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America’s Nonprofits Need Rescuing

May 21, 2012

Joel John Roberts, CEO of PATH (People Assisting The Homeless) Partners has penned a great op-ed suggesting that nonprofits are in desperate need of help. Roberts cites how charities are going out of business in Southern California–particularly housing and homelessness charities–and notes that a fragile has adversely impacted organizations charged with helping our most vulnerable families and individuals. But Robert advances a fantastic point about the nonprofit dilemma,

Unfortunately, these caring social good leaders don’t have the skill to market their organization as well as today’s hot charity — like Charity: Water, or can balance their books like Deloitte & Touche. Just because you are good at empowering hurting people doesn’t mean you have a Harvard MBA in successfully making money. Selling a cell phone to the masses is different than convincing a jaded American public to donate $20 per month to a social good cause.

Running a nonprofit is incredibly challenging and complex. In fact, I’d wager that running a nonprofit is more complicated than running a comparable size for-profit business, as the Bridgespan Group argues in Stanford Social Innovation Review,

When a for-profit business finds a way to create value for a customer, it has generally found its source of revenue; the customer pays for the value. With rare exceptions, that is not true in the nonprofit sector. When a nonprofit finds a way to create value for a beneficiary (for example, integrating a prisoner back into society or saving an endangered species), it has not identified its economic engine. That is a separate step.

Nonprofits aren’t quite as good at identifying their “economic engine” as they are creating social services and programs. But how could they be? We ask a lot of our nonprofits. With generally fewer resources, less (nonexistent?) professional development and abysmal infrastructure compared to their for-profit counterparts, nonprofits are expected to help solve or at least mitigate intractable social problems while simultaneously being better, more efficient businesses.

It’s a lot to ask of a terribly under-resourced sector and we certainly haven’t done nearly enough to help.

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