How to not stunt a nonprofits growth

I was sitting on my yoga ball (aka my office chair) the other day reading The Chronicle of Philanthropy, as I usually do when I need a break from work, and I saw a headline that instantly reminded me of one of my favorite Ted Talks by Dan Pallotta (I’ll talk about him later). “Nonprofit Leadership Development Is a Vital Ingredient for Social Change” it said. Yes! Corporate America has been increasing the dollars spent on leadership training and development of it’s employees over the past few years, and it continues to grow. But how come we are not doing this for nonprofit leaders?

The author of the article, president of a large national fund, believes foundations should support their grantees in this way. “If we agree that strong leadership is crucial to the success of the nonprofits we support, what is keeping us from maximizing impact of our funding by investing more in the skills and capabilities of people who lead organizations, including staff and board members?” (The Chronicle of Philanthropy, Volume XXVI, No.15). They are right on! We cannot expect staff members and executive leadership of nonprofits to grow and strategically move forward in reaching their overall vision, if resources are not put into making that happen.

To reiterate my thoughts in my last post, social change is not easy and it cannot just be done on a whim. While I will advocate that anyone can work towards social change, anyone cannot just create positive change without the knowledge and skill sets to do so strategically. “Investing in leadership doesn’t just deliver higher performance; it can also deliver a better, more equitable world.” If more foundations realized this and supported this for their grantees, I am confident that their funds would be put to better use and have a greater impact. Don’t believe me? Look into the 5 year evaluation done on the Haas Jr. Fund‘s early leadership investments and the results they saw.

Now, on to the aforementioned TED Talk, “Dan Pallotta: The way we think about charity is dead wrong”. Dan Pallotta is often times seen as controversial when it comes to his stance on the way society views charity, but I think he is dead right! We expect nonprofits to tackle so many big problems in the world, but have a double standard when it comes to the way npos vs. for-profits are being operated. 61iJKJ8D0vL

He mentions 5 ways that nonprofits are discriminated against:

1. Compensation– We have this notion that people should not be making a lot of money when they are supposed to be helping other people. Nonprofits are losing good talent to the for-profit sector because they are having to choose between salaries.

2. Advertising/Marketing– This idea that overhead going towards marketing is not where donors want their money going, they think it should directly go to the need, but disregard the fact that marketing is needed to lengthen your reach.

3. Taking Risk– NPOs are in fear of taking any sort of risk towards revenue generation. Worried by what the community will think if something flops, many nonprofits do not have the luxury of innovation.

4. Time– People have patience with for-profits taking time to build their scale because they understand it is going to take time to generate revenue and expand their market, but as Pallotta says it “if a nonprofit organization ever had a dream of building magnificent scale, that required that for 6 years no money would go to the needy..we would expect a crucifixion”

5. Profit to attract risk capital– Nonprofits are starved for growth, risk and idea capital.

“This is what happens when we confuse morality with frugality.” – Dan Pallotta

We need to better support our community organizations and understand that for-profits and non-profits need to be run in similar ways. Like a business.

Watch his TED Talk. It will be a well spent 18 minutes. I also encourage you to check out one of his books- Uncharitable: How Restraints on Nonprofits Undermine Their Potential.


4 thoughts on “How to not stunt a nonprofits growth

  1. Great points!! and I am a big fan of that @TED talk


  2. Pingback: Modern Social Impact | Don’t work for an NPO? Who cares, go make a difference!

  3. Pingback: Modern Social Impact | There’s more to it: Don’t be so quick to judge Red Cross “failures”

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