Is there a role for business practices in nonprofits?

Is there a role for business practices in nonprofits?

Posted on June 13, 2012 by Pam Truitt

Phil Buchanan, president of the Center for Effective Philanthropy, posted an interesting blog — part of a series focused on the real/perceived blurring of boundaries between nonprofit and for-profit enterprises. One of his more recent posts discusses the current conversations of utilizing ‘business thinking' as a path to nonprofit effectiveness. For those who read in the space, there’s been lots of broadcasting and one of Buchanan’s objectives is to seek clarity on the term ‘business thinking’.

Buchanan (@pbuchanan_CEP) seems to draw parallels between ‘business thinking’ as a direct pipeline to the financial meltdown. I’m guessing that the vast majority of Americans learned more than they ever wanted to know when the tide went out and the financial sector’s shortcomings were glaringly exposed. But, hey, many of us 99%er’s were flying high, too, using our home equity like it was an ATM. Oops!

Buchanan makes very good points that effectiveness is tied to strategy — no argument here. He also acknowledges that not all nonprofits function at peak performance — no matter what ‘business thinking’ they employ.

I, of course, posted a comment on his blog:

Very interesting perspective. If nonprofits adopted pure ‘business thinking’, the first thing they would do is shed all of their unprofitable lines and replace them with those that reward shareholders. As you know, nonprofits are in it for the mission–not the money.

Many nonprofits share with us that they cannot afford the talent in the business arena, which results in a drag on their ability to produce vital community programs. The Patterson Foundation focuses (through independent facilitators) conversations between nonprofits around ‘business practices’ that will drive their missions.

The Patterson Foundation’s space is to provide facilitators for one or more nonprofits (located in our four-county region) that are interested in exploring business practices — through collaboration models — as a path for effectiveness and growth. As we say at TPF…..we’re in the ‘what could be’ business!

What do you think about the role of business in the nonprofit world?

  • Learn about these and other concepts used in TPF's approach to philanthropy.


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