Breaking a Bad Habit

While flipping through a recent edition of The Economist, we came across an article on philanthropy called “Doing Good By Doing Well.” A title like that will always slow our pace, but in this case, it’s what we found in the subhead that completely stopped us. It read:

“Lessons from business for charities”

It’s an easy mistake right? It’s one we’ve heard and seen for years, going back to the 80s whenPeter Drucker stated it in reverse. The error of the text, in our opinion, is that charities and nonprofits are in fact businesses. In the context of a well-balanced article, it’s clear the author intended to communicate, “Lessons from for-profit businesses for other businesses…that just so happen to be structured as nonprofits.” It’s not as eloquent of a subhead, but accurate, particularly for the article that followed. However, as written, the subhead assumes that all charitable organizations are deficient and that they must learn from their smarter counterpart, the for-profit.

The debate the article wrestles with is nothing new — strategic, disciplined and outcomes-focused “business-like” thinking is indeed a good thing.  But so is the ability to pivot quickly, think creatively, and care personally when a community needs you. Can you be both? Indeed. So, why the perceived gap between management effectiveness?

The truth is, we see this popping up more and more. It’s overheard in conversations and in intimate settings with foundation leaders: “If they just ran it like a business.” Leaving out the obvious point from above (they are businesses), but also inserting an implication that all businesses are well-run —a point perhaps even more vexing.

It just comes down to the basics. Market participants need to be able to correctly state that nonprofits ARE businesses with their own sets of internal strengths and weaknesses and external opportunities and threats. But, they must also recognize that ALL businesses, for profit or otherwise, are run in their own way. Before suggesting that “ABC” organization be “run more like a business,” think about the business you have in mind, and name it. In specificity, there might actually be something tangible to learn.

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