Tuesday, April 13, 2010

Business Minded Nonprofit Organizations

In the last two months, I have read numerous articles on the nonprofit sector regarding trends, ideas, new concepts, and concerns that have surfaced in the industry -- especially in light of current economic times. Truth is, the nonprofit sector in the United States employs 1 in 14 people; and in 2008 U.S. Charitable Giving totaled $307 billion dollars. The nonprofit sector is adapting and changing, proving it is still vital by providing a tremendous benefit to our society.

On February 2, 2010 Shelly Banjo and S. Mitra Kalita wrote an article for the Wall Street Journal titled "Once Robust Charity Sector Hit With Mergers, Closings." (http://online.wsj.com/article/SB10001424052748704586504574654404227641232.html?mod=googlenews_wsj) The authors were articulate and honest about the nonprofit sector. Much of what is written in this piece, are quips and comments I have been speaking on for the last few years. In the article, Paul C. Light, a professor at New York University's Wagner School of Public Service states, "There were too many poorly performing nonprofits. There were very many niche nonprofits devoted to small slices of a problem and they needed to be merged." Nonprofits need to take into consideration revenue, expenses, marketing and accounting. In addition, there is a tremendous amount of competition for the philanthropic dollar. Merging nonprofit organizations that have common missions and goals can result in increased exposure, service and funding. For years, business minded professionals who have served in advisory and board of director capacities for nonprofits have been expressing to the organizations they need to be 100% business minded.

This article also portraits a consolidation success story. In Chicago, Big Brother Big Sisters was consistently avoiding financial concerns by increasing revenue from private funding. Relying less on United Way they merged with Chicago metropolitan area small chapters and the organization has evolved stronger and healthier. They have attracted new donors, recruited board members and created new efficiencies. I believe the Big Brother Big Sister model is a great example of organizations coming together, combining their resources to solve financial issues but remain focused on the mission of the organization.

Nonprofit organizations contain the same important business entities that for profit companies do – accounting, sales, marketing, and operations. In today's economy, it is important nonprofits remain competitive and one of the best ways to do this is through education. Business West Online, the business journal of Western Massachusetts published an article on March 30, 2010 on the importance of nonprofit staff, managers and executives to examine benefits of higher education, more specifically an MBA targeted to nonprofit organizations and nonprofit management. (http://businesswest.com/details.asp?id=2431)

The article's author, Georgia O’Brien, writes about a conversation she had with Kathryn Carlson Heler, professor of Business Administration at Springfield College. The college offers an MBA with two concentrations, one of those concentrations is in nonprofit management.
Heler says, “The definition of a nonprofit today is that of a mission-based business, and those two words sum it up,” she explained. “They have to run like a business, they have to show a profit, and they are under many of the same rules and regulations that any small business is. Most nonprofits are selling a product,” she continued, “and they’re marketing a product. And for social entrepreneurs, they’re looking for new ways to raise money beyond the annual campaign.”

Donors, key leaders and board members are looking for innovative ways for nonprofits to stand out, raise money, attract new support and at the same time, truly be self sufficient. Boards that are governing nonprofits want to see for profit thinking and they want professionals with diverse skill sets steering the organization. Springfield College is not the only school in the United States to offer a nonprofit MBA, a variety of colleges and universities are offering similar programs. For some programs, the student is one that is coming straight from completion of their undergraduate studies – deferring their job search in a luke warm market a bit longer. However, programs of this nature are also seeing career change professionals, in addition to people that have spent careers in the nonprofit industry and being encouraged to freshen up on critical skills.
Between business - minded individuals running nonprofits and a cluster of nonprofit MBA gradutes out in the field – the nonprofit sector will truly benefit and thrive.

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