Opinion
January 20, 2015

Technology Start-Ups Don’t Hold All the Answers for ‘Broken’ Nonprofits

For the 13 years I have worked in philanthropy, I have heard again and again the same sweeping generalizations about the supposed ineffectiveness of the nonprofit sector—typically followed by a pronouncement that the answer lies in "business thinking" or acting "like a start-up."

It has become downright tiresome.

And just when I think that, maybe, just maybe, the sea monster of arrogance and ignorance about nonprofits has been slain, it rises, horror-movie like, to prey again on those who don’t know better.

"The nonprofit model is broken," Ryan Seashore, founder and CEO of CodeNow, declared on TechCrunch.com this month. "Unless you’re part of a unicorn nonprofit like Charity: Water, then your organization likely has too much overhead, too much bureaucracy, and a lack of focus on impact. Everything feels slow" and not enough like—you guessed it—"a for-profit start-up."

Wow, really?

After reading the piece, Antony Bugg-Levine, head of the Nonprofit Finance Fund, took to Twitter and asked, simply: "Anyone else worry technotriumphalist hubris gets in way of potentially useful insights?"

Yes, indeed, I do. And I think we all should worry.

Look, I would be the first to say the nonprofit sector should be more effective—and I say it all the time. I feel the same way about business and government. I also think there is much to be learned across sectoral lines, in both directions.

But what aren’t helpful are sweeping pronouncements rooted in a lack of understanding of the diversity and achievements of nonprofits.

In his piece, Mr. Seashore segues from his sweeping and ill-informed generalizations to his recommendations: Get focused, innovate, think big. These pronouncements are, of course, as platitudinous as they are unoriginal, not to mention a royal dis to the vast and diverse array of effective nonprofits (start-ups and those with long histories alike) that do these very things each and every day.

This is just one recent example. In fact, Mr. Seashore’s piece is oddly reminiscent of a Wired piece by Reddit co-founder Alexis Ohanian from a couple years ago. That piece began with almost exactly the same words as Mr. Seashore’s: "Let’s be real: The nonprofit model is broken. The 20th-century way of guilting people into giving to an opaque, inefficient organization with massive overhead is no longer a viable model."

Again: really? That’s the "nonprofit model"?

Maybe you’re thinking, who cares? Why not let it roll off our collective back? Why worry about this stuff?

And if you’ve read my columns before, perhaps you’re wondering, Why is he writing about this stuff yet again?

Because I think it matters a lot. And here’s why. These kinds of inaccurate broad-stroke slams hurt the image of the sector, which can affect all of our efforts to raise funds and hire the best talent. Nonprofits enjoy more public trust today than other sectors in our society, but trust is fragile.

Moreover, we’ll be more effective if we root our efforts in an understanding of the unique challenges of the nonprofit sector, if we respect the differences between most nonprofit work and a technology start-up, and if we acknowledge the good work that has been done, so we might actually learn from it.

So why does this keep happening? I think there are some crucial gaps that are contributing to a kind of looping repetition of ill-informed prognosticating.

The first problem is a lack of good journalism focused on nonprofits.

It’s possible for seemingly very smart people like Mr. Seashore and Mr. Ohanian to remain ignorant about the nonprofit sector in part because, outside of trade publications (like The Chronicle of Philanthropy), so little that is informed and intelligent is written about it. A decade ago, newspapers more frequently had a dedicated nonprofit or philanthropy reporter. But as newspapers have cut their staffs, that beat has fallen by the wayside, even at The New York Times.

Today, much of the reporting on philanthropy in mainstream media is done by business reporters with little knowledge of the sector. But I think there are some glimmers of hope. The Boston Globe recently brought back reporter Sacha Pfeiffer to cover philanthropy. She shared a Pulitzer for the Globe’s reporting on sexual abuse in the Catholic Church. Journalist Benjamin Soskis has penned thoughtful pieces on philanthropy recently for The Atlantic and The New Yorker. And reporter Amy Costello started Tiny Spark, which runs podcasts "investigating the business of doing good."

We also need thoughtful opinion pieces: education blogger Valerie Strauss at The Washington Post has raised tough questions about philanthropy focused on public education.

The second problem relates to what—and where—people are learning about nonprofits.

Too much education of both students and nonprofit professionals is taking place in business schools or in cross-disciplinary efforts, without dedicated faculty responsible for really getting smart about nonprofits. There are very few good histories of the field— a notable exception being Philanthropy in America, by the University of Virginia’s Olivier Zunz. And there are too few scholars of the likes of Paul Light of NYU, Lester Salamon of Johns Hopkins, and the other academics who have focused their careers on the sector in a sustained, dedicated way.

The increased interest in nonprofits and "social enterprise" at business schools and elsewhere is a positive development. But too much of what goes on at places like Harvard Business School romanticizes the seemingly "new," overestimates what is transferable from business to nonprofits, and undervalues both charities that have existed for longer than five years and leaders who don’t have MBAs.

There’s a need for more well-funded academic centers that focus on the nonprofit sector—its history and its future. In this area, there is an opportunity for grant makers who support strengthening the sector to do more.

The third problem is about us—those of us who work at nonprofits. We need to speak out more forcefully for nonprofits and their distinctive value. Today I could point to more folks who are doing so than a decade ago, but I am not sure they’re getting enough attention.

For example, Vu Le, head of Rainier Valley Corps, is a forceful—and funny—commentator on the unique challenge of running a nonprofit, on his "Nonprofit With Balls" blog. Late last year he wrote an "open letter to the business community" that pleaded with those in the private sector to "check your superiority complex," adding, "It’s annoying as hell."

A subsequent post, titled "The Nonprofit Inferiority Complex Is Not Sexy," asked those in nonprofit work to get over a "pervasive … sense of inferiority."

Mr. Le is right. I look at conference programs and am struck by how often we trot in big names with little knowledge about philanthropy and nonprofits to tell us what we’re doing wrong. We need to have a little more confidence.

We need to stop playing along with those who promote unhelpful and nonsensical new terms like "philanthrocapitalism" or "philanthropreneurship" (hadn’t heard this one until I read about it in an appropriately skeptical piece by Rick Cohen in the Nonprofit Quarterly last month) or who want to analogize everything to a start-up.

"Real social change is much more complex than start-up versus institution," the consultant Nell Edgington wrote on her blog in response to Mr. Seashore’s piece. Indeed it is.

As foundation consultant Cynthia M. Gibson put it in a 2013 talk at the Aspen Institute, "it’s … time for the nonprofit sector to move from the kid’s table to the table where people and organizations from all sectors meet as equal partners, all with something important to offer."

The U.S. nonprofit sector, with all its challenges and all its needs to be better and stronger, is one of this country’s defining strengths, addressing the toughest challenges­—the ones that businesses and the private sector haven’t.

I think of the nonprofit sector as the People’s Sector: the sector focused only on mission, not on generating a return to shareholders or winning the next election.

Let’s give it, and the people who work in it, the respect they deserve.

Phil Buchanan is president of the Center for Effective Philanthropy and a regular columnist for the Chronicle of Philanthropy.