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Money Matters in Nonprofit Failure

December 1, 2012

Mark makes an insightful comment to yesterday’s post on financial resources, nonprofit performance and innovation. He writes,

Creating a culture of innovation where the focus is on doing more with less is critical for nonprofits. My take is that money alone cannot buy innovation as defined in this manner. Some nonprofit leaders do believe a direct relationship exists between the amount of financial support they receive (or do not receive) and their ability (or inability) to accomplish their mission. Although the necessary monetary resources are clearly essential, this belief discounts the value of the organization and the potential of its people.

I believe nonprofits are already accustomed to doing more with less. Philanthropic and government spending on social services is relatively small when compared to how capital is deployed generally. Foundations, for example, typically dedicate between 5 and 8 percent of their endowments yearly to combating social problems. (It’s probably less, given philanthropy’s large–and necessary–commitment to the arts, etc.) The rest of their largesse is invested in such a way to ensure the continuation of their endowment–sometimes in ways that are in direct opposition to their social mission. You can’t affect meaningful social change with such a financial imbalance.

Second, the  relationship between financial support and achieving a nonprofit’s mission exists. Without adequate resources, it’s difficult to build a strong organization with the necessary structure and systems. And without appropriate financial support, it’s difficult to retain talented, driven people and maximize their potential.

Still, money isn’t necessary to establish a culture of innovation–but it is when you need to act on it.

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One Comment
  1. Seth Compton permalink

    Hello Rodney, I’m sure you’ve seen this by now but I was catching up on your blog and thought your posts from a year ago were echoed in this pretty great TED talk. http://on.ted.com/Pallotta

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