Is Doing Good All That Matters?

An inquisitive look at the real bottom-line for nonprofits.

In the minds of young people like ourselves, at the mention of the word “Nonprofit,” images of happy, smiling faces and selfless, backbreaking volunteers enter our heads.

And in the minds of many Americans, these sentiments are the same. But there are those who look beyond the velvet curtain of cheerful feelings and optimistic hopefulness, into the murky waters of fiscal responsibility and high expectations that all nonprofits must face on a daily basis. In the wake of a tumultuous year of both natural and manmade disasters, nonprofits found themselves in an interesting position.

More and more, the public was looking to them for answers. Nonprofits were expected to step in and bring results where the government fell short. Donations to these groups came in record numbers, and suddenly some organizations faced overflowing coffers for the first time in recent memory. And as we all know, with great power comes great responsibility. Rapidly following this period of abundance, there was an outcry from the public for increased transparency, and more importantly, increased accountability from nonprofits. But herein lies the problem – how can we hold nonprofits accountable? Accountable for what? Considering the fact that nonprofits exist to fix a problem that government is unable or unwilling to tackle, the fact that they are doing anything at all should be enough. Or should it?

Beginning with the horrific events of 9/11, the landscape of philanthropy changed forever. On through the tsunami of 2004, Katrina in 2005, and the deadly earthquakes just a few months ago, the effects of public scrutiny on charitable organizations have been widespread. The American philanthropic response to the September 11, 2001 terrorist attacks was absolutely precedent-shattering. Private donors contributed over $500 million in the two weeks following the attacks, and there was an estimated $1.5 billion dollars donated to charities in total. The top recipient of these funds was the September 11 Fund of the United Way/New York Community Trust, followed the by Red Cross’s Liberty Fund. Many of us remember the debates that ensued following the influx of donations which insinuated that the money donated to some charities collecting on behalf of the victims was being mishandled, misused, or worse. One of the most contentious of those debates ensnared the Red Cross, and involved their decision to put aside a large part of their donations for later use and for uses other than what donors may have been aware of (see CNN’s article linked below). The controversy eventually led to the resignation of the Red Cross’s chief administrator, who maintains that the use of the money was legitimate and defends the decisions made by the organization.

Some of the lessons learned after 9/11 were applied to problems that arose later. After the destruction caused by the tsunami in the Indian Ocean in 2004, the governments of some of the affected countries tried to address the concerns of donors by working towards greater effectiveness and transparency in fund allocations for the rebuilding effort. But does this kind of overarching supervision work, or just feed into the melee of bureaucratic confusion? McKinsey, which assisted in the planning process, began to analyze the effectiveness of these measures taken one year after the disastrous event took place (for more info, read McKinsey’s After the Tsunami: Lessons from Reconstruction). According to their analysis, many of the best practices learned by these groups on the ground were intuitive. Namely, a solid planning process is absolutely necessary, accountable goal setting and monitoring is key, and capacity building and information dissemination aid in the process of rehabilitation. But these findings are not so specific to rebuilding demolished communities. They are also infinitely applicable in a broader organizational setting. 

But after the tsunamis came a disaster that hit much closer to home. Hurricane Katrina ravaged the Gulf Coast in 2005, and the largest natural disaster in American history was born. People rushed to donate, and many questions that had arisen before resurfaced as donators were faced with the question of whom to give their money to. Once again, the Red Cross was in the limelight. In a strongly worded editorial, Richard M. Walden of the LA Times (2) posed several questions, the most salient of which asked why the Red Cross was withholding from spending such a large portion of the money they had been given. As the organization at the receiving end of 70% of the 2 billion dollars in donations after the hurricane, the pressure was on for them to make an observable difference in the lives of the victims. It remains to be seen if this observable difference will appear. As yet, there is little indication that the kind people who donated so much are affecting the kind of change that they hoped would come of their actions. And if the terms of this unspoken contract were not met, does this mean that the Red Cross and other charities who received donations didn’t hold up their end of the bargain? 

What works well in business often works in rebuilding efforts, and what works in rebuilding efforts also works in organizational management. Good sense dictates that there is no reason that nonprofits should be held above the fray. There are reasons that accountability and transparency work, and those reasons are found in quantifiable and tangible results. But as I stated before, there is a downside to nonprofits “going corporate.” No one wants to lose the heart and optimism found in these organizations, because those are the very reasons why so many amazing people dedicate their time, money, and lives to the cause. Nonprofits must look for a new bottom-line; one of fulfilling the unspoken agreement between the organizations themselves and the people who keep them afloat. The people who volunteer, fund, or work for nonprofits expect results, and the best way to get those results is through a measured and well thought-out plan where transparency, planning, and accountability are tantamount to “profit” and success.

The big dilemma here is one of intention. The old adage was “If intentions are good, how can we possibly demand more?” The answer lies in the way that the public, and the nonprofits themselves, must come to view themselves. If a nonprofit organization allows itself to look beyond the image of the sweat stained volunteer and instead look towards one of a business with a clear mission and attainable goals, they would stand to benefit a great deal. However, the most important and essential stipulation is that these establishments find a way to deftly bridge the divide between these two images. There is a way to strike a balance - and the nonprofit that finds it is the one that will survive long-term in the changing climate.

Other Links and Sources:

(1) http://fdncenter.org/research/trends_analysis/pdf/sept11.pdf

(2) http://www.latimes.com/news/opinion/la-op-redcross25sep25,0,5057936.story?track=tothtml

http://archives.cnn.com/2001/US/11/06/rec.charity.hearing/?related

http://www.onphilanthropy.com/tren_comm/tc2006-01-06.html

Technorati Tags: philanthropy, volunteers, nonprofits, future leaders in philanthropy

More and more, the public was looking to them for answers. Nonprofits were expected to step in and bring results where the government fell short. Donations to these groups came in record numbers, and suddenly some organizations faced overflowing coffers for the first time in recent memory. And as we all know, with great power comes great responsibility. Rapidly following this period of abundance, there was an outcry from the public for increased transparency, and more importantly, increased accountability from nonprofits. But herein lies the problem – how can we hold nonprofits accountable? Accountable for what? Considering the fact that nonprofits exist to fix a problem that government is unable or unwilling to tackle, the fact that they are doing anything at all should be enough. Or should it?

Beginning with the horrific events of 9/11, the landscape of philanthropy changed forever. On through the tsunami of 2004, Katrina in 2005, and the deadly earthquakes just a few months ago, the effects of public scrutiny on charitable organizations have been widespread. The American philanthropic response to the September 11, 2001 terrorist attacks was absolutely precedent-shattering. Private donors contributed over $500 million in the two weeks following the attacks, and there was an estimated $1.5 billion dollars donated to charities in total. The top recipient of these funds was the September 11 Fund of the United Way/New York Community Trust, followed the by Red Cross’s Liberty Fund. Many of us remember the debates that ensued following the influx of donations which insinuated that the money donated to some charities collecting on behalf of the victims was being mishandled, misused, or worse. One of the most contentious of those debates ensnared the Red Cross, and involved their decision to put aside a large part of their donations for later use and for uses other than what donors may have been aware of (see CNN’s article linked below). The controversy eventually led to the resignation of the Red Cross’s chief administrator, who maintains that the use of the money was legitimate and defends the decisions made by the organization.

Some of the lessons learned after 9/11 were applied to problems that arose later. After the destruction caused by the tsunami in the Indian Ocean in 2004, the governments of some of the affected countries tried to address the concerns of donors by working towards greater effectiveness and transparency in fund allocations for the rebuilding effort. But does this kind of overarching supervision work, or just feed into the melee of bureaucratic confusion? McKinsey, which assisted in the planning process, began to analyze the effectiveness of these measures taken one year after the disastrous event took place (for more info, read McKinsey’s After the Tsunami: Lessons from Reconstruction). According to their analysis, many of the best practices learned by these groups on the ground were intuitive. Namely, a solid planning process is absolutely necessary, accountable goal setting and monitoring is key, and capacity building and information dissemination aid in the process of rehabilitation. But these findings are not so specific to rebuilding demolished communities. They are also infinitely applicable in a broader organizational setting. 

But after the tsunamis came a disaster that hit much closer to home. Hurricane Katrina ravaged the Gulf Coast in 2005, and the largest natural disaster in American history was born. People rushed to donate, and many questions that had arisen before resurfaced as donators were faced with the question of whom to give their money to. Once again, the Red Cross was in the limelight. In a strongly worded editorial, Richard M. Walden of the LA Times (2) posed several questions, the most salient of which asked why the Red Cross was withholding from spending such a large portion of the money they had been given. As the organization at the receiving end of 70% of the 2 billion dollars in donations after the hurricane, the pressure was on for them to make an observable difference in the lives of the victims. It remains to be seen if this observable difference will appear. As yet, there is little indication that the kind people who donated so much are affecting the kind of change that they hoped would come of their actions. And if the terms of this unspoken contract were not met, does this mean that the Red Cross and other charities who received donations didn’t hold up their end of the bargain? 

What works well in business often works in rebuilding efforts, and what works in rebuilding efforts also works in organizational management. Good sense dictates that there is no reason that nonprofits should be held above the fray. There are reasons that accountability and transparency work, and those reasons are found in quantifiable and tangible results. But as I stated before, there is a downside to nonprofits “going corporate.” No one wants to lose the heart and optimism found in these organizations, because those are the very reasons why so many amazing people dedicate their time, money, and lives to the cause. Nonprofits must look for a new bottom-line; one of fulfilling the unspoken agreement between the organizations themselves and the people who keep them afloat. The people who volunteer, fund, or work for nonprofits expect results, and the best way to get those results is through a measured and well thought-out plan where transparency, planning, and accountability are tantamount to “profit” and success.

The big dilemma here is one of intention. The old adage was “If intentions are good, how can we possibly demand more?” The answer lies in the way that the public, and the nonprofits themselves, must come to view themselves. If a nonprofit organization allows itself to look beyond the image of the sweat stained volunteer and instead look towards one of a business with a clear mission and attainable goals, they would stand to benefit a great deal. However, the most important and essential stipulation is that these establishments find a way to deftly bridge the divide between these two images. There is a way to strike a balance - and the nonprofit that finds it is the one that will survive long-term in the changing climate.

Other Links and Sources:

(1) http://fdncenter.org/research/trends_analysis/pdf/sept11.pdf

(2) http://www.latimes.com/news/opinion/la-op-redcross25sep25,0,5057936.story?track=tothtml

http://archives.cnn.com/2001/US/11/06/rec.charity.hearing/?related

http://www.onphilanthropy.com/tren_comm/tc2006-01-06.html

Technorati Tags: philanthropy, volunteers, nonprofits, future leaders in philanthropy

Comments

[Divine Tabios]

Great point, Adriana. It's so important now for non-profits to begin thinking beyond just achieving their social missions. The question of whether they are doing it effectively and whether they can continue to be effective five or ten years down the line must be answered. As it is, there are so many non-profits that just exist, rather than thrive.