In a nutshell

An excellent article by Les Silverman and Lynn Taliento of McKinsey & Co. posted at the Stanford Social Innovation Review recounts all the things business people should understand about nonprofits, but don’t.  While lots of it is smart, as it discusses the disproportionate need for consensus-building in nonprofits or the challenges of measurement, one sentence is out-and-out brilliant.  The insight belongs to Judy Vredenburgh, a former fashion executive who spent six years as senior vice president of the March of Dimes, and another five and a half years as CEO of Big Brothers Big Sisters:

“Every time we in nonprofits satisfy customers, we drain resources, and every time for-profits satisfy a customer, they get resources back."

That’s it!  That’s the whole ball game: nonprofit executives aren’t as effective as their for-profit counterparts because effectiveness in nonprofits is counterproductive.  The more successful you are at attracting and serving clients, the higher your costs.  At the same time, any nonprofit executive who concentrates on attracting and serving clients is taking time away from the begging necessary to pay for all that attracting and serving.

With tension like that between mission and means, it’s a wonder the nonprofit sector gets anything done at all.  Perhaps we need to highlight this to governments operating under the delusion that their tasks can simply be offloaded to some charity somewhere.  Certainly, we need to make damn sure that, if they learn nothing else in orientation, new Board and staff members learn this.


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