Making progress: An essay, Part 5

[Editor’s note: This article first appeared in the 2004 annual report of the Z. Smith Reynolds Foundation in Winston-Salem, N.C.]

By Todd Cohen

Helping nonprofits operate more effectively is a crucial challenge for funders, particularly those that cannot get over the idea they should support nonprofit programs but not their operations.

Yet to survive and thrive in an increasingly competitive marketplace in which donors, volunteers and regulators demand greater accountability from nonprofits, securing support depends on showing good business sense and practices.

Helping nonprofits improve the way they do business first will require that funders retool their own operations, restoring their credibility and giving them greater insight into the changes for which nonprofits need support.

Strengthening their internal operations arguably is the biggest challenge charitable organizations face. If philanthropy and the nonprofits it supports hope to find solutions to complex and intertwined social problems, and to help change the public policies feeding those problems, they first must make their own organizations sound.

The gears of the nonprofit world are grinding: Pay and benefits for smaller organizations are low, hours are long, and training for staff and volunteers is rare. Boards do not actively contribute their time, know-how and connections, and they starve their organizations of the investment in basic tools the business world counts on. Yet pay and benefits can be rich at larger nonprofits like big foundations, universities and United Ways, creating two philanthropic worlds separated by organizational size and mission.

Technology has become integral to the way people live and business operates, yet funders and nonprofit boards fail to recognize that investing in technology and the training to use it can improve nonprofit productivity and spur greater innovation in nonprofit services.

Foundations themselves also lag in embracing technology, which can improve the way they field and screen funding requests, manage grants, measure their impact, share knowledge and communicate. A small but growing number of funders do support nonprofit operations and technology, and the emerging North Carolina Network of Grantmakers can help speed and expand that progress.

The need for more professional and visionary leaders in the charitable world also is the focus of academic initiatives. Those include the statewide nonprofit-management program at Duke University, and the new Institute for Nonprofits at N.C. State University funded by the A.J. Fletcher Foundation.

The time is ripe for funders to take bold steps, such as supporting sabbaticals for experienced fundraisers and managers at big nonprofits so they can work for a year with smaller nonprofits, or subsidizing benefits and pay so smaller nonprofits can hire experienced professionals from larger organizations.

Philanthropy traditionally has invested money in programs designed to fix and better society, but has taken for granted the nonprofits that serve as instruments of change. Until funders and donors recognize the urgent operating needs of nonprofits, true change will elude philanthropy’s well-meaning but often misguided helping hand.

Other stories in the series:

Part 1: Philanthropy, more targeted and strategic, works for change. 
Part 2: Philanthropic legacy rooted in wealth from traditional industries. 
Part 3: Philanthropy plows new ground to address critical problems. 
Part 4: Philanthropy expands to engage new markets.
Part 6: Philanthropy changes to help guide the ‘invisible hand’.

Part 7: Philanthropy without borders emerges as new model for change.

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