The Risks Posed by a Sector’s Silence: Toward a Forceful and Positive Articulation of the Nonprofit Sector

This is the final installment in a series of six blog posts.

Why are we, in the nonprofit sector, putting corporations on a pedestal? The recent damage caused by the unethical, if not illegal, practices of many of this country’s largest financial institutions needs no recounting. Nor does the environmental destruction wrought by a wide range of companies over the decades.

Yet, as I have discussed on this blog over the past six weeks, many continue to hype boundary-blurring, beat up on the label “nonprofit,” advocate the adoption of “business thinking,” and promote corporations as the solvers of our toughest social problems. All this without sufficient acknowledgment of the vital role of nonprofits – organizations that do not have to answer to investors pushing for a financial return.

Let me be clear. Many companies do good every day, and our embrace of free markets and entrepreneurialism are defining strengths of this country. The jobs, products, and services created by American corporations have enriched our lives and our country. The creation of wealth in our capitalist society makes possible the philanthropy that supports the nonprofit sector that I have been arguing is so important.

Further, the push for more investors to consider the social impact of their work through an “impact investing” approach, which has deep historical roots going back centuries, should be celebrated and encouraged. We should applaud companies that operate responsibly – both by mitigating their negative impact and creating positive impact in various ways. There is no question about that.

But we also need to speak up – much, much more forcefully – for the nonprofit sector’s distinct role and relevance. For this, too, is a defining strength of our country. We need to point to the historic and present day examples of foundations and nonprofits that make communities stronger, people healthier, and our environment cleaner.

We need to cite not just the obvious historical and contemporary examples of nonprofit influence and impact – the educational institutions created for African-Americans in the South in the early 20th Century, the Green Revolution, reduction in smoking rates, progress in gay rights. We need also to discuss present-day examples that are lesser known, from the work of the Stuart Foundation and its grantees to improve life outcomes for foster youth in California to the work of the Wilburforce Foundation and its grantees to protect habitats for wildlife in the Pacific Northwest to the work of the Institute for Healthcare Improvement to reduce hospital mortality rates.

We need to push back against those who argue that the sector has failed because we have not yet solved all our social problems. The question is not whether all our social problems have been solved but, rather, whether foundations and nonprofits have had a meaningful positive effect on people, issues, and communities.

As Rockefeller Brothers Fund President Stephen B. Heintz often points out, charitable giving is approximately $300 billion annually – which is a big number but not when compared to nearly $4 trillion in federal government spending alone and much more when state and local government spending is added in. So it’s a bit far-fetched to presume that we can hold philanthropy and the nonprofit sector responsible for the fact, for example, that poverty persists.

Heintz notes that, just as we have three branches of government that act as checks on each other, so too can our three sectors act as checks on each other. Although the nonprofit sector is the smallest, it often plays an invaluable role in either doing what the other sectors can’t or won’t – or in prodding business and government to do better.

And we need also to push back against those who over-simplify and presume that success in philanthropy and the nonprofit sector can come as easily as success in business. Addressing social problems is tough, grinding work. In the face of that day-in, day-out challenge, it’s easy to be tempted by the lure of the shiny “new” framework or approach. But caution is in order: the philanthropic road is littered with the wreckage of successful entrepreneurs who thought they’d single-handedly fix social problems that have confounded us for centuries.

We need to remind those entering philanthropy of Andrew Carnegie’s words: “It is more difficult to give money away intelligently than it is to earn it in the first place.” Carnegie knew what he was talking about, and so did Warren Buffett when he said, “In business you look for the easy things to do. … Philanthropy … is a tougher game.”

Making the case for the sector will not be easy, especially as corporations and business schools – flush with resources – increasingly position themselves as the hubs of conversations on “social impact.” Making it tougher, still, media coverage of the sector is now dominated by frequently uninformed reporters and bloggers at business outlets like Fast Company and Forbes who embrace the “business thinking” paradigm. The New York Times no longer even has a nonprofit sector and philanthropy beat reporter.

So it won’t be easy, but we can do it. If nonprofits know how to do one thing, it’s to persist and get stuff done in the face of limited resources. We need to use the full range of media ambitiously and creatively to make the case. This video by Robert Egger confronting Rush Limbaugh for calling nonprofit workers “lazy idiots” is the kind of in-your-face defense of the sector that is all too rare.

We need to shed our timidity. We need to find our collective voice, telling the country what the nonprofit sector has achieved and what it can achieve.

Our challenge is clear and the stakes are high. As I said in my first post in this series:

“The consequences of a lack of understanding and appreciation for the role of the nonprofit sector are many – and potentially dire. If lawmakers and the media fail to grasp the distinctive role of the nonprofit sector, the policies that encourage giving and exempt nonprofits from taxes are less likely to be perpetuated. If talented and idealistic young people do not see nonprofits as the center of the action in the pursuit of positive social impact, nonprofits will lose out in the competition for talent. If businesses are portrayed as our best hope for positive social change, and further elevated in their influence on the public debate on crucial issues, we risk becoming a society in which public discourse is dominated to an even greater extent by corporations with a direct financial interest in the outcome. If we see “business” as a synonym for effectiveness, despite the evidence all around us to the contrary, we will fail to appreciate the achievements of the many effectively managed nonprofits that produce positive outcomes for those they serve every day.”

But we need more than talk.

Unless we are demonstrating our effectiveness, our words will be empty. The sad fact is, as many terrific nonprofits as there are, there are also far too many ineffective ones (just as there are far too many lame companies and pathetic government agencies). Given our relative size, and the scale and complexity of the challenges we seek to address, the nonprofit sector can afford to tolerate ineffectiveness least of all.

So let’s root it out by pushing relentlessly, each and every day, for greater effectiveness in the sector. We need to champion what it takes for nonprofits to really achieve results: clear goals; coherent strategies; disciplined implementation of those strategies; and relevant performance indicators to gauge progress. These are the characteristics needed if nonprofit organizations are to maximize their impact. Exemplifying them, each day, is much harder in the nonprofit context, where the problems are the toughest and performance measures are elusive.

Achieving nonprofit effectiveness is extremely hard work, but it’s essential.

So let’s rise to the challenge, let’s own it, so we can point with ever greater pride to the achievements of the nonprofit sector: to healthier people and communities, greater equity, less suffering, and a better environment.

 

Phil Buchanan is President of CEP. You can follow him on Twitter at @philCEP.

Author’s note and acknowledgment: The views expressed here are mine. Healthy debate on these issues occurs within the walls of CEP and in our board room. I am grateful to the many people, including CEP board members and staff, as well as colleagues and friends outside CEP, who gave me feedback on earlier drafts of these posts, much of which I incorporated.

Please read on to see the rest of this series:

Part One – Our Starry-Eyed Idealization of Markets
Part Two – The Need for Clear Boundaries

Part Three – Wearing It Proudly: Clarity on Being Nonprofit
Part Four – “Business Thinking”
Part Five – Companies to the Rescue

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