Why Nonprofits Are Committing Suicide

(Photo via MSN)

Summary: Nonprofits are hanging themselves through a failure in leadership, a failure to set ambitious goals and a failure to take the needed risks.  Are they really any better than the for profit sector ethically?  And can a dying world really afford such shortsightedness from so-called champions of good?

A Failure in Leadership

The worst part about nonprofits is leadership. Dan Pallotta says it best in one of his articles Compensation Should Be Aspirational.

Notice again how different the humanitarian sector’s approach is from the for-profit sector’s. When a business wants to acquire a leader it offers a compensation package higher than what its competitor is paying to lure the person away. When a humanitarian organization wants to attract that same person, the arrogant and clueless argument is made that the candidate should accept a lower salary and work his or her way back up. Never mind that the person will never accept this proposal.

For-profit businesses set their sights on who they want and pay to acquire them. By contrast, it wouldn’t occur to the humanitarian organizations to set their sights on the kind of leaders they would want if they gave themselves permission to dream a little bit — superstars with breathtaking track records who could quadruple their size in five years. Rather, nonprofits sets their sights on a pay range designed to ensure that it attracts no one worth any more money than any of its peers and then sorts through the available candidates. And this practice has gone on for decades.

Many nonprofits don’t pay for or get amazing leaders who could help them reach their mission goals and do the most good in their community.  Instead they settle for paying people insulting amounts to live on and then expect them to torture themselves working for them.  How does  a starved animal help anyone?

Is it surprising that burn out is inevitable?  (Click here for an article on the problems with nonprofits)  And nonprofits accuse businesses of being shortsighted about…

Getting the Best (Most Fair) Outcomes

If you want to succeed and make a real lasting difference then you’ve got to set ambitious goals and work hard to make them happen.  Many nonprofits make the huge mistake of setting really vague, wishy-washy goals like “Feed all the hungry in this-or-that city” instead of specific targeted goals — “Feed 100,000 hungry people in South Central neighbourhood.”

It’s because they’re scared of not meeting their targets and not satisfying funders.  Set weak or smoky goals and just meet them — great it’s persuasive to your grant funders.  It doesn’t make for a motivational or inspirational success and telling yourself to get up in the morning only gets harder.

In this day and age with such important missions that nonprofits have (however badly defined) — can nonprofits really afford to be so meek, typical, so average and so NOT outstanding.  It’s not much of a story and there’s little risk.

Many nonprofit leaders are fearful of spectacular success.

They fear making money because it somehow taints them.

They fear ambition because they think it makes them somewhat less pure.

And yet…

Nonprofits Say They Want to Change the World

Yet all the evidence shows that most people coming from the nonprofit sector are happy if they can just get by.  If you give people less than what they need to survive don’t be surprised they don’t strive for more or aren’t willing to take risks.  All the examples I’ve seen where nonprofits have seen spectacular success is because their leaders (usually one) had a strong background from the business world and weren’t afraid to do what it takes to make things happen even bending rules that no longer make sense today.

They also happened to have a good amount of startup resources too.

(Click here for an article on the problems with nonprofits)

So…

Does the Ends Justify the Means?

Lets face it.  Nonprofit and business thinking has to meet in the middle somewhere.  The world needs a better middle because right now we’re nowhere near it.  In this day and age can a world that’s suffering environmentally and socially afford such lack of vision from the nonprofit sector?  (Click here for an overview of our dying world)

Blind idealism won’t get you anywhere.

Getting results will.

And yet it leads to the big nonprofit paradox (click here for an article about that).  If you act more like a business will you lose your soul?  Now we have more businesses trying to be more socially and environmentally responsible — maybe that’s telling you that it’s time to get a move on here?

And…

Is There A Real Alternative?

Social enterprises are a new kind of nonprofit-business model that’s trying to be the middle right from the start.  It’s just starting to grow though it still doesn’t have enough support because the people with the money haven’t quite figured it out yet (what is this new kid going to grow up to look like?).

Yet we have billionaires calling on the rich to give away half their wealth to make the world a better place.  (Click here for Warren Buffet and Bill Gates making the call)

Polls in the United Kingdom Great Britain in 2009 show that people want businesses and organizations to have more social and environmental values even with the economic crisis (click here).  And some are already seeing and predicting the future trends in the field (click here).

Maybe it really is time for nonprofits and businesses to work harder than ever to meet in the middle.

Thus given the situation today can nonprofits afford to have shortsighted leadership?  Can they afford to not take risks and not take a stand against funding systems, laws and more that actually hurt hundreds if not thousands of people?  What do you think?  And who do you know that goes against the grain?

Technorati Tags: ethics, goal setting, leadership, mission statement, non profits, not for profit, risk, risk management, Social Enterprise