More and more, nonprofit philanthropists, such as Pierre M. Omidyar and Peter B. Lewis are providing management consulting services to their grantees in order to increase their organizational effectiveness. Good move. In fact, better for the world, considering the vital missions of these NGOs and nonprofits—eliminating poverty and disease and building a more peaceful, sustainable, and prosperous world for all people.
Nonprofits need first-class management consulting services.
Considering the increasing demands on nonprofits for services, and the severe financial constraints on their budgets, nonprofits would surely benefit from outstanding management assistance services. For example, imagine the CEOs of two nonprofits trying to explore strategic alliances—an important option in this environment—while also running their respective enterprises, and without the benefit of any consulting services. Would two for-profit CEOs conceive of such an undertaking? Or be able to do their jobs and manage a strategic alliance thoughtfully and effectively? (One of my nonprofit CEO clients once referred to his job as "changing a tire on a car while it's speeding down the highway).
Given the size of the nonprofit sector, and the unique challenges facing the sector and our communities, the extent of management assistance services has been limited. While corporations have used $140 billion of management consulting services from 130,000 firms from the U.S. consulting services industry alone, nonprofits have had access to mere morsels of resources in training, coaching, and consulting services. Overall statistics were elusive (maybe some readers can help with this?), but to the best of my knowledge, there are under 200 local management assistance centers around the U.S. with annual budgets well under $1 million a year. There are independent consultants. A few of the major for-profit consulting firms provide pro bono services or have branches serving nonprofits. And Taproot Foundation engages and matches business volunteers with nonprofits seeking management assistance.
Key considerations when funders and consultants assist nonprofits.
I've worked on various sides of the table, having built and run social enterprises, served on nonprofit boards, consulted to nonprofit entrepreneurs and CEOs of major NGO/nonprofit institutions, and served on behalf of philanthropists and foundations.
Management consultants to NGOs and nonprofits can be highly valuable if they keep the following in mind:
- Understand that the NGO/nonprofit CEO is likely to have far more expertise and experience in the field than they do. Imagine if someone from an entirely different industry from yours were to visit your company for a matter of hours, and then deign to tell you how to run your business.
- Have genuine humility and respect for the vision, drive, experience, expertise, and dedication of the CEO and any staff members with whom you are working. This is their business that they have built. They are close to the consumers/clients; the CEO and staff usually know the industry and the needs of the people they serve.
- Understand that the CEO and staff are driven by passion, so be cautious not to undermine that. While fair compensation is necessary (no one wants to be taken advantage of), it's less about the money, and more about genuine respect and appreciation. For example, in some cases, a bonus might be an insult; just pay a fair salary, realize that the CEO is driven to work ridiculous hours because she is devoted to the mission, programs, and her team; say thank you.
- And before the consultant makes any recommendations, the consultant needs to:
- Really, really get the mission. That's actually where I occasionally see some for-profit firms get in trouble ... when they don't understand that the mission must be a fundamental factor in all decision-making (and that does not mean sacrificing financial strength or sustainability!).
- Learn and understand the revenue model—usually more complex than in any for-profit.
- Understand how lean the operation is, and where that puts stress on the staff, on the clients, and on the organization.
- Understand the core programs and services and the extent to which they achieve the mission. Gauge how the organization performs compared to industry trends and best/next practices; the CEO is a valuable resource as are other experts in the field (who can be identified by the CEO).
- Engage the CEO and staff in considering how to measure impact, if they are not already doing that. They are best equipped to figure out how to build the dashboard.
Build the board to be an asset.
While nonprofits have limited access to management consulting services, they do have access to outstanding board members if they know how to board-build effectively. Keys to board effectiveness: having the right board chair; building a board comprised of people with diverse perspectives, experience, expertise, and networks to help the board to advance the organization towards its greater vision; clear expectations of board members and a system of accountability; board meeting agendas focused on the board's work in advancing the organization (not staff work!); leadership succession planning; and effective staff work to leverage the board's value.
Philanthropists and funders, it's great that you are shining the light on the need for excellent management consulting and training services for nonprofits. You'll get a better return on your investment, help make nonprofit enterprises and their work environments more effective and satisfying, and help make the world a better place.