Entries For: December 2007

Lesson #5 -- “I think philanthropists that are public and visible are just showing off with their money”

There are cases where that is true and certainly it’s a personal decision about how public or private to be about one’s philanthropy. More often than not, someone being more public or visible about their philanthropy is done for a reason, i.e. to show leadership and commitment to a particular cause. And to do so as a means to an end, to help raise more philanthropic capital. This is true especially for newer organizations and causes.

Like most things in this world in we each invest, we want to know who we are investing in (not just what). And knowing who the other “investors” are is an important signal that may guide our own decisions. Visible philanthropy might occasionally be motivated by arrogance, but more often it’s a signal of public leadership and commitment.

Paul S.

P.S. A lot of those people that are the most visible in their philanthropy in one realm are also very private or anonymous in other areas of their giving. 

Lesson #4: "The non-profit needs to be run more like a business and set specific goals …"

Like a lot of things in life, it depends on what you mean by the words "run like a business." Sometimes the expression is used inappropriately and ignorant of the unique issues a non-profit faces. Three simple examples: 1) in most situations in the non-profit world, the "end customer" does not buy the product or service, 2) the usual economies of scale are often not present for non-profit direct service organizations, and 3) there is no clear "market signal" like earnings per share to guide and optimize where capital flows; in fact sometimes money can run away from successful non-profits because they don’t "need" it as much. Non-profits don’t need to be "run like a business" when it comes to mission, effectiveness and resource allocation, etc.

But when it comes to efficiency, operational processes, measurement, etc., non-profit organizations can learn important lessons from private sector business (and some certainly have). No matter how fuzzy or grey the social outcomes are, measurement is important.  How else do you know if you are realizing your mission? Areas like how to...do strategic planning, build financial / cash planning scenarios and tools, hire and retain quality staff…are all examples of domains where running a non-profit more like a business does make sense. In the end, the only reason to do so is to help the non-profit increase its capacity to be effective at achieving its mission.

P.S. By the way, private sector businesses could learn a lot from non-profits as well, but that’s another future topic altogether.

Paul S.