I hear your frustration, but I think the root of the problem is more systemic than just nonprofit consultants. I think the way IRS standards and accounting practices are set up, the way philanthropists are educated, the way nonprofits communicate, the way the incentives are created, etc all work together to create crazy metrics, like at least 80% of funding should go to “program.” I completely agree with your frustration and that’s one of the reasons I write my blog is to get some of these issues out in the open and get people talking about them. Thanks for joining the discussion!

When I say charitable non-profits, I mean those whose work are entirely focused on giving or charity: soup kitchens, scholarships, after school mentoring, health care subsidies, etc. These organizations, by the nature of what they do, typically have very low overhead costs. Most of their money should be a pass-through to their recipients.

Many nonprofit consultants have set benchmarks for the “industry” and tell donors that if a nonprofit doesn’t have 10% indirect costs, then they are “ineffective” in the work. And, nonprofit consultants have been telling their donors that the impact must be “immediate” and “tangible”

Well, social change nonprofits (policy institutes, economic development work, etc) is an entirely different business model than “charitable” work. We’ve done all the benchmarking with similar entities, and our work is high risk, high overhead, and tangible results take 5-10 years.

It is frustrating to have people tell me that I’m not running EDCO like a business when they have no clue whatsoever how much we are doing with so little funds, relative to the organizations that are engaged in the same type of work we do. The training they receive should teach them about different models, so that Philanthropists can approach their investment or analysis in a more “pragmatic” manner.

You raise some great points. I absolutely agree with you that the communities where solutions are being formed need to be key partners in change that affects them. That’s true for any social impact organization, nonprofit, for profit or government. Thanks for writing and for pointing us to your blog.

Through my work with Grassroots Grantmakers, I have seen funders equate “nonprofit working in a community” with “people who live in the community”, and place solid nonprofit organizations in the role of “speaking for” or serving as the voice of a community. In many cases, the people who work with that nonprofit may know the community well, but go home at night to another community and another reality – clearly working with and caring for, but not the same as being from that community. I think there is a missing ingredient in the community change formula that we have all been using – and that’s the people who are served by the nonprofits and governmental agencies who are trying to create change. Social entrepreneurs would think about critical partners as well as key audiences or customers. Wouldn’t it be fantastic if more non-profits could see strengthening authentic community voice as in their best interest? Wouldn’t it be amazing if more non-profits had the strength and foresight to say “no” to funding opportunities that positioned them as competitors to the residents in the communities that they serve?

I’m glad that you have initiatied this conversation.

Check out my blog – Big Thinking on Small Grants – would love to see you weigh in there as well.

I’m glad that you all enjoyed the post and appreciated the perspective.

I agree that the tin cup mentality is fairly well entrenched in the nonprofit sector, but I do see signs of hope. In fact when I have these sorts of conversations with nonprofit organizations I sometimes sense an enormous feeling of relief, as if they feel suddenly released from the chains that bind.

And I absolutely agree that government agencies as well suffer from this charity mindset. I am hopeful that the growing convergence of the three sectors will help free nonprofit and government agencies from this mindset.

Sue Hyatt
Business Nonprofit CONNECTIONS, Inc.
@Susan_Hyatt

Critical, equal partners – agreed!