Are business principles good for not-for-profits?

There have been a number of articles in the newspapers recently recounting how business thinking can help the not for profit sector . Although there are a number of different initiatives, where people in business volunteer their time, or where people from business have migrated to the not-for-profit sector in order to make a contribution, there are some general trends in the kinds of advice that they bring.

Their first intervention is to encourage managers in not-for-profits to bring ‘focus’ ( to what they are doing. Bringing focus, as far as business volunteers are concerned, can mean drastically reducing their understanding of the complexity of what not-for-profit organisations are dealing with. So business volunteers are delighted if they can reduce the mission statements of not-for-profits to one or two sentences. Achieving focus comes to mean concentrating on just one or two things.

The second piece of advice is that managers in not-for-profits should have ‘ambition’ in what they are doing. This can sometimes mean that they should consider expanding what it is they are doing many fold. In other words, not-for-profit managers should concentrate on growing the business.

This kind of advice is usually portrayed as helping not-for-profit managers make the transition to the ‘real world’, and in this sense, particularly in the way that these articles are carried completely uncritically, are intensely ideological. After reading these articles one might be left with the idea that business volunteers and interventions have helped not-for-profits from floundering around in a muddle instead of growing the business and focusing on the bottom line. But what is the ‘bottom line’ as far as not-for-profits are concerned? If the bottom line is about meeting the needs of clients for whom the not-for-profit was set up in the first place these may or may not be met by growing the organisation. Concentrating on growth, coping with size forces managers to attend to the needs of the organisation as much as to the needs of beneficiaries. And in a competitive and marketised world pursuing growth and competing with others then becomes an end in itself. Some big donors would also prefer to deal with fewer, larger organisations and for there to be a ‘rationalisation’ of the sector.

In an essay on Tolstoy, the philosopher Isaiah Berlin drew on an obscure Greek philosopher Archilochus to make the distinction between knowing like a hedgehog and knowing like a fox. The hedgehog knows one thing very well, while a fox knows many things.

‘Focusing’ and being ‘ambitious’ is hedgehog thinking, encouraging not-for-profits to act just like corporations, and thus creating exactly the kind of competitive, sometimes conflictual dynamic that we encounter between organisations in the private sector. Growth and promotion of the organisation becomes as important an organising principle as paying attention to clients the organisation is supposed to serve. It is a powerful way of thinking, but it is a reductive, potentially destructive way of thinking for a sector which is involved in the messy, complicated and pluralistic domain of human need and social development. Smaller not-for-profits are often forced to be more adaptive, and more innovative to survive in comparison with much larger more corporate organisations, which a friend on mine, once a ‘beneficiary himself, has referred to as ‘powerful empires of philanthropy’.


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