New nonprofit world – Fortune reports on changes

Like it or not, the new economy is transforming the nonprofit world, according to a special July report written for Fortune magazine on “New Frontiers in Philanthropy.”

Venture philanthropy, or the application of venture capital principles and practices to social transformation, is one aspect of this transformation. Venture philanthropists are willing to invest time and expertise as well as money, but want some measurable return on investment, some visible result.

Accountability can be difficult for nonprofits, however, whose success is measured in human terms rather than dollars. Nonprofit managers also worry that economies of scale and other business practices don’t help organizations that work through individual relationships.

Even traditional philanthropies may change dramatically: many predict a rash of mergers in the nonprofit world over the next few years.

Nonprofit managers say mergers are inevitable because many charities and foundations do not have the resources for staffing, equipment and computers to meet the ever-increasing demand for their services. Organizations that share a mission and that can combine their administrative staffs have a better chance of surviving.

Venture philanthropists have responded by offering to supply the needed technology and expertise. Offers to supply technology carry their own problems for nonprofit executives, however. Do they accept systems that are difficult and expensive to maintain? Does the philanthropist really understand the needs of the organization? If the company offering the technology is new, will it be around for long enough to put its initiatives on solid ground?

Partnerships between profits and nonprofits are increasing in spite of the questions. The many initiatives bringing computers into public schools are a perfect example of this, but many companies are also partnering with nonprofits that fight hunger, homelessness or domestic abuse.

The Internet has a tremendous capacity to help nonprofits find both money and volunteers. The main difficulty, at least with fundraising, is that a Web site must have a high volume of traffic to be financially successful.

Charity malls, e-commerce shopping sites that make charitable donations for each online purchase, are one of the main online fundraising methods. The malls are unregulated, however, and nonprofits have had problems such as being listed without being asked, receiving minimal donations, and being unable to get information about the donations.

Still other sites act as clearinghouses for donations, allowing potential donors to research a wide variety of organizations and then direct their money to causes that fit their interests. Similar sites exist for volunteering, matching volunteers with appropriate organizations in their zip code.

Information technology helps many charities, but undermines the need for others. People who are interested in social change can link up with other interested people on the Internet, without going through an intermediary organization.

Furthermore, the Internet has given its public an enormous appetite for daily information updates. Nonprofits will more and more be expected to keep their donors and clients constantly informed about their activities and finances.

For full story, see Fortune.

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