But Change We Must

The social sector, or perhaps more appropriately, those writing about the social sector, seem particularly analytical and reflective this past week. Perhaps its the looming end to a horrible year for the general economy, and nonprofits in particular.  Whatever the reason, the nonprofit sector and the philanthropy that funds it are at an important crossroads.

First, the picture for the current state of the social sector continues to be bleak. A recent Foundation Center advisory reports that foundation giving will decline 10% this year and more next year. And a new survey by Opportunity Knocks reports that more than half of nonprofit organizations froze the salaries of, or laid off employees this year. You begin to see a bad situation getting potentially worse.

But at the same time, there is the flip side of adversity: the opportunity. The nonprofit and philanthropic worlds, and the fundamental shifts occurring in both, are becoming a topic of broader discussion and understanding. First, the Wall Street Journal, in a great display of how the changing landscape of philanthropy has finally hit the consciousness of mainstream media, devoted an entire section this week to improving philanthropy, with the editor’s note: “If there ever was a time to get smarter about philanthropy, this is it. The question is: How?”  And the lead article “What’s Wrong With Charitable Giving and How to Fix It” is noteworthy in its examination of philanthropy, even if its proposed solutions are a bit weak.

And second, the James Irvine Foundation and the Fieldstone Alliance just released a report, “Convergence: How Five Trends Will Reshape the Social Sector,” conducted by La Piana Consulting that details an emerging restructured nonprofit sector. They argue that the nonprofits that will succeed in this changing sector are those that:

• Share leadership across generations, cultural perspectives and styles
• Use technology strategically to engage wider audiences to advance their mission
• Understand and harness new networks, collaborations and partners, both individuals and organizations
• Become skilled at tapping into a larger pools of individuals who want to volunteer in meaningful, skill-specific and diverse ways
• Understand the convergence of the nonprofit and private sectors and embrace new opportunities there
  

The point of the report is that the status quo is no longer an option.  Those nonprofits that recognize and embrace change will survive and thrive: “In this changing environment, transformation is not optional. The future will demand a collective rethinking of what it means to be an organization, how individuals define their work and how best to both compete and partner across many permeable boundaries.”

This is akin to the “resetting” of the nonprofit sector discussed before.  This is not a blip; things are changing in very fundamental ways and the WSJ and others are recognizing that.  And nonprofits must recognize, understand, and embrace those changes.

I am glad that the WSJ thinks philanthropy such an important topic that they have devoted an entire section to analyzing what could make it better.  And I applaud the Convergence report for pointing out what’s changing and what it will take to survive amid these changes.

But I’d like to see this all go even further. Now is the time for nonprofit organizations to overcome their inherent risk aversion. Experiment with new funding models; try social media and other new technologies; analyze and refine your impact; get rid of low ROI fundraising activities; shake up your board; ask hard questions; encourage dissenting opinions and open discussion; let go of the status quo and embrace the opportunity of change.

And on the philanthropy side, I would like to see more risk taking, harder questions, more discussion.  Ask the nonprofits you fund what they really need to succeed; invest in organizations, not just programs; combine strategy and passion in your giving; make gifts based on results, not marketing; leverage your giving with other philanthropists; make investments, not just donations.

Fundamental shifts are occurring in how we approach social problems, how we communicate, how we build support, how we access resources. Those solutions that are bold, courageous and open to change will ultimately survive.

Tags: Fieldstone Alliance, Foundation Center, James Irvine Foundation, nonprofit, Opportunity Knocks, Philanthropy, social sector, Wall Street Journal

Becoming Great

Jim Collins, author of a pivotal business text Good to Great (about what differentiates companies that just survive from those that thrive and become great), wrote a short monograph on the social sector a few years ago called Good to Great and the Social Sectors.  If you haven’t already read it, I highly recommend it.  He clearly and articulately lays out what, he suggests, makes a great social sector organization.  It is not, as many have argued in the last decade or so, that it becomes more like a business.  Rather, as Jim writes, “Greatness is not a function of circumstance.  Greatness, it turns out, is largely a matter of conscious choice, and discipline.”  To be a great social sector organization you must be disciplined about the talent you hire, the decisions you make, the actions you take, the strategies you create, the results you attempt to achieve, the mission you seek.  As Jim puts it, “To do the most good requires saying “no” to pressures to stray, and the discipline to stop doing what does not fit.”  To be a great social sector organization you must focus on what you can be great at and create a disciplined strategy to get there.  A really interesting read.  Some excerpts are here.

Tags: business, Jim Collins, social sector