Recently, on the Twin Cities blog, Leadership and Community, Janine Fugate shared some thoughts on how we look at nonprofit business. She mentioned a TEDTalk by Dan Pallotta, “The way we think about charity is dead wrong.” We asked Ann Johnson, director of UST’s Center for Nonprofit Management to share her thoughts on the topic.
Fugate wrote: I hope there will be greater awareness of what it actually takes to run a nonprofit organization and the importance of funding a nonprofit organization’s “overhead”. I believe this is critical to helping our donors and supporters shift their measurement focus from financial efficiency measures alone to overall organizational impact and social change.
The restrictions nonprofits must follow to raise funds and the (arbitrarily) set percentage for “reasonable” operating costs, are prohibitive. Any one metric used to assess a comprehensive value proposition for nonprofit impact would be an over simplification. Even in the business sector, ROI isn’t the only metric use to measure success. As “conscientious capitalism” continues to evolve, social responsibility is being measured in terms of profit and purpose and consumers are much more actively engaged in and using their purchase power to make decisions that include both. (more…)