Managing nonprofits in an “age of hope”

December 29, 2008


– Prof. James Post, an authority on corporate governance, teaches “Strategies for Nonprofits” at the Boston University School of Management. The views expressed are his own. –

I am inclined to think the Bernard Madoff affair has blown the lid off the financial madness of this decade.  We have been living in an age of fraud, and now must rethink the way we do business.  As John Kennedy once appealed to the nation’s better angels to call us into public service, Barack Obama’s inaugural address should instruct us on our obligation to serve the greater good.  It’s not just a moral concept; it’s good business.  I offer a corollary as well: Without good business, how far will a moral concept take you?

The management cliché about nonprofits goes something like this: What they lack in business savvy or operating budgets they make up for in passion and vision.  This notion was especially apt in an age of decreased governmental support.  And there’s a private-industry parallel declaring that firms may have a wealth of professionally trained managers but run in the red when it comes to inspiration.  Few organizations have it all, so private and public industry must continue to collaborate to serve the community.

If Obama can keep the lives of real Americans in his sights, despite the overwhelming urge to obsess over Wall Street and Baghdad, he can have a profound effect on reversing the destruction wrought by the age of fraud.  He can strengthen the bond between public industry and the private sector in ways that benefit all of the stakeholders.  In many ways, the time is ripe for nonprofits to set a new example, one that marries sound management and ethics, and proves they can stay together for the long haul.

How do nonprofits rise to that challenge?

For starters, Obama’s Social Entrepreneurship Agency for Nonprofits and Social Investment Fund Network purportedly will “build the capacity and effectiveness of the nonprofit sector.”  Not exactly a trillion dollar cash infusion, but a seat at the policy table.  That means better lobbying access, governmental R&D/capacity-building support, a streamlined grant-making process, more explicit encouragement of civic involvement, and greater accountability.  More attention will be paid to the energy, education, and training sectors, meaning added incentive for people to get involved in these areas.

Nonprofits, you need to dust off your gym bags.  If you’re finally going to have that equal playing field in the competition for governmental attention and support, you need to hone your skills and get your team into shape for the upcoming season.  Whether a senior manager looking to move up the professional ladder or a new executive director seeking more effective ways to guide and manage your organization, you need to strengthen your skill set, increase your confidence to lead, and join a focused network of people who share a vision of management excellence.

For instance, when was the last time you stepped away from the day-to-day tactical management of your underfunded, overburdened organization to think about long-term strategic planning, more efficient project management practices, or funding innovation?  How often do you network with your peers in other organizations and report best practices?  What steps have you taken to insulate yourself from the consequences of our unhealthy economy?

Most importantly, you must avoid scandal (or the appearance of scandal) by having unquestionable ethics and demanding the same from your team.  You must engage in new and innovative partnerships — with other nonprofits and with corporations; think like an entrepreneur — creatively, resourcefully, relentlessly.  And you must improve your accounting and assessment practices.  These are just non-negotiable, and if I have to explain why, you’re more out of shape than you thought.

In short, nonprofits are not exempt from Obama’s call to change.  Reject low standards.  Raise your sights.  Find new ways to be heard and taken seriously in a communications landscape that seems to have the bandwidth for only two to three stories a week.  Most importantly, get the training you need to run your organization efficiently.  You can’t capitalize on any of these opportunities if you’re out of breath before you even warm up.


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I completely agree with this article and many of the comments. Too long, in my experience, has the non-profit/charitable sector been immune from serious scrutiny. It needs to be recognized that it has become an industry sector like any other industry sector. The emerging non-profit/charitable business sector needs to come under the same regulation and governance that other for-profits are subject too. In fact, a higher standard needs to be developed since the non-profit/charitable sector can rely on moral sentiments and good will to raise funds, and this in turn should produce a fiduciary duty of the highest variety owed to both the people who give and to those whom the money is intended.

The high wages within non-profits/charitable organizations and the low levels of accountability to both the donor and the recipient of aid have fostered an environment of bizarre financial opportunity for precisely the type of person who is not motivated by the urgency of a social cause or harm, precisely the type of person who should not be working in the non-profit/charitable sector.

Posted by Derek James From | Report as abusive

Isn’t it typical for a bleeding heart liberal to write an article espousing that American give more money away to the poor and other countries..American does more aide around the world that all of the others added together…we are more charitable and caring..I for one am SICK of this liberal agenda of taking our money and dispensing it as the government deems appropriate..I have finally STOPPED donating to charities for this reason..My Taxes are charitable enough..I think more people will start hoarding their money and stop giving if his global inniative is implemented..I will be glad when he is voted out of office in 2012..and congress removed in 2010..they will spend the next two years sticking it to us and people will say enough is enough!!..remember my words

Posted by Jeanne | Report as abusive

Gosh, Jeanne… You seem awfully angry at our new president when he hasn’t even had a day of work yet. Through your barely coherent rambling, I read that you’re mad about all the things the current free-spending administration has done for the past eight years, but somehow you blame it on “the liberals.” The current, outgoing administration has destroyed the economy.

There are many, many, many charities that do not get government funding, that do great work. Instead of complaining about how you’re sick of begging charities sponging off the government and giving all the money away, you should research a little bit and give to the ones deserving of your support. The ones the article is putting the spotlight on.

There are excellent charities out there. But in these economic times, we’ll see many of the less fit disappear, leaving those they serve without help.

Posted by Craig | Report as abusive

Non Profit has become synonymous with charity or foreign aid. This is an unfortunate misconception. At one time broadcast companies were required by law to provide 30 minutes of commercial free news every morning and evening as a public service. News rooms were run as a Non Profit entity. Public health systems here and around the world including nationalized health care are not for profit. Universities are public and private are run the same way.

Perhaps it is time that as a society we weigh in on what services we wish to remain for profit or not for profit. And while we are at it, however we choose, we should demand better from both. I for one am not satisfied with the state of health care or education at any level in this society just to name two. The basket is full of things that need to be fixed.

Posted by Anubis | Report as abusive

The dominant equation seems to be – better pay = better performance. But if this was true, then the sad situation we are in today should not have been. Unfettered worship of mammon will only culminate in the sort of quagmire Wall Street and US finds itself in. If the reward on the other side is too great (read multi million dollar stock options), execs will find all ways, good and not so good to achieve it, the stakes are simply too high and try any means to achieve it attitude prevails, and when this attitude gets engendered on a mass scale, there is a destabilising effect on the society.

Run the company for a few years, cash in on your options and get out, leaving the company in a mess, who cares, the government will bail out anyway, if we are too big.

So probably we need to think of other ways to reward executives rather than money and a disproportionate amount at that. One way, lock their options and let them cash in 5 years after they have quit. This will ensure they make decisions for long term good.

Posted by TS | Report as abusive

I love satire…obahhh-maaaah will fix as much as W after clintoon…
You still don’t get it! There is no difference:
The 2 wings of the demopublican party been having fun at our exspense for decades!

Obama who appointed all Clintoon cronies and voted for the bail out and his handler goes back to Carter days-
the polish immigrant whose ‘children’ worked for both McCain and Obama during the campaign.
Read more, believe less of the offical distraction propaganda, do your own research.
Stop ingesting fluoride!

Posted by birgit | Report as abusive

After Wall Street bail out, and failed regulatory efforts, it’s clear that charities, non profits, nor institutions can or should be tax exempt since together they have the capacity to save and hoard, steal, and waste American assets, income, and jobs, then leave America with the bill – as has happened already.

The price for that inefficiency and neglect must be taxes for those not subject to them previously.

America has no choice, or there will be no America.

Posted by Pat | Report as abusive