Sustainable Nonprofit Organizations

Any student can tell you I set high expectations for them, regardless of their backgrounds and college classifications.  Yet, any time you ask some people to go beyond their comfort zone and stretch themselves a bit mentally, a professor is going to get some backlash. 

Nevertheless, I designed a new final project called Real World Application based on one of the top tiered business schools.  The objective was to provide students in my Operations Management course some practical applications from the course and assist  local organizations with their problems.   This is when I fully understood the challenges that many nonprofit organizations faced in this economic climate.

Most students selected private businesses while a few opted for nonprofit organizations.  Noriko Chapman, the past guest blogger, got me involved more with her project since she complained she needed to do well in my course.  Her project entailed assisting the Tennessee Vocational Rehabilitation Center (TRC’s), located in Maryville, to be more efficient and effective. TRC’s mission is to provide services that help lead individuals who have a physical and/or mental disability to employment and are designed to meet individual needs.  

Her employer, DENSO, had been working to assist this nonprofit organization with a contract that allowed disabled workers to earn income.  Her research helped TRC become more efficient.  Noriko’s final project was the main inspiration for her new book, Second Chance: An In-depth Case Study on Nonprofit Organization’s Resource Allocation and Operational Maximization.

During the economic crisis this year, the organization nearly lost $72K from government funding.  It was clear to me that nonprofits needed to get their act together and create more value to the sponsors and customers or face extinction.

With shrinking funds for programs and a more competitive environment, nonprofit organizations will need to rethink their corporate strategies for future success. In 2005, there will be approximately 1.4 million nonprofit organizations registered to the IRS.

The majority of nonprofits depend on volunteers at various levels.  In fact, 74% of all public charities and 83% of all foundations are small; they have less than $500,000 in expenses and limited staff. 

Nonprofit organizations are different from traditional organizations and require special considerations in their operations. Operations management (OM) has been a vital instrument in the pursuit of greater productivity in the business sector.

OM includes planning, coordinating, and executing all activities that create goods and services. Robert Jacobs, Richard Chase, and Nicholas Aquilano, authors of Operations & Supply Management, suggest that implementing OM assists organizations to be more competitive: “Compared with most of the other ways managers try to stimulate growth – technology investments, acquisitions, and major market campaigns, for example – innovations in operations are relatively reliable and low cost.” Today’s businesses have built elaborate systems for better efficiency and effectiveness. Yet, most nonprofits are forced to rely upon low-end technologies and outdated practices.

Demanding contributors and the public in general are demanding more accountable and efficiency after several high profile scandals.  Nonprofit organizations are often influenced by their stakeholders that include clients, board of directors, committees, government officials, community leaders, staff, and volunteers.  

However, most nonprofit organizations haven’t completely embraced this rigor due to various reasons (i.e. limited resources and the lack of knowledge).  Yet, nonprofit organizations have a greater need for increased effectiveness in their processes during this economic crisis.   

Describe your professional experiences with nonprofit sustainability issues.

© 2011 by Daryl D. Green                                    

 

 

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14 thoughts on “Sustainable Nonprofit Organizations

  1. The difficulty of not only starting, but also sustaining, any organization is becoming more and more stringent. A group can start an organization a whole lot easier than having the funds and resources to sustain the venture. Companies have to do more on smaller and smaller budgets since everyone seems to be strapped for cash.

    One thing comes to mind about what companies need to succeed. While most need more people, more funds, and more resources, I argue the one thing that the companies can do to fight the trend is to develop more applicable and efficient strategies for their path to success. Gamble and Thompson state, “A company’s strategy consists of the competitive moves and business approaches management has developed to attract and please customers, conduct operations, grow the business, and achieve performance objectives” (p. 2). While everyone needs a strategy, few have strategy’s that have the foresight and efficient objectives of the most successful organizations.

    Gamble, J. E., & Thompson, A. A. (2011). Essentials of strategic management: The quest for competitive advantage. New York, NY: McGraw-Hill/Irwin.

    • Strategies are certainly very important in achieving and maintaining sustainability. Tucker reveals in his article “Entrepreneurs for Sustainability,” the story of one Holly Harlan, who created a network of more than 4000 individuals: from business, government, academia, and otherwise. The use of this partnership/alliance strategy has allowed for representatives to achieve sustainability for their respective organizations, including several nonprofit firms. The company, Entrepreneurs for Sustainability (E4S), is itself nonprofit. Using business strategies such as this is an inventive way to work toward achieving sustainability, while also developing community ties that may help to aid in volunteer efforts for nonprofit companies.

      Tucker, M. (2007). ENTREPRENEURS FOR SUSTAINABILITY. In Business, 29(3), 10-13. Retrieved from EBSCOhost.

  2. Sustainability issues are perhaps the major obstacles for nonprofit organizations. Although their good cause often sets apart nonprofit organizations, only those that sustainably find a way to appeal to their contributors and attract customers are able to stay in business. Mr. Roth on his interview makes a good point in that brand is perhaps not a bad idea for nonprofit organizations. A company that builds a good brand by distinguishing itself for the good work they do is perhaps more likely to attract eager donators and willing volunteers, both of which are essential for nonprofit organizations.
    During my third year of medical school, I had the opportunity to rotate through a sustainable non-for-profit medical clinic. The clinic was founded by a visionary physician who over thirty years ago had the noble idea of helping people of low resources in Memphis, TN with no medical insurance. This respectable individual was able to establish adequate support from the community, the government and other medical professionals and his vision has helped thousands of people in need.

    Rogers, D. (Interviewer) & Roth, H.(Interviewee). Branding Nonprofit Organizations. YouTube. http://www.globalbrands.org

    • Miguel, I really liked your post. Sustainability is definitively a major issue within non-profits. I would even suggest that a majority of non-profit companies are trying to put themselves out of business. To reiterate my point if we examined organizations such as, Habitat for Humanity their mission is to provide affordable for those in need correct? Therefore cannot it not be said that their ultimate goal is to provide every man, woman, and child with an affordable home? Such circumstances create unique situations and challenges for non-profits. Sustainability efforts must be focused on efforts that support cost effective incentives that maximum organizational funds. Such efforts will allow sustainable futures.

  3. A common misnomer is that non-profit organizations don’t generate a profit. Many non-profits do generally well however, there profits need to be reinvested to meet community interests. Hospitals usually will provide a safety net to the community so that low income or uninsured may be afforded healthcare. This does not mean that sustainability issues can not be a community interest, many non-profits are now testing grounds for sustainable technologies because they are afforded government and community loans and grants. In Methodist Germantown, “The Women and Children’s pavilion is the first LEED gold-certified hospital in the Southeast and one of only seven gold-certified hospitals in the nation, according to the U.S. Green Building Council, the organization that developed LEED standards. There are 184 LEED-certified health care projects in the U.S., according to the council, of which 23 are hospitals”.

    Sells,Toby 2010. The gold standard: Methodist Hospital pavilion wins LEED recognition.The Commercial Appeal.

  4. Non profit organizations are in more of a crunch now than ever before. Almost all of them are facing limited funding. The natural response to limited funding is to do things more efficient. The less efficient techniques are likely sufficient when money is no problem; however, when money is tight things must be changed. Its somewhat ironic that efficiency often comes out of financial crisis. Food banks come to mind when thinking of this; it seems that almost everyday I hear of a food bank being out or almost being out of food. As the economy has shrunk the need for food as increased and amount of people that are able to give food has decreased.

  5. Non profits are in a precarious situation. Simply for being who or what they are.  Many non profits are formed out of a simple needs based idea.  I recently had the opportunity to work with a local non profit, Random Acts of Flowers.  This non profit was run well from a standpoint of organizing whet needed to be done and when it needed to get done.  They also excelled at organizing the volunteers who wanted to work with them.  From that standpoint the leadership of the group were very strong.  Where they lacked real leadership skills was in managing the financials of the institution.  I think this is the case with other non profits that are close to failing of have failed.  The ability for a non profit to sustain itself does not lie in what they do, it’s how efficiently they do it with the resources they have.

    Gamble, J. E., & Thompson, A. A. (2011). Essentials of strategic management: The quest for competitive advantage. New York, NY: McGraw-Hill/Irwin.

  6. It’s hard to see non-profits being able to develop more advanced strategies for bringing in funding. They just don’t seem to be appealing to the majority that they need, and this is understandable, since they won’t always be able to appeal to every majority. As the economy is on a decline, any organization will be having difficult times, especially, those that receive most of their funding through benefactors who choose to donate large or small sums of money to what they feel is important. There is less money to given to non-profits, and it is becoming more apparent that if they just appeal to one group, it may not be enough for them to keep up their activities.

  7. I believe that any leader or manager for a non-profit must incorporate a competitive strategy. As someone who worked at a non-profit in Knoxville for children, I was surprised at money being spent at fund-raising events that seemed to be wasted. I understand they were there to raise money, but they should have utilized low cost leadership when planning these events, and even services that they offer. According to Gamble and Thomspon, one should revamp the firm’s overall value chain to eliminate some cost producing activities altogether (Gamble and Thompson, 2011). For instance, just purchasing things for events on the spur instead of planning, ordering, and saving money. Another was introducing a consultant into the expenses, while not receiving a substantial savings. Some of the ideas were also ideas that employees had suggested, but managers refused to acknowledge. However, I feel the biggest strategy is to constantly re-evaluate the top management. Just because someone has been there forever, does not mean that they are doing their job well or bringing something to the organization.

    Gamble, J. E., & Thompson, A. A. (2011). Essentials of strategic management: The quest for competitive advantage. New York, NY: McGraw-Hill/Irwin.

    • Hi Angela!

      Yes, I do agree with you that a non-profit must constantly re-evaluate their management. At the same time they must re-evaluate their Board of Directors. With non-profits, everyone must produce. It is the bottom line. There is no such thing as sitting on a non-profit Board in name only, or the name should be removed. A properly functioning non-profit must have serious, dedicated, loyal, hardworking, people invvolved that are willing to wear many hats, strategize, and serve. If the mission is solid and not easily duplicated, the vision is crystal clear from the top down and back up again, the leader is a servant leader and thoroughly understands his/her role, and the Board of Directors is ready to role up their sleeves, a non-profit might have a fighting chance of survival. Survival means that they have the privledge of continuing to serve others.

  8. FOR SO MANY YEARS, NON-PROFITS WERE THE ORGANIZATIONS THAT WERE REGARDED AS NOT BEING VIABLE BUSINESSES, WHICH IS RIDICULOUS BECAUSE THEY WORK HARDER THAN ANY OTHER BUSINESS. THE FACTS ARE, NON-PROFITS SEEK OUT AND FIND VERY VIABLE NICHES AND THEY WORK VERY HARD PROVIDING SERVICES TO THE COMMUNITY. NON-PROFITS USE THEIR FUNDING MORE EFFICIENTLY THAN ANY BUSINESS I HAVE EVER ENCOUNTERED. THEY CARVE UP EVERY DOLLAR THEY GET AND SPEND IT LIKE A MOTHER WITH TWELVE CHILDREN. MANY ENTREPRENEURS HATCH THEIR PLANS THROUGH NON-PROFITS. THE GOVERNMENT KNOW THIS, AND IS FUNDING MORE AND MORE NON-PROFITS. THEY ALSO KNOW THAT NON-PROFITS ARE TAKING A LOT OF THE BURDEN FOR SOCIAL ILLS AND ISSUES OFF OF THEIR SHOULDERS AND NON-PROFITS ARE COST EFFECTIVE.
    THE BASIC ELEMENTS OF NON-PROFIT 101 ARE THE MISSION, VISION, STRATEGY, FUNDING, AND THE WORKFORCE OR VOLUNTEERS. ALL CRITICAL AREAS THAT REQUIRE STRICT ATTENTION. IN MY OPINION, THE VOLUNTEER IS THE MOST IMPORTANT. WITHOUT VOLUNTEERS NOTHING CAN BE ACCOMPLISHED, AND KEEPING THEM IS REQUIRES A SERIOUS STRATEGY THAT IS CONSTANTLY CARED FOR. WITH DEDICATED, LOYAL, TRAINED, HAPPY VOLUNTEERS YOU CAN CREATE A MISSION, VISION, STRATEGY, FUNDRAISE, AND BE SUCCESSFUL.
    Gamble, J. E., & Thompson, A. A. (2011). Essentials of Strategic Management: The Quest for competitive advantage. New York, NY: McGraw-Hill/Irwin

  9. Sustainability issues are perhaps the major obstacles for nonprofit organizations. Although their good cause often sets apart nonprofit organizations, only those that sustainably find a way to appeal to their contributors and attract customers are able to stay in business. Mr. Roth on his interview makes a good point in that brand is perhaps not a bad idea for nonprofit organizations (Branding Nonprofit Organizations). A company that builds a good brand by distinguishing itself for the good work they do is perhaps more likely to attract eager donators and willing volunteers, both of which are essential for nonprofit organizations.
    During my third year of medical school, I had the opportunity to rotate through a sustainable non-for-profit medical clinic. The clinic was founded by a visionary physician who over thirty years ago had the noble idea of helping people of low resources in Memphis, TN with no medical insurance. This respectable individual was able to establish adequate support from the community, the government and other medical professionals and his vision has helped thousands of people in need.

    Rogers, D. (Interviewer) & Roth, H.(Interviewee). Branding Nonprofit Organizations. YouTube. http://www.globalbrands.org

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