The Inferiority Complex of Non Profits

I have long been a fan of bringing the thinking of the business world to non-profits. As a congregational rabbi, I found the workings of synagogues to be unprofessional: policies were inconsistent; many questions were decided on the basis of who you knew or how much you contributed. I was sure (and even verbalized in a sermon) that if we applied business principles to synagogue life, we’d all be better off.

Then, I went into agency work in Jewish education. In my first executive director position, we were coached by my friend Paul, then of JESNA, who advised us to move from reading journals about education and provision of services to keeping up with money and finance publications. I took the advice seriously (fortunately). In that job, I brought in an incredible business consultant to conduct staff training. Her teachings changed my life, and, at the very least, helped my staff to understand what my expectations for our work would be.

Since starting my career, I have now read dozens of books from the business world on leadership and management. In the organizations I served, I got to know and work with at least 30 different consultants and trainers, most coming from the for-profit world.

For some reason, at the last training session (which, oddly enough, was one of the most useful in which I participated) I snapped. Despite all I had learned over the past 30 years, I myself questioning much of the wisdom to which I had been exposed. So, between the first and second day of the seminar, I sent an email with a challenge to the facilitator, which basically said the following:

I am learning a great deal from what you are teaching, but noticed that all examples of good practices and innovation that you use come from the business world, rather than from the educational or non-profit world in which we work. I find this troubling, especially at this point in history.

Our world is suffering from the worst economic disaster in our lifetime. Much of the blame lies on business models. The business world has been convincing the American public that “you can have it all.” If you can’t afford it – the big house in the ‘burbs, the latest fashion, the fastest computer, the newest car – put it on credit. Not a great credit risk? We’ll find you the bank that lends to higher risk borrowers. Everything was based on greed. Even when banks had to be bailed out, they continued to spend on private jets, executive bonuses, and even naming baseball stadiums. Eventually, it all fell apart, leaving us with foreclosures, bankruptcies, high government
bailouts, federal debt, and high unemployment.

Given what the business world has gotten us into, it is incredulous that we, in the non-profit, educational world are looking to business models for salvation. Even Jim
Collins, after writing Good to Great, recognized that a model created from research on for-profit businesses does not always translate to what he called the “social sector”. For that reason, he wrote a follow-up book (that didn’t make the best seller lists) called Good to Great for the Social Sector, explaining exactly what, from his business research, would not work in non-profits.

The principles you are teaching us are valuable, but are there no non-profits or educational models that can illustrate the same principles or teach us other principles and practices? Where are the examples of innovation, creativity and leadership from
the non-profit world?

I will be the first to admit that many non-profits continue to work as if they were mom-and-pop grocery stores. And we are cognizant (perhaps too cognizant) or the failures of too many non-profits and educational organizations. But there are also principles that guide good non-profits, social innovators and entrepreneurship that reach a young generation, and models of thinking about non-profit work that have moved the field forward.

Here’s some food for thought: In 2008, the year following the beginning of the economic disaster, the Dow Jones Average fell by 33.8%, Standard & Poor 500 Index lost 37%, housing prices fell by 17%, retirement savings in 401(k) plans lost 27%, residential construction fell by 22.9% and unemployment grew to over 7%.

Over that same period, non-profits had the following record: Charitable giving was $307,700,000. That’s a drop, but only by 2%, making it the best investment around. Charitable giving as a percentage of gross domestic product, was at 2.2%, only slightly down from the previous year. Meaning that, as people had far less money, they continued to give, percentage-wise, at almost the same level.

That’s a record to be proud of. We in the non-profit world deserve to feel a sense of accomplishment, and to hold up our achievements and best practices proudly.

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