Associated Press
Nonprofits adopting a for-profit model
By Millie Minshi
Associated Press
NEW YORK - Dan Cardinali is running his nonprofit organization like a
business. Communities In Schools, a national dropout prevention program, went
through a painful process last year similar to a corporate reorganization that
included program cuts and layoffs.
Working with a consulting firm, Cardinali's organization spent seven months
redefining the roles of its local, state, and national offices, changing its
management team and tightening its business model.
"We were intent on becoming a really well-run nonprofit organization, balancing
an efficiency of resources with high, substantial impact," Cardinali said.
The same type of transformation at the Crohn's & Colitis Foundation of
America led to new executive positions including chief technology officer and
director of pharmaceutical relations.
"We changed the dynamics of the organization," said Rodger DeRose,
president and CEO of the New York-based foundation. "In general, there's a
shift in the culture of nonprofits that's much more focused on the fundamentals
of business."
Motivated
in part by an uncertain economy, nonprofit organizations have become more
results-driven by developing new ways of creating revenue, increasing employee
specialization, and enhancing marketing techniques.
Changing
the way an organization is run to increase efficiency and impact, a process
known as capacity building, is one of the biggest trends in nonprofits, said
Margaret O'Donnell, director of the American Humanics Nonprofit Certification
Program.
"Organizations
are interested in beefing up," O'Donnell said. "They've been looking
at capacity building for two or three years, but it's really coming to a head
now."
Jan
Lennnon, a director of the Wisconsin Breast Cancer Showhouse in Milwaukee, said
that in the past year, her organization has been more focused on leadership
training and development for its board members. The way it recruits volunteers
has changed; it now looks for people with specific corporate skills that can be
applied to the organization's nonprofit work. For example, two women who work
with advertising agencies have volunteered to help the organization with
publicity.
"There's
a trend to turn your focus from where you are putting your work to what you are
actually achieving," said Alan Tuck, a partner at the nonprofit consulting
firm Bridgespan Group that worked with Alexandra, Va.-based Communities In
Schools. " That's definitely something that has more of a business feel,
the way businesses measure profits. Of course, social impact is much harder to
define."
Some
of the changes are also due to the fact that nonprofits have been under greater
scrutiny in recent years after questions were raised about the portion of
donations that goes to fundraisers or telemarketers. Donors want to know that
their money will be put to good use.
Harry
Leibowitz, founder of World of Children, a group that honors work done for
children's issues based in Columbus, Ohio, said his organization has had to
carefully plan its marketing and solicit corporate donors with business
proposals that detail the benefits of giving and how the money can be used.
Organizations
have learned they also need a different marketing approach with individual
people, who often want something in return, such as the brightly colored
bracelets that have become popular since a yellow one was first worn by cyclist
Lance Armstrong to help raise funds for cancer organizations. Clothes with
logos, ribbons and bumper stickers are also popular products sold by
nonprofits.
"This
isn't something totally new, think about Girl Scout cookies" said vice
president of programming at the W.K. Kellogg foundation Bob Long. "It's
just that there's a new surge of interest."
At
the Leukemia & Lymphoma Society in White Plains, N.Y., items including polo
shirts and calendars will soon be available at the organization's e-commerce
store both to increase revenue and to help the organization advertise itself,
said executive vice president of revenue and marketing Richard Geswell.
DeRose,
of the Crohn's & Colitis Foundation, said his organization is also selling
bracelets. Since the foundation began adopting a business approach to its
operations, revenue has increased dramatically, growing 30 percent in the 2005
fiscal year ending June 30, DeRose said.
Since
Communities In Schools restructured, revenue has increased by 45 percent. The
transformation caught the attention of others in the nonprofit community -
Cardinali said in the past year 10 to 12 colleagues from other organizations
have asked for advice.
"It's
the smartest thing we ever did," Cardinali said.
Consultant
Tuck said the number of nonprofits seeking help for their business models has
grown since Bridgespan was founded in 2000. He expects that growth to continue
as organizations feel pressure to keep up with the changing practices of the
industry.
"It's
not something that's going to be an immediate flip," Tuck said. "But,
we believe that more organizations are going that way."