For-profit and nonprofit businesses: are we all the same?

Are nonprofit organizations any different from for-profit businesses?

For years, many professionals have encouraged us to think about nonprofit organizations just like you would a "regular" business.

I agree...to a point.

The easiest delineation between the two business types is that for-profit businesses distribute profits to shareholders, while nonprofit businesses reinvest profits in the mission of the organization. Nonprofit organizations definitely need to understand their "product," follow sound financial and operational practices, and all companies, regardless of classification, need to generate a profit to preserve long-term sustainability and the success of its purpose.

But when the bottom falls out, I expect something different from nonprofit organizations.

Recently, a nonprofit organization that I have been deeply involved with as a volunteer for almost 20 years, made business decisions that I have a hard time understanding. Ten people, several of whom I count as friends, who provided exemplary service and supreme dedication, were let go with less than a day's notice. They received calls in the morning and by the end of the day, they were unemployed.

I'm sure there are facts I don't know. And I'm told that this is the way it is done. This is “normal business practice” nowadays.

I've seen this happen at more than one nonprofit organization, and it makes me angry.

The line between nonprofit and for-profit companies is more blurry every day. With companies like TOMS, Warby Parker, and many others, it's becoming harder to tell which is a for-profit and which is a nonprofit. For many consumers, it doesn't really matter. I get that.

For better or worse, the nonprofit sector has traditionally claimed the high ground of being morally superior to our for-profit brethren. Not only does the mission come first, but we also care for our team. We're more humane. We're collaborative. We're “family.”

Business practices that treat employees as disposable leave us with little to differentiate ourselves from the traditional for-profit sector. So we might as well go to “the other side” and make more money. Or better yet, work for a hybrid corporation like TOMS.

I could be making more money. I probably should be making more money. But instead of becoming an accountant, or something else, I chose fundraising. I chose to work with small nonprofits. I chose to pour my heart, soul, time and money into the philanthropic sector. And increasingly, I am disappointed in business practices of organizations that purport to be the leaders in the sector.

Alexis de Tocqueville's Democracy in America is often quoted in reference to philanthropy. Tocqueville writes this on associations in the US:

"In the United States, as soon as several inhabitants have taken an opinion or an idea they wish to promote in society, they seek each other out and unite together....From that moment, they are no longer isolated but have become a power seen from afar whose activities serve as an example and whose words are heeded."

When we come together, when we have shared values as a group, we have the power to change society. We have the power to treat people with dignity. We serve as an example to others of how to work with respect for one another. Things that the charitable sector has historically had at its core.

In an effort to make the nonprofit sector "more like a business," I hope that we have not forgotten that the word “philanthropy” means “love of your fellow man.”

***
This blog first appeared on the GoalBusters Blog and reflects the personal opinions of Alice Ferris. But Jim Anderson probably agrees, since we both wrote the GoalBusters manifesto that outlines our values.

What's Your Culture of Philanthropy?

Being a donor is often the best way to learn how to be a better fundraiser. I've experienced this on many occasions, particularly when I was the Foundation Director for Flagstaff Medical Center and was responsible for giving away a half a million dollars a year.

But right now, I'm learning a lot for another reason.

My mother-in-law, Rose Marie (Ogden) Ferris, passed away on Friday, July 19, 2013 after a long battle with emphysema. She passed peacefully with her surviving sons, Steve, Bill and Dave, nearby. While no one is ever prepared for the loss of a parent, the Ferris men are handling the transition and arrangements as well as they can. 

Of course, I was wondering how to help. I figured the things I knew how to do were planning the lunch after the service and the donations in lieu of flowers. I am a fundraiser, after all.

Here's my experience so far with the selected charitable organization:

1. It took three attempts to get in touch with someone in the development office. The volunteers and staff were uncertain who to call and asked many questions as if to "filter" me away from the development staff.
2. The person I spoke with was very nice, but neglected to get my contact information, even after I asked if she wanted it.
3. Even after I asked about naming opportunities in honor of my mother-in-law, they still don't have my contact information.

In "Under Developed:  A National Study of Challenges Facing Nonprofit Fundraising," conducted by CompassPoint and the Evelyn and Walter Haas, Jr. Fund, the analysis identified a lack of a culture of philanthropy as a key weakness of the sector. Fund development and philanthropy needs to be "understood and valued across the organization."

So I write this not to "flog" the organization in question; they took very good care of Rose and we're working out the details of the donations. But how can this, or any other, culture be improved?

Here are my suggestions:

• Make regular contact with your "directors of first contact." Who is the first person who will interact with a potential donor? Make sure they know who you are and you know who THEY are.
  
  The first volunteer we spoke with on site didn't really know what we were asking for. The second volunteer that we were referred to looked through the binder at the front desk and said, "I can't remember the lady's name who does this sort of thing." The third volunteer was almost protective--"Why do you want to speak to them? Can you give me more information?"
  
  Highlight a handful of key people in this role--people who are willing to participate and receive additional training. As they develop their persona of "brand ambassador" for the organization, their enthusiasm will eventually spread throughout the rest of the front line.
  
• Assume that your team isn't as comfortable interacting with donors as you might be. More often than we care to admit, our teams are terrified of our donors. Many of the staff don't know what to say or how to act around donors, mostly because they're afraid they'll say something wrong. Help your team understand their role in thanking donors, whether they are current, past or future. Provide them with regular training on how to communicate with external audiences as well, as communication skills are critical.
  
• Make sure you understand why they work for your organization. It's not just about you: what makes your colleagues tick? What are they passionate about related to your cause? If you understand that, you can help them find their own story that they can share. You can also help them relate to a donor, saying, "Our donors are excited about our organization, too."
  
• Collect donor information, even if you're not sure where the relationship will go. Especially if the donor initiated the contact. They want to start a relationship with you--at least have a way to follow up.
  
• Be a donor to your organization on a regular basis. Do a little "secret shopping." Call your main line. Find out what happens when someone asks to donate. Then use your experience to improve.

Culture of philanthropy is a challenging thing to build and maintain at any nonprofit organization. It requires a consistent investment of your time as a development professional, but you never know when a donor will not be as persistent as I am.

In memory of Rose Marie Ferris, mother, grandmother, wife and author, 1938-2013.