June 8, 2014
The Business of Non-Profit Organisations
![People-first-300x300[1]](https://management4volunteers.wordpress.com/wp-content/uploads/2014/06/people-first-300x3001.jpg)
I nearly bought myself into an argument recently, wanting to defend the claim “Charity organisations are different from a business”. Now I have done some reflecting and marshalled the points I could have made at the time, as a kind of dialogue with myself.
Of course they are different, given the ‘for-profit’ and ‘non-profit’ labels. But I have never liked the use of ‘charity’ in reference to non-profit organisations and NGOs. The word has got too many connotations of ‘doing-to’ consumers/users/clients, as many a for-profit business operates. I prefer the concept of ‘doing-with’ people – groups and individuals in the community. When I hear concerns expressed about large nonprofits operating like corporate businesses I have to concede my opponents might have a point.
On the other hand it is not an unreasonable expectation that non-profits operate in a businesslike manner, especially in a contracting environment. Of course non-profits need to be accountable for their financial management. They also need to prove their value, to demonstrate outcomes and impact, or in current business-speak, to show a social return on investment. And yes, they need to establish a strategic plan, set policy, outline the programmes and services they will deliver.
But still I cry: they are different from a business. They do not exist to make a profit. They deliver services, they fill a gap, provide for a need, or they offer opportunities for healthy lifestyles and leisure interests. These organisations bring communities together, engage people in activities and actions outside the market-place. Collectively the non-profit sector and its associations represent Civil Society, acting as a counter-balance to the weight of the private and public sectors. Otherwise non-profits get swallowed up in politics and the economics of consumerism.
- That does not excuse them from governance responsibilities and ensuring practice standards are maintained.
Of course not. If they are not meeting expectations, if they are not offering an environment for member or volunteer satisfaction then the organisation will fold. Non-profit organisations are different from businesses in their aims and obligations. They began with a specific mission, and they hold particular values.
- But so do business organisations. They are no different in holding statements on their vision, mission and values.
Yes, I am reminded of the snappy mission held by Canon: Beat Xerox! That competition element is a big driver in business, always looking for that niche in the market, and to improve market share. That is not the business of nonprofits! Non-profit organisations tend to live by their vision and values. In business these can be just words and not treated seriously, as the Enron history shows. Not to mention the shady dealings of finance companies exposed in the Global Financial Crisis.
Non-profit organisations do not compete, they complement each other. They are fulfilling particular needs for a specific community, at a particular time and place. And there is much more focus on collaboration, working together and sharing information. Businesses work to protect their intellectual property and ensure their bottom line is always a good one.
- And so we should! If it wasn’t for business and our ability to create profits and pay taxes non-profit organisations would not be ‘in business’.
Now you are getting narky. And also highlighting the fundamental difference between business and non-profit organisations. Put it this way: business is about making monetary profits which go to shareholders, the investors. The profit for a non-profit organisation is the benefits and gains seen in community and individual well-being, and in the contributions of a well-run volunteer programme. That’s why it’s important that we stay different.
You are still not convinced? Yes, there is plenty more ground to cover in this debate. What would you have to say?
April 21, 2013
What’s to Become of Volunteering?
There’s my question for the week, something to puzzle over after reading the headline Some community social services could be funded privately in future, under a new agreement with the Government. This is the first public statement on Social Bonds from a New Zealand government minister.
‘Social Bonds’ is a process of advancing funds to NGOs by philanthropist groups (‘private providers’) for the term of an outcomes-based contract, and then reimbursed by Government when the NGO delivers on pre-determined targets. This funding arrangement has been researched and discussed within government in New Zealand since 2009. Earlier this year a roadshow promotion from Treasury and Ministry of Health travelled the country to inform community organisations, and to start public discussion.
Those of us who do the media watching, monitor trends, and understand the politics of the day will not be overly surprised. In the UK Social Bonds have been transforming the community and volunteer landscape since Big Society became the favoured social policy of the Coalition Government. An Australian report indicates ongoing discussion and debate on details of a Social Bond programme. Maybe we should heed a Canadian view that says “Social Impact Bonds are a new way to privatise public services.”
On the face of it, the intention of a Social Bond arrangement makes a lot of sense – as any venture capitalist would want from investing in a new enterprise. You put in the money, and you expect to see some real returns on investment, like a reduction in the rate of teen-age pregnancy, fewer smokers, or a drop in criminal re-offending figures. Social Bonds also link favourably with current developments in New Zealand for user-friendly contracts between government and NGOs, including multi-agency contracting and simple format financial reporting. Social Bonds sit well with the results-based programme set by Better Public Services – though this ambitious agenda needs to involve all parts of the community and voluntary sector, from the beginning.
Nothing is yet certain, except for evidence of government intentions for change. In my reactionary moments I see a pincer movement to corral organisations into a private sector model of service delivery, to get the job done in the shortest time at the lowest cost. There are risks of reduced public accountability. Worse is how the ethos of a welfare safety net is further eroded, because investor profits will take precedence. At the work-face performance-based contracting could mean a selective practice devoted to the most ‘deserving’ clients who will boost the return on investment.
Nowhere in the discussion so far has there been a mention of volunteers – neither their existing contributions to NGOs, nor their future potential. Non-Government Organisations are those which contract with government. To be drawn closer to web and snares of government is to revert to the decades-old acronym of QANGO – a quasi-autonomous non-government organisation, the ‘almost, but not quite’ independent body, a phrase that will fool nobody.
Not-for-profit organisations (NFPs) can be thankful they are outside this net. Yet they too will be drawn into this new environment, if only in their efforts to secure a share of the charity dollar. Will philanthropists consider NFP applications favourably alongside a guaranteed return for investing with NGOs? And, if the ROI from government contracts is lower than finance market rates doesn’t that reduce the size of the over-all funding pool?
What will become of volunteering when government-sponsored community services become the norm?
Well, here’s your example. There is one institution, developed and run by volunteers for many years. Since it gained a government contract a few years back there has been a huge growth in paid staff, and volunteers have been side-lined, reduced to wondering what their role is, and whether they are needed any more. They do not feature on the organisation chart; they are bit-part players, not really essential to the way the organisation is playing out its mission and vision.
If I was writing a fictional scenario for the future I would be describing the growth in NGOs marketing and fundraising departments. The organisation-wide volunteer programme will be down-graded in favour of ‘greater efficiency’ from paid staff. Volunteer activities will be confined to promotional and fundraising events. No need now for managers of volunteers, because HR and FR people know how and can do.
But if I was looking for inspiration I would go straight to Inspiring Communities, where community-led change is still the mantra to follow, where they know about ‘learning by doing’, about community development thinking and action. Or I would read again the stories from NZ Social Entrepreneur Fellowship.
Volunteering shall not die, because it is in our nature to collaborate and to care about our families, neighbours, and communities. We just need to our voice to be heard, and heeded.
Management4Volunteers Blog 