Growth in nonprofit consulting double-edged

Ret Boney

Nonprofit consulting, in one form or another, has been part of the American landscape almost as long as there have been charities.

In the early 1800’s, the American Sunday School Union and similar organizations were raising tens of thousands of dollars a year to build Sunday schools and colleges, and to send would-be ministers to school, says David Hammack, the Haydn Professor of History at Case Western Reserve University.

Eventually, those fundraisers thought to market their expertise to other religious and even secular organizations.

“Then you get people saying they have a better way to do it and trying to sell that service to all comers,” says Hammack.

Over the past 200 years, as the nonprofit sector has grown and evolved, the service industry dedicated to supporting it has grown, too.

And with the U.S. nonprofit sector now including over 1.4 million organizations, and employing about one in 10 workers, the sector represents big business.

“There are more organizations getting more money,” says Hammack, “not more organizations getting the same amount.”

A growing field

The U.S. nonprofit sector has grown not only in size but in complexity, a trend exacerbated by the recent recession, which left nonprofits with more to do and fewer resources to do it with.

Consultants are able to help nonprofits, particularly smaller ones, navigate this new complexity, says Tom Lambeth, senior fellow with the Z. Smith Reynolds Foundation.

“Smaller nonprofits have begun to realize that while they may not be a $10 million operation, there are some things a $10 million nonprofit has to do that they need to do also,” he says.

Board development and marketing and communications, for example, are important, regardless of an organization’s size, but may not be skills held within smaller nonprofits.

And increased oversight and regulatory interest in the sector, particularly with the newly-revised IRS information filings that require greater disclosure, are overwhelming to some organizations, says Lambeth.

That heightened complexity has created more demand for consulting and in part has fueled growth in the number of available practitioners, he says.

“There’s no question that it’s growing,” says Joel Fleishman, professor of law and public policy sciences at Duke University’s Sanford School of Public Policy. “The consequence is that there are a number of new organizations on the landscape that have really been raising the level of quality in the field.”

In addition to fundraising consulting, other fields have sprouted over the last couple of decades, including strategy consulting, financial advice, advising donors, and information-technology consulting.

These days, there are firms of all sizes, as well as individual practitioners, with a host of specialized skills who can help nonprofits identify, confront and overcome a variety of operational issues.

“It’s all part of the zeitgeist of society,” says Fleishman. “The availability of professional services to help people do things better will very likely continue growing.”

That growth is a good thing in large part, says Fleishman.

Nonprofits, he says, need specialized help they often can’t afford to have in the form of full-time employees.

The speed of technological advance, for example, can be difficult for nonprofits to manage on top of day-to-day efforts to pursue their missions.

“We are living in an age, largely because of the Internet, in which expertise is increasingly valued,” says Fleishman.

Nonprofits need help learning how to use new technologies, how to apply them to their organizations’ specific goals or problems, and how to maintain and upgrade technology over time.

“The bottom line is, is philanthropy being done better than it was 30 to 40 years ago,” Fleishman says. “The answer is ‘yes.’ More people are understanding how to get more value for their money and more people are concerned about how well nonprofits are being run.”

Growing pains

While the recession created more need for specialized advice, it also may have increased the supply of would-be advisers.

And while the benefits to nonprofits of the growth in consulting are clear, it is not without its downside, says Fleishman.

“My sense is that some increment to their growth is attributable to the fact that the people offering services see there’s an opportunity to make money,” Fleishman says of the consulting industry.

And with more people and companies in the field, it can be difficult for nonprofits to separate qualified providers with solid track records from those more intent on making a buck, he says.

“Most of the people in the field care passionately about the public good and how to do good well,” he says. “The key to identifying them is the same as is true for other professions – find someone who cares about the substance, not just about the money.”

To find those people, nonprofits must employ a greater degree of due diligence when looking outside the organization for help.

That means talking to peers in the sector, asking funders for recommendations and knowing exactly what it is you want to get out of the relationship.

“Be demanding about finding out who they worked for and talking to them,” says Lambeth. “It’s really important to find out the kind of work and the history of the group you’re talking to.”

And once an organization is convinced it has found a practitioner with skills and a solid track record, it’s important to make certain the individual’s or firm’s skills and motivations are a good fit for the job at hand.

“You want people who can give their advice in the context of your individual organization and its specific mission, specific geography and specific clientele,” says Lambeth.

And nonprofits should consider it a red flag if a potential consultant isn’t willing to do the homework and research necessary to get up to speed on the organization’s background, market and goals, he says.

Fleishman says finding the right person with the right skills takes time and hard work. But external advice can lift individual nonprofits and the sector as a whole, he says.

“It’s a complex issue,” he says. “But philanthropy is being done better than it used to be. Organizations are being run better than they used to be. That raises the standards of the field they’re working in and that tends to spread. Some of that is attributable to the people who provided high-quality advice.”

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