November 18, 2011

Big Consultants Increasingly Turn to Nonprofit Clients

As nonprofits have grown in size, complexity, and number, many of the nation's big management-consulting companies have stepped up their efforts to serve charities and foundations.

Most of the help these companies used to offer came in pro bono assistance. But now they are going beyond that to offer aid for a fee, sometimes through a nonprofit arm and often at a lower cost than they would charge businesses.

Among the companies that have started or expanded specialized nonprofit services in the past dozen years:

Booz Allen started a unit in 2007 to serve nonprofits that is just like any of the other specialty practices within the company.

Monitor Group created the Monitor Institute in 2007 to serve nonprofits. [Editor's note: This corrects an inaccuracy that previously stated the institute was classified as a B corporation.]

Accenture started ADP Accenture Development Partners in 2002, an organization that
provides advice to nonprofits.

Wellspring is a for-profit company founded in 2002 to serve nonprofits. Christopher Keevil founded it after he stepped down as a partner of the Boston Consulting Group.

Bain & Company started Bridgespan in 2000 to operate as a separate nonprofit.

McKinsey & Company in 2000 expanded its "social sector" practice.

FSG Social Impact Advisors is a nonprofit that was co-founded in 1999 by Michael Porter, who also founded the Monitor Group.

While profit margins for nonprofit work are generally modest compared with for-profit work, management-consultant groups gain many benefits by aiding charities and foundations. That work helps companies recruit and retain employees who want to work for a company that is socially conscious as well as profitable. And association with good causes can be part of promoting a consulting company's brand.

Consultants that are structured as nonprofits themselves can attract grants and other support.

Have you worked for big management companies? What has been your experience at those organizations? And what is the difference between working at those large organizations and working at smaller, more specialized nonprofit practices? Are you considering expanding your consulting to include more services to nonprofits?

Please talk about the pros and cons of each type in the comments section below.