I’m really struck by the clash between the mindsets of the various people who have been engaging in this debate. A while ago, I wrote about “old” and “new” philanthropists and the need to “harness innovation to wisdom” rather than throw out one model in favor of another. I wrote at that time:
"the positive outcome is not a result of each side politely
acknowledging each other’s strengths and then going their separate
ways. Rather the two sides are best served by engaging in verbal
combat, where the weaknesses in each side’s point of view can be
exposed and the strengths revealed."
And I quoted James Irvine Foundation CEO Jim Canales:
“We have to cultivate a culture of debate. Civility is a big problem.
We can’t have five board members present different points of view and
then have the chair say “Good debate!” and hand things off to the staff”
That’s how I feel about this debate. I generally agree with the “business” mindset being expressed in this debate. I think that funders should starve less effective nonprofits of resources and drive them out of business. I think that anyone who cares about nonprofits should want the field uplifted and weeding out the poor competitors is a needed step. On the other hand, I fully agree with this statement from Dave Chakrbarti of Grassroots.org:
A nonprofit is *not* a "business structured as a nonprofit". A nonprofit is an organization driven by a mission instead of a profit margin. Many nonprofit organizations are working to reduce the "market" that needs their services…the very opposite of a "sustainable" business, which often actively works to ensure there remains a market for their goods or services…
…This idea that a nonprofit needs to "make" enough money from its constituents to cover its costs is fundamentally flawed; how do you feed the poor on this model? Is it not sustainable to feed the poor?
Maybe systemic change results in the poor no longer needing to be fed after a certain period, which is a movement towards sustainable development but *not* sustainable if we think of the organization doing the feeding as a business, with that narrow definition of "sustainability". But the ecology is sustainable.
Dave was correcting me with his comment and I deserved it. Becoming a 501c3 is not just a tax election for a business. It implies an entirely different objective. Applying “business logic” to nonprofit work is useful, but the model does not translate completely. It would be better to think about “harnessing business logic to mission driven passion” or some other twist on the phrase.
The for-profit model is not superior to the nonprofit model and it is simply ineffective in many mission driven environments. But that being said, just because an organization is mission driven, does not excuse it from needing to be effective. I continue to support the idea that mission driven organizations should compete for resources and funders should allocate their scarce capital wisely. If you believe that philanthropy and nonprofits can make the world a better place, and you acknowledge the scarcity of resources, then you should cheer the failure of nonprofits that don’t do a good job. You aren’t celebrating their failure, you are celebrating the redirection of resources to effective nonprofits that do more good. The causes that nonprofits are fighting for are too important for us to worry about the egos of the failed nonprofit leaders.
I’ve quoted the Anne Fadiman quote a number of times now. I’d like to mention that as exciting as cross-disciplinary conversations can be, Fadiman points out that “there are interesting frictions and incongruities in those places”. Creativity isn’t painless. I’d like to commend the people who have shown up at this debate. I hope that this blog can continue as a platform for cross-disciplinary debate and maybe all of can learn from each other. To all of you who have participated, know that your comments are not going unnoticed. The last few blog posts here with their attached comments have been emailed through Feedburner, sent to Digg, tagged and noted by other blogs here, here, here, here and here.