-mentality– that’s often the point. I would argue, however, that both sectors have the same aim when generally promoting their brand- but the promotion of the actual goods/services is different because what is being “sold” often cannot be quantified. Nonprofit marketers must promote programs (often with unmeasurable social outcomes) through awareness of social causes.
3. Goods are purchased by a consumer, and for the consumer’s use. For-profit marketers can rely on the sexy concept of direct ownership which is a thing with extreme value in a capitalistic society. Take a look at traditional messages behind for-profit marketing campaigns: If you drink Gatorade, you could become an Olympic athlete. If you buy a BMW, you’ll be suave and sophisticated. Buy Proactiv, and you’ll have flawless skin like Jessica Simpson. Not even Wal-Mart’s roll-back prices platform translates directly to nonprofit organizations that aren’t selling consumer goods. Nonprofit marketing is different. Nonprofits are often tasked with marketing programs that benefit people who are not the donor. Of course, many nonprofits offer great perks and publicity for big donors, but that doesn’t often directly compensate for small-scale donations. Even folks donating to their own community centers face a free-rider problem that for-profit marketers don’t need to deal with in their message. Namely, even if you donate to an organization you participate in, the benefit you receive is still diluted among other community center users (the money doesn’t come directly back to you– see point #2). The key to nonprofit marketing? Telling stories, tugging heart-strings, making people care about something. Nonprofit marketers must appeal to donors by promoting goods/services that benefit people other than the donor alone.
4. One-way transactions are frequent- and they work. This section offers what I believe is the biggest fundamental difference between nonprofit and for-profit marketing: though it’s often the aim, for-profit marketers do not need to build personal relationships– often because it’s for-profit companies that sell things we need to buy like food and shelter. In fact, consumers would no doubt find it annoying to be very personally courted by their television, toilet paper, and fabric softener companies by name (how creepy). No doubt companies would invest more in building personal relationships if they could (and indeed, many do), but it would/does take a tremendous amount of resources on the part of the company. Thus, companies must prioritize– and, due to sector differences, for-profits and nonprofits prioritize these relationships differently. Most companies don’t need personal, two-way relationships in order for people to buy their products, and they can rely almost exclusively on building a trusted brand to make products and the company feel personal. In other words, for-profit marketers focus on one-way transactions; they state a price, and consumers buy the product at that price with minimal actual company interaction. Nonprofit marketers must also build a trusted brand, but conversation and relationship building are key to securing donors. This difference lies at the very core of nonprofit verses for-profit marketing mentalities. To state it dramatically: a for-profit marketer will come off more like a used-car salesman if she or she does not fully understand the way that relationship-building in nonprofits function. Nonprofit marketers must facilitate two-way interaction between the organization and potential donors.
5. User experience with the good/service fuels repeat customers. Because consumers purchase a good or service from a for-profit company for their own use, the buyer is in a position to recall their experience with the brand and decide if they want to purchase the item/service again. In nonprofit organizations, donors are similarly more likely to give again if their first experience was a positive one. Considering that for-profit goods are usually measurable, for the user’s own purpose, and delivered for a set fee, a private company customer is in a position to buy again based on their perception of the good and how it meets their individual needs. Nonprofits must rely on the customer’s positive relationship with the organization (because the donor doesn’t always receive a tangible good that they can judge). What does this mean for the difference in nonprofit and for-profit marketing mentalities? For-profit marketers focus on the good. Nonprofit marketers focus on the cause and the relationship. Nonprofit marketers must think ahead of a one-time transactions, speak to bigger issues, and put quality and care into two-way communications. In nonprofit organizations, experience with the organization fuels repeat donors.
Despite these differences, many similarities obviously still stand. Marketers in both sectors are promoters and benefit from being savvy in traditional marketing skills and methods (partnership, buying ads, tracking web stats, advertising, guerilla marketing, etc). While both nonprofit and for-profit marketers are promoters with the goal of enticing buyers/donors to award funds to an organization or company, the bottom line of what is being promoted is different, and thus the mentality and specific aims of these marketers must be different.
Many nonprofit marketers must be skilled in balancing both nonprofit and for-profit angles of marketing. Museum marketers and those working in other nonprofits earning commercial income from revenue-producing activity must be knowledgeable in both marketing skill sets. They are promoting both a social cause, as well as an excludable, rival good (like tickets to a nonprofit theater performance or museum entrance). Having a nonprofit marketing mentality certainly does not necessitate a lack-of for-profit marketing savvy and vice-versa. However, hiring managers should note– for the sake of their organizations– that the mentalities fueling both sectors are different in regard to marketing. If a marketing position requires knowledge of both types of marketing, then hire someone who can summon the proper skills set at the proper times. Resourceful marketing, after all, requires a strategic plan-of-attack. How wasteful it may be for a (previously successful) marketer with a for-profit background to step into a nonprofit organization and spend funds simply buying up excessive Facebook ads (one-way methods) when they should be on social media or connecting with potential donors in a more personal way (two-way methods).
Here’s a (maybe crazy) idea: as for-profit companies continue to evolve toward nonprofit-like practices and relationship-building increases in value to private companies, it just may be the nonprofiteers who are sought after for high-power for-profit positions across sectors.
Photo credits to issnaf.org (base image) and Hugh Macleod
I am captivated by this great video on Dan Pink’s research on what drives people. It’s absolutely worth a watch! Want to learn more? Check out his TED Talk on motivation.
If Dan Pink is right and purpose, mastery, and autonomy are the three keys to motivation, then I imagine that nonprofit employees should be rather happy and motivated folks because purpose and mastery seem to be built into the sector to an extent. However, this video provides a helpful hint to organizations to keep employee autonomy in mind when preparing for the future. Given Dan Pink’s outline, are nonprofits more primed to be motivation-filled workplaces than private organizations?
I think they certainly could be. Here’s how nonprofits stack up:
Purpose: Nonprofit and museum environments supply this without question. In fact, overall organizational purpose is neatly summarized and an employee’s purpose is to help realize a nonprofit organization’s (hopefully) noble mission in some form. The purpose of the employee may be specialized within the mission, but generally nonprofit work provides a feeling of “doing good” in the greater context of the world. Want a job position with a purpose? A nonprofit is a great place to be.
Mastery: Because nonprofits are sometimes understaffed and employees must take on wide variety of roles, one might assume that employee mastery would be an issue for nonprofit organizations. For instance, I work for a great but small organization in which I take on significant duties related to marketing, communications, fundraising and development, event planning, and web design— and I’m not even a full-time employee!
In nonprofit organizations, I think mastery still functions because these environments provide several areas of mastery (which may tie into autonomy below), and smaller nonprofit organizations offer employees the opportunity to gain and refine skills. Not to mention, if there’s a talent that you can contribute to the organization, it’s likely that the organization will allow you to summon your skills in that arena.
But autonomy? This doesn’t seem as innate to the sector as purpose and mastery might be. For that very reason, maybe it should be on the forefront of nonprofit leadership literature. Not only does there seem to be a lack of discussion regarding nonprofit-specific employee autonomy, but individual nonprofits do not have the benefit of autonomy afforded by private corporations due to nonprofits’ multiple stakeholders. Aside from being a key motivator for employees, Why is employee autonomy of particular importance in nonprofit organizations? Here are some points that came to my mind when contemplating the importance of the third element in Dan Pink’s motivation trifecta:
- Autonomy allows the organization to discover hidden talents and foster innovation. Google is famous for having what they call “20 Percent Time” in which they encourage employees to spend 20% of their work week on a project that is of interest to them, and not necessarily tied to their day-to-day job function. Nonprofits doing this may be able to loop back to mastery here by allowing employees to summon their talents and ideas to contribute to the organization in any way that they desire. This kind of autonomy could help relieve employee burnout while at the same time motivating employees to utilize their mastery in the workplace.
- Autonomy builds internal trust and commitment. High commitment management– which emphasizes high trust, responsible autonomy, and employee involvement– has been shown to increase overall performance and reduce employee turnover. This is important in all sectors. In nonprofit environments in particular, donor relationships are very important. Reducing turnover could mean reducing a loss of donor relationships when development staff members leave the organization because fewer development employees would be leaving this kind of environment.
- Autonomy increases productivity. If the purpose of the workplace is to provide an environment where people can do their best work in the best way that they know how, then a successful workplace will be productive. When Jeff Gunther developed a results-only work environment, he found that his employees were actually more productive. It also seems obvious that employees that are more motivated and committed will be more productive.
Autonomy may not deserve more time in the “to-do” spotlight than purpose or mastery, but it seems less innate to the sector and therefore may deserve some brainpower. If anything, autonomy is a powerful tool to be kept in nonprofit leaders’ minds as we move forward and make decisions in regard to organizational culture.
Do you think autonomy is an area where nonprofits may move forward and compete with for-profit companies? Do you think that the nonprofit culture, with some focus on Pink’s main elements, has the ability to provide a more motivating workplace than for-profit companies depending primarily upon monetary rewards?
5 Reasons Why I Chose to Pursue an MPA over an MBA
May 17, 2010
USC's 2009-2010 Officers of the Graduate Policy and Administration Committee with Associate Dean, Carol Rush
MPAs and MBAs have a lot in common: they are both professional degrees that provide management training by way of economics, policy, statistics, and finance. What made me pick an MPA (Master of Public Administration) over an MBA (Master of Business Administration), you might ask? The MBA is surely a beaten path with many, well known benefits…but considering my interest and passion for museums and nonprofits, an MBA just wasn’t for me. I liked the idea of a professional degree, but an MBA overlooked the defining features in my field of interest. Here’s why I decided to pursue an MPA over an MBA:
1) Museums and nonprofits have unmeasurable outcomes
A defining characteristic of the nonprofit and public sectors is unmeasurable outcomes because the point of most nonprofits is to fulfill a social mission (nonprofit organizations cannot distribute profits). A powerful business is one that can make the most money (measurable). A powerful nonprofit is one that helps more people, most effectively (not-so-measurable). To get an MBA would mean overlooking an opportunity to really think about solving problems of nonprofit outcome measurement and would mean focusing heavily on a monetary bottom-line, which is just not a characteristic of the sector. The MPA focuses on social missions while also emphasizing the skills required to obtain funding for an organization, which is much more relevant to my continuing work with nonprofit organizations.
2) It’s a problem-solving degree- ideal for an evolving sector
If MBA programs study the market, then MPAs try to solve market failures– and there’s an obvious difference between studying and solving. In the former, it’s been figured out, you’re just learning how to do it. In the latter, there’s a large-scale problem to be solved. MBAs are hired to make an individual company more profitable and there are books on this (lots of them!) with clear rules (“buy low, sell high,” “always be closing”). In contrast, MPAs are hired to take action to lead their organizations in making the world a better place… and our literature is not nearly as abundant and the tone is less certain. Our academic journals are filled with what’s happening right now or what’s happened in the past. This is ideal for the nonprofit sector because need and the way people communicate and connect (securing funding, donors, etc) is always evolving. There is certainly no better degree in this case, it’s just based on your goals and interests. Considering my interests, an MPA was the way to go.
3) My utility function includes public service
This is not to say that my utility function– and those of my MPA peers– doesn’t include income at all (or that the utility function of MBA grads never includes public service), but it is to say that public service drives my behavior more than money, and most likely drives the behavior of my classmates as well. It shouldn’t be surprising that nonprofit CEOs don’t make as much money as for-profit CEOs. On top of that, nonprofits are often understaffed and leaders may suffer from serious burnout. So why would us MPAs put ourselves through that? Because we want to make a difference. For some of us (and I’ll blame my background at The University of Chicago for the sincerity of this statement), we want to solve big problems and aren’t afraid of hard things. Some people might hate to look back and say, “I wish I made more money.” I respect that– and to each, his own. But for me, the most heartbreaking thing that I can imagine saying is, “I wish I made a difference for someone,” or “I wish I spent my life doing something I deeply cared about.” The MPA degree helps me build the skills to accomplish the things that I care about.
4) MPAs want to change the world… but we’re not impractical about it
I spend every day with folks that are determined to change the world. Are we starry-eyed and optimistic? Maybe. Too impractical to be effective? Definitely not. These professionals come from top tier institutions, much like the professionals that enter top MBA programs. Moreover, as an MPA, our speakers, mentors, and professors are professionals in policy and the nonprofit sector– rather than bankers and for-profit professionals. If I were to have pursued an MBA, our speakers and mentors would be those who best understand investment banking recruiting and achieving measurable outcomes– which would be much less relevant to me and my interests. Instead, I am surrounded by future foundation CEOs, grant writers, program producers, and nonprofit directors. A frequent happy hour topic for us: how not warm-and-fuzzy it is to work tirelessly for a mission.
5) The future: society’s priorities are placing higher importance on social good.
Signs are pointing toward the need for corporate environments to take on social missions– or at least some corporate social responsibility. Does this mean we might see some MPAs in corporate environments changing up the system in the near future? Perhaps. Consider this: Generation Y, the incoming professional leaders, are said to run on public service motivation. Unlike Generation X, these folks would much rather work for the government than a corporate giant. They want to give back to communities. Moreover, customers are more likely to consume goods that align themselves with some sort of social mission– and communication, transparency, and connection (nonprofit focuses) are beginning to lead corporate environments. In sum, the days of caring primarily about income and individual companies may be coming to a close. In fact, that’s what The Economist predicted for 2010 when they discussed the oncoming decline of the MBA.
When young nonprofit and museum professionals spout their desire to get an MBA because that’s what they think they “should” do, I cringe. There are many incredible reasons to get an MBA and great reasons to get an MPA as well; but I think it’s the responsibility of professional-degree-advocates to know why they are choosing one degree over the other.
It seems that, without even knowing it, we’re all working together to limit nonprofit innovation.
In the nonprofit sector, risk (an important element in innovation) is stifled due to nonprofits’ need for multiple stakeholder acceptance in order to survive. This makes large-scale change difficult, if not impossible, and the only way that we will solve this is if we put our minds together to think about it.
Let’s take the hot topic of increasing salaries for nonprofit leaders (though we could pick any topic that challenges perceived sector constraints). A nonprofit might seriously consider higher salaries in order to attract high-quality leaders, establish itself professionally, or ensure that competition for the position allows the organization to choose– or continue to motivate– the best candidate for the job. This could be a great idea. It could work wonders. But questioning sector constraints at all is often much like trying to give a big hug to a hand grenade. Here’s why:
- The board and staff will need to approve this risk. In the case of increasing employee salaries, they will consider that every extra dollar given to a staff member is a dollar that could be spent on programming. These immediate stakeholders must believe in the potential of the idea.
- Then the nonprofit will have to face the multiple foundations that may no longer award the nonprofit otherwise-much-deserved grants because their administrative costs exceed (or come close to) a percentage set by the foundation in advance.
- You have to face the people who don’t understand why you made this change (regardless of its nobility), and the media may tear you apart. Even worse, other nonprofit leaders at The Chronicle of Philanthropy may even give you bad press for trying to take a risk to aid in sector evolution.
- Your amount of in-kind donations over the year may suffer because of the bad press– which defeats your whole attempt at innovation because you can no longer afford to pay a higher-than-before salary to your employees… so you are back where you started– but with fewer funds, a lot of bad press, alienated foundation connections, and unhappy employees.
In the private sector, innovation breeds new business practices and monetary success. The system is quite simple: a firm must gather capital to take a risk, take that risk, and if the company makes a profit, they are onto something. Other companies catch onto the company’s new tactic and next thing we know, every company has to be doing that innovative thing in order to continue to stay in the game. The same is true for nonprofit organizations except, in the nonprofit sector, raising capital may mean raising social capital.
Please click on the image to enlarge
So what can be done to alter sector constraints in order to allow nonprofit professionals to be innovative in organizational management?
First, double loop learning must take place. Double loop learning occurs when leaders question their own basic assumptions about the world. Single loop learning, by comparison, is the tried-and-tested routine that we fall into when we do everyday things like write grants and conduct meetings– but we also use single loop learning when we devise wages (continuing with the case of nonprofit salaries as our example). We have an idea of what works and we stick to it. Double loop learning, on the other hand, makes us ask ourselves, “Why do we do X? Maybe I should be doing Y.” When we ask this question, possibilities are born.
Second, the nonprofit must be transparent about their new idea and share it among networks. The nonprofit could ask for input via social media networks, get dialogues going with staff members; make everyone (stakeholders especially) aware of the possible benefit of taking this risk. This includes spreading word about the importance of innovation among stakeholders, the public, and other nonprofit groups. Technology is a great mechanism for information-share, and getting brain juices flowing. Who knows? A few other nonprofits may consider the idea and try it out alongside you.
Through this, social capital is created. Spreading the message creates connections. Asking people for their input (even if it’s negative) creates connections. Connections build social capital. Social capital increases overall support of the new practice because friends and community partners can share your idea with their own networks, and become part of idea formation and collaboration.
Then intellectual capital is built as stakeholders become educated on the issue. The more people hear about the issue, the more educated they will become on the need for innovation, or rather, the more accepting they will be when you actually follow through in challenging sector constraints. Lets go back to the example of a nonprofit taking on higher administration costs to motivate employees. If we learn that there’s a nonprofit leadership deficit on the way, then we may be more likely to outwardly encourage and support (or at least understand) nonprofits that are raising employee salaries.
And finally, the innovation is accepted. This does not mean that people will agree with your new (hopefully) innovative practice– but, because of your transparency, they will fully understand why you have challenged sector constraints, and also that you have the best interests of the community you serve at heart. And whether they agree with the idea or not, folks may be more inclined to respect the idea. Foundations may still award grants to the organization, and donors may stick around for at least another year. Who knows? Maybe your active desire to contribute to the sector and your fresh views of management will earn you a few more donors.
This theory is just that: a theory. I do not know how to encourage nonprofits to take responsible risks and challenge constraints that hold them back in serving their mission. I do know that, if the sector means to evolve, nonprofit leaders must begin to think about blazing new trails— and we should think about ways to allow them to do so.
Photo credit to agentgenius.com
More and more for-profit companies are beginning to function like nonprofits– and perhaps for good reason. It seems that nonprofits are becoming less like slow-to-pick-up organizations, and a little bit more like the sector that’s onto the trends.
There’s a lot of talk about how nonprofits gain by functioning more like businesses. Among other things, nonprofits must keep up with the innovation taking place in the for-profit sector, or nonprofits will be weeded out by for-profit competition. But nonprofits are not the only ones looking to other sectors for inspiration. In fact, nonprofits have a few things going for them right now that for-profit companies seem to really want:
1. Competition
Companies will need social missions to attract the next generation of customers. In fact, according to a USA Today article, 69% of Gen Yers consider a company’s social commitment when deciding where to shop, and 83% will trust a company more if it is socially responsible– and that’s just attracting customers! Companies will need to step it up a notch if they want to hire new MBAs and MPAs (whom are increasingly socially conscious, by the way). The next generation is civic-minded and cautious in regard to where and how they spend their time. And on top of all this, the human race as a whole is evolving into beings that value kindness.
Companies are already publicly rising to the occasion and deep-rooting their identities in crowdsourced cause marketing. The Pepsi Refresh Project, American Express Members Project, Google Project 10^100, Chase Community Giving, and Target’s Bullseye Gives may be just the tip of the big-companies-crowdsourcing-for-social-good iceberg. Not only are these companies recognizing their need to “do good,” but they are making it a part of their social identity by fostering communication and asking communities to participate in choosing where their money goes. Recently, this has helped for-profits build up legitimacy in yet another area where nonprofits (as opposed to for-profits) are known to shine…
2. Communication-
Nonprofits are said to be kicking private sector booty in building relationships through social media. They have quickly taken up this way of telling stories and spreading social missions. Sure, social media has its serious pluses for nonprofit organizations: it’s generally affordable, it can be done by a volunteer, and site visits and bit.ly clicks are measurable (an often-rare quality for activities taken up by nonprofit organizations). But most of all, social media is a hit for nonprofits because the ability to connect, ignite excitement or empathy, and create and maintain strong interpersonal connections has always been an element of survival for nonprofits– both on the administrative end and in the front lines. The community engagement– as well as individual connections– that nonprofits are often able to summon is an object of desire for private companies in the evolving world. The days of putting a product into the world with an overarching one-way message are coming to an end. During this time, companies will need to steal and ingrain the nonprofit practice of building meaningful connections in order to thrive.
3. Costs-
Amazon’s Jeff Bezos is credited for saying, “I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.” This could have come out of the mouth of any nonprofit CEO out there. Granted, the for-profit sector has an arguably greater ability to take risks than nonprofit organizations, which have several stakeholders and constraints beyond the budget. Bill Gates proved that scrappiness and frugality were the way to go back in 1976 when he created Microsoft. In fact, Guy Kawasaki dedicates an entire chapter in his book, The Art of The Start, to bootstrapping. In the current economic climate, there’s a need for businesses to reevaluate spending. In this case, it is less that businesses want to be more like nonprofit organizations– they have to be.
Nonprofits are not often thought to be business trend-setters. Perhaps that’s why the nonprofit sector– as a whole– don’t seem to take the time to pat themselves on the back. Right now, nonprofits are onto something. Social missions are in. Personal connections are in. Even endearing scrappiness is in. Instead of looking longing at the for-profit sector’s freedom and financials when it comes time to allocate resources or cut already-decreased spending in nonprofit organizations, we should take a moment to focus on the sector’s incredible strengths. Nonprofits, it turns out, are teaching private companies a thing or two about how to connect to communities and champion a good cause.
I owe a thank you to Dr. Peter Robertson, a professor of organizational behavior within USC’s School of Policy, Planning, and Development, for raising an eyebrow and saying, “I think in the future businesses will function as nonprofits,” when I spoke nonchalantly about nonprofit evolution to private sector practices during a recent meeting.
Advance Review: Earth, Inc – on Sustainable Profits
April 2, 2010
What will dinosaurs and companies that are not integrating “green” practices have in common in the next century or so? Extinction.
How’s that for a call to action for slow-movers.
Earth, Inc, a soon-to-be released book by Gregory Unruh published by Harvard University Press, has a simple bottom line: in order to be sustainable and remain competitive, companies must utilize nature’s own rules. Corporations like S.C. Johnson, UPS, Kodak, Coca-Cola, and Clorox are leading the way in creating material product processes that mimic nature– and are (nearly) as earth-friendly. If companies are unable to follow suit in order to leverage sustainable practices across product lines, these companies will fade away. The world keeps moving, after all.
This book is particularly enlightening for those who are nonbelievers in the power of for-profits to evoke large-scale, positive change. Indeed, in the examples Unruh mentions, these changes must be done by these kinds of companies. By utilizing processes similar to nature, companies are uncovering ways to make a buck by incorporating sustainable practices.
Though grounded in sustainable profits, the book reinforces popular lessons in innovation that hold true across industries:
1) The best way is often the most simple way (In the book, this is materials parsimony): In Earth, Inc, we learn that the bulk of earth’s productivity is composed from only carbon, hydrogeny, oxygen, and nitrogen (which form animo acids, proteins, and sugars). That is nearly all that nature needs to create almost everything we know of life. The first rule in creating sustainable profits is to create materials parsimony— or, to keep it simple.
2) The power of constraints (In the book, this is creating sustainable product platforms that fit into the five constraints Unruh identifies): The idea that the only way out of a box is to invent your way out holds true here. Companies that can work within the five rules for sustainable profits (materials parsimony, power autonomy, value cycles, sustainable product platforms, and function over form), are truly the most innovative because they are leading the way in creating greener businesses that also turn a profit.
Earth, Inc. makes you think about the story of stuff on the production level. I don’t think about Patagonia products the same way. The book is short, to the point, and easy to read. As an individual with interest in sustainable profits but no former knowledge of production terms, there were times when I had to read sentences twice. Even in these cases, Unruh uses terms in a way that makes their meaning easy to unravel.
This video has long become a youtube favorite, but it’s worth including here. It gives you an overview of the issues facing the world of non-sustainable profits, and provides a good basis for understanding the need for practices uncovered in Earth, Inc.
If you produce goods or want to know more about the future of the product cycles of items you consume, read this book. Even if you aren’t extremely interested in these things, you should pick up the book. At the very least you will learn something about the direction in which the world is moving… Just read it if you want to keep up.
I owe a big thanks to Brazen Careerist’s Penelope Trunk, who spotted this book, recognized it was up my alley, and Harvard Business Review- who sent an advance reader’s copy my way.
4 Trends that Will Have Growing Impact in the Next 5 Years
March 16, 2010
image from psfk.com
Trends toward using social media, obtaining ”must-have” gadgets (iphone, ipod), and celebrating green practices were the bigger trends of the last five years. Here are four trends that should begin to solidify– if not be in full force– by the year 2015. We are on a consistent path to already making many of these trends permanent, and each point has the potential to create a domino effect that will alter how we live our lives.
1. Children will learn HTML in grade school.
And those children that do not begin to learn HTML in grade school will at least learn how to generate web content via facebook, twitter, blogs, or whatever option is available to them. They’ll need this information not only to understand the world, but also to contribute to it. There’s no doubt that there’s a need to focus on technology in schools, as 12 of BusinessWeek’s 25 most influential companies are rooted in technological advancement. The Internet will continue to play a bigger role in our lives, and already 37% of internet users have contributed to creating news. Children now will be raised with the internet, so they’ll need to know how to use it. Not only that, kids who are behind in using the internet will be at a comparative disadvantage because children who use facebook or write blogs have higher literacy levels.
2. We will consider tax-exempt businesses.
This means that either a) cause marketing and businesses taking part in/funding projects/ crowdsourcing for the greater good will make us at least (for one moment– if not only this one) consider what it would mean for businesses to solicit donations and be tax exempt in specified situations, or b) nonprofit organizations will up their ability to compete in commercial business in order to secure ongoing funding. As Generation Y combines an entrepreneurial spirit with steadfast public service motivation, the nonprofit sector is sure to continue to evolve in the hands of a new generation. In the next five years, we’ll begin the long process of considering what the contemporary melding of the public and private sector will look like.
3. Nearly all but physical job positions will be location-independent.
People who work from home are more productive than people who work in an office. And people who are self -disciplined are happier than those who are not. With the ease at which people can video conference and utilize technology to keep in touch with coworkers from home, there’s no doubt that we’ll begin to realize the benefits of location-independent work. Other benefits? Increased work/life balance, reduced stress, improved supervisor-staff relationships, better worker retention for employers, and increased general job satisfaction. The exception here will be job positions that require a physical presence, such as plumbers, doctors, factory workers, landscapers, and the good ole’ cable guy.
4. Most businesses will have flat structures and be decentralized.
Decentralization is the dispersion or distribution of functions and powers in an organizations, or the the delegation of power from a central authority to regional and local authorities. These kinds of organizations do not rely on the strict organizational hierarchies of power of the past– and companies such as Johnson & Johnson, IBM, and numerous other successful companies boast decentrailized governance. Though this trend may be already solidifying, the effects of flattened companies will begin to be felt in the next five years. Namely, we will be even more accustomed to working in teams or networks, and there will be fewer managers as groups gain empowerment to make many of their own decisions.
My name is Colleen Dilenschneider I work in museums and nonprofit organizations. I believe that community engagement is the key to new philanthropy and it lies at the intersection of marketing, program production, and fundraising. I am currently a graduate student studying Nonprofit Management (MPA '2011) at the University of Southern California. Learn more about me 
