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#533: Are You Too Focused on "Business"?

Posted By Mark Haas CMC FIMC, Wednesday, March 30, 2011
Updated: Wednesday, March 30, 2011
My clients are in the foundation and nonprofit space but it sometimes irks me that consultants are asked to make these organizations "run more like a business." Unlike a for profit business, my clients' missions are not to maximize shareholder wealth, so is it right to be doing so?

In the end, the main difference between for profit and non profit is the disposition of profits. The largest foundations have assets that put them well inside the Fortune 500 and some operate with thousands of employees across the globe. Therefore, it is logical to consider them businesses because they are. Just because their missions are not oriented to shareholders does not mean that the leadership, strategy customer service, information management, human resource and business processes don't deserve your best improvement efforts. The outcome of applying your consulting skills is not profitability to shareholders but service to stakeholders.

Consider that a poorly run nonprofit or foundation loses the trust of its funders and service recipients. It also fails to generate enough revenue or control costs such that it compromises its ability to fully achieve its mission. Finally, employees and volunteers working at an organization with an inefficient, unfair or dysfunctional working environment will not contribute their best efforts. For these reasons and more, your best efforts to run your clients' organizations efficiently and effectively are valid.

Tip: That said, the constituents of every organization, for profit or nonprofit, benefit from competence consulting advice aimed at good "business" practices. This applies to public sector organizations as well. Some government agencies and nonprofits are so effectively managed that they put a lot of for profit businesses to shame. Your clients can be in this category.

© 2011 Institute of Management Consultants USA

Tags:  business culture  consultant role  customer understanding 

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Comments on this post...

Raymond W. Suarez CMC says...
Posted Wednesday, March 30, 2011
Well said, Mark. I agree wholeheartedly!
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Patricia Evans says...
Posted Friday, April 1, 2011
Further to that: check out Dan Pallotta's book, Uncharitable. The Stanford Social Innovation Review has just released the following review of "Uncharitable:"

The Double Standard
By Renée Irvin Spring 2009

Dan Pallotta has written Uncharitable as a response to every media report about a charity spending $400,000 to raise $1 million, every donor who wants at least 90 percent of her donation to go toward the cause, and every nonprofit executive director who eschews marketing for fear that donors will consider it extravagant. "Enough already!" the book explodes. And it does so with such good reason and blunt candor that it deserves to become the nonprofit sector's new manifesto.

Pallotta reviews the frugal, almost prudish constraints the public expects from nonprofits, everything from a ban on paid advertising to substandard wages for nonprofit employees. But if we want the nonprofit sector to do without the successful tactics of the business sector--say, marketing--how can we expect the nonprofit sector to aspire to greatness? How will it ever grow, get results, and reach new supporters? Why, for instance, did the American Cancer Society spend only $1 million on anti-tobacco legislation in 1998, when, during that same year, the five largest cigarette manufacturers spent more than 6,000 times that amount in advertising and promotions? (more...)
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