In the spirit of NPOs

The other day I had lunch with a colleague who is working for a NPO, i.e. a so-called Non-Profit-Organisation. As a coincidence, I also just happened to have been invited to a talk on female philanthropic work and the current tendency by “business and academia” to want to ‘professionalise’ all that good-will of these rich ladies.

As there tends to be a link between NPO and philanthropic work, let’s take a general look at NPOs. Personally, I find that the acronym ‘NPO’ has turned into something of a misnomer really – which is why it turns into a topic for a blog. Ehem.

Let’s start with the expectations we have of a NPO for instance.

What are the expectations of an NPO?

So, what are the general expectations we have of a NPO? – Well, obviously, the immediate expectation is that of ‘non-profit’. The organisation does whatever it does without claiming a profit-oriented necessity. This sounds wonderful, doesn’t it?

This statement alone implies that the people working in such an organisation are somehow more human, charitable’, respectful, tolerant, – you name it – than the rest of the world working in profit-oriented organisations, which by counter definition then would have to be blood-thirsty, greedy and cut-throat in their behaviour.

Okay, this is quite black and white. However, when we observe our immediate reactions when we hear ‘Bank, Pharma, Food-industry, etc.’ vs ‘NPO, NGO, charity organisation, etc.’ an immediate internal categorisation happens. Isn’t it so?

If the NPO deals with animal protection for instance, the automatic thinking is: “what a wonderful person that has to be who works for the protection of animals”. Clearly, this kind of automatic thinking rarely happens when we think of a Banker, for instance. It isn’t fair of course and we very often do injustice to the ‘Banker’ as the line of work really prima facie has nothing to do with whether or not a person is wonderful or not.

Behaviour of NPOs

When we look at the behaviour of NPOs, we soon find that they are as much under the strains of market laws as any other business-oriented company. NPO’s compete ferociously not only for financial support but equally (and maybe not so well-known) for good projects. Why? – Good projects mean support and legitimacy for the livelihood of the organisation.

As the livelihood of the organisation also means jobs for the people working in such an organisation, NPO’s clearly have a problem of authenticity. On the one hand there is an increasing business-oriented component and on the other hand the ‘wanting-to-do-good-component’ – two quite incompatible components striving to find a harmonious balance. Hm.

Impact

Another reason why NPO is a misnomer lies in the claim of any NPO that it generates an impact in its line of (social) business. In fact, much time is spent on calculating the impact of any given project. After all, money spent on any project has to be justified and will attract further funds in the case of a positive impact. Non-profit?

If the impact of any given project is positive then the money spent on that project is justified and legitimized. – In that case you could talk of a profitable project. If the impact were neutral, i.e. no-impact, what’s the point? Finally, if the impact is negative, the NPO is in deep trouble – like any profit-oriented company!

Actually, a profit-oriented company can easily survive with expense and revenues just about being balanced, i.e. zero-profit. A non-profit organisation, on the other hand that generates no impact with its projects is questionable: it spends money that it gets from where ever (fundraising, philanthropist…) on a project with no impact? Hm.

Not really surprising then that CEO’s and employees of NPOs are under quite some stress to both generate funds and spend them in positive impact-oriented projects. The question is only, what indicators are to be used to determine the worthiness or rather the profitability of a project.

The danger

NPOs have become highly business-oriented. They are managed like businesses and they are judged like businesses. The only difference with respect to a classic profit-oriented company is the key-indicators that determine the success of the company and the line of ‘business’ in which it operates. As such, a so-called NPO is under pressure to present more than just a neutral (i.e. no) impact.

The danger thus of shifting away from the actual work whilst focussing a little bit too much on numbers is great, if it hasn’t already happened in many cases. In fact, what is observable is that the focus has shifted heavily on business and finance. This practically always leads to extra staff in administration, finance, legal, fundraising and marketing with a consequential reduction of staff in the actual NPO-relevant areas. Why? – Shift of available resources. Of course, when the focus shifts too much on business, finance and appearance, the actual objective of why that NPO exists becomes secondary and thus obsolete.

It may thus be time to follow Mahatma Ghandi’s statement that when the objective of an organisation has been fulfilled or has become obsolete, the organisation should dissolve itself. OM.