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Re: Management Approaches to Non-Profit Technology

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  • Peter Campbell
    I think we re missing some clarity on this point. Like Victoria, I am a strong advocate of non-profits acknowledging that they are businesses and operating in
    Message 1 of 26 , Apr 30, 2007
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      I think we're missing some clarity on this point. Like Victoria, I am a strong advocate of non-profits acknowledging that they are businesses and operating in manners that increase efficiency and heighten effectiveness. Effectiveness, in the case of a non-profit, is increasing mission-based outcomes. At no point would I suggest that non-profits should de-prioritize constituent outreach! Engaging constituents is one of the clear (as in, "well, duh!") business strategies that we need to deploy. So Tracy's post, like one yesterday relating how, when the board mandated that the NPO "act like a business", they sunk it, are missing the point here.

      An organization with a culture that values direct services and fundraising over organizational efficiency can not change overnight. My point is that fundraising and direct service are strategies toward mission effectiveness. Putting them in perspective allows you to look at your staffing structure and weigh whether technology, facility or personnel investments, as well as strategic outsourcing or collaborations, might be worthwhile strategies. It allows you to consider if, maybe, a move toward a social enterprise model might prove more sustainable (which it might or might not). And challenging what are clearly debilitating assumptions about NPO budgets, particularly as it applies to administrative overhead and capital investments, might be a long overdue action that leads to significant returns -- but I acknowledge that this last one needs support and adoption from the community at large.

      All of this needs to be weighed in light of the things that make an organization succeed. Re-organizing those priorities (as opposed to swapping out one set of priorities for a different one) is a process, and it requires education and openness to organizational change on the part of the staff, management and board, as well as buy in from the community. Board members can't dictate organizational readiness for change, but effective management can facilitate it.

      When I argue that non-profits should adopt more business-like practices, I'm not recommending that non-profits lose sight of their values and missions in an ill-fated attempt to act like, um, some other business. I recommend that non-profits understand the business that they are in and increase efficiencies and outcomes accordingly. Do your strategic plan, but back it up with business plans and departmental plans that tie business activities to the strategic outcomes. Budget for the long term, not for poverty. Look at what the latest business trends and practices are and determine which ones can increase your own productivity. This isn't about rejecting who we are - it's about going to the gym and building some organizational muscle with the latest equipment and dietary trends.

      The question is not "should non-profits act like businesses?". It's "should non-profits continue to run their operations as if they are somehow not businesses, and not able to benefit from sound business practices?"

      --
      Peter Campbell
      http://techcafeteria.com

      [Non-text portions of this message have been removed]
    • Pamela Alvey
      Whew! The discussions haven t changed much in 36 years...but the technology has. And...as a NPO administrator/leader/visionary/adaptive tech user it s
      Message 2 of 26 , Apr 30, 2007
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        Whew! The discussions haven't changed much in 36 years...but the technology has. And...as a NPO administrator/leader/visionary/adaptive tech user it's pretty clear to me that for NPOs to be agile, responsive, connected and able to relate to all segments of our constituencies, we need to explore and utilize whatever options exist to allow us to !) be more functional 2)save resources to redirect to the mission 3) educate our funders to the costs of their reporting requirements and 4) allow them to consider if that's how they want their resources to be utilized.

        In a recent partnership with a major corporation, we undertook a Six Sigma project staffed by a couple of their black belts. It was in response to a small grant that they wanted to make larger...but they wanted more data first.

        Step one was to identify all the reports we had to prepare, for whom, including what, and what we received in exchange. By the time that was accomplished (4 times longer than they had anticipated) they were believers in streamlining the collection and reporting processes...and were ready to give us more $$$...while acknowledging that their structure did not require, expect or collect the minutia being required of us.

        All this is to say that we all struggle with folks who have unrealistic expectations. And, if you have great data collection folks, be sure you utilize them for the highest and best use. Sometimes that is making life easier for your clients, sometimes its to stretch a buck. Either way...it's very for-profit like:)
      • Fitch, Dale
        ... I can only imagine that the CEO of this agency clearly knows how to run a business as she/he has had to stitch together these programs due to a constantly
        Message 3 of 26 , May 1, 2007
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          Pamela's response reminded me of a message that was posted to the HUSITA listserv this morning:

          -----original message-----
          >>Greetings All, Please help me find software capable of tracking multiple services. Part of a 3-year strategic plan is to have our agency equipped with a one-stop software package for tracking all of our clients and all of our services; Head Start, Migrant Head Start, LiHEAP, Food Pantry, Weatherization/Housing (NEAT and MEA), Community Distributions, Case Management, Rental Assistance, Emergency Food and Shelter. Currently we are using SHAH software for our Community Development, Cleverex PROMIS (HSFIS) software for our Head Start and Migrant Head Start, and Access databases created by a local non->profit technical group for our LiHEAP and Weatherization. One of the problems we face is cross-referencing the needs of our clients according to their income and finding other services our agency can supply for them. All of our clients and services are in different >systems. For example, it is very difficult for us to see if a LiHEAP client would be eligible for a Head Start program because the poverty guidelines are different for each program. Our staff would have to >manually figure out if their income makes them eligible for another program which is not practical.>>







          I can only imagine that the CEO of this agency clearly knows how to run a business as she/he has had to stitch together these programs due to a constantly changing funding environment all while keeping an eye on the organization's mission, managing the staff and board, etc., etc. And no doubt she/he would have preferred a single software solution from the beginning, but was precluded from doing so due to the funding strings attached to SHAH, PROMIS and LiHEAP.

          The type of situation described in this posting is the norm at least for human service non-profit organizations and not the exception.

          Just my 2 cents,

          Regards,

          Dale Fitch, Ph.D., LMSW
          Assistant Professor
          University of Michigan
          School of Social Work
          1080 South University, Rm 2794
          Ann Arbor, MI 48109-1106
          (734)763-6286
          (734)763-3372 (FAX)
          dale@...
          http://www.ssw.umich.edu/faculty/profile-dale.html


          [Non-text portions of this message have been removed]
        • Dan Prives
          People talk about all the philosophical differences, but the truth is that most people are comparing very small-scale nonprofit organizations to very
          Message 4 of 26 , May 1, 2007
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            People talk about all the philosophical differences, but the truth is that most people are comparing very small-scale nonprofit organizations to very large-scale for-profit corporations. If you compare organizations of comparable scale, you would find far fewer differences, it seems to me.

            Just this week I blogged about the project being undertaken by the Kaiser health plan to convert to electronic medical records. The project is costing billions. The problems it is encountering have little to do with the fact that Kaiser is a nonprofit, but rather because of the unprecedented scale of the project.

            Email Blasts Billion-Dollar IT Project at Nonprofit HMO http://www.wheremostneeded.org/2007/04/email_blasts_bi.html

            The problem Prof. Fitch described are also related to scale. A larger scale organization would have less difficulty developing software to address multiple eligibility criteria, because it would be able to maintain sufficient internal resources to do the integration. For that matter, an even larger scale organization would have access to resources to negotiate or lobby for a more manageable system of eligibility criteria. It has nothing to do with the organization's nonprofit status, it has to do with the scale of the enterprise.

            Regards,
            Dan Prives
            Where Most Needed
            The Charity Industry Blog
            http://www.wheremostneeded.org
          • David Geilhufe
            The whole for profit/ nonprofit management debate always seems to miss a very fundamental point (IMHO). For profit firms focus on efficiency. More efficiency
            Message 5 of 26 , May 2, 2007
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              The whole for profit/ nonprofit management debate always seems to miss a very fundamental point (IMHO).

              For profit firms focus on efficiency. More efficiency means lower costs, higher transaction volume at the same expense level, etc. This works because of the mechanics of profitability... increasing transaction volume at the same expense level yields more free cash flow.

              Nonprofit firms need to focus on effectiveness. Lets say I lower the per-individual costs of providing homeless alcoholics with emergency shelter by kicking people out of the shelter as soon as their blood alcohol level falls below a certain level, even if that is 3AM. Though this is an efficiency action that would be rewarded in a for-profit environment, this is not a very effective.

              I really don't think there is a mindset to change here. Nonprofits make perfectly ration choices given their incentive structures and the quality and type of people that their compensation structures attract. The managers with for-profit experience that ride in on their white horses generally muck things up pretty badly.

              The place I think that the for-profit and nonprofit worlds need a mind meld is in measurement. For profits are good at measurement... measuring dollars. Nonprofits need to measure far more complex outcome data. If you have experienced for-profit managers that understand they are no longer in the efficiency business, they can go a long way to helping nonprofits be more effective as being in the effectiveness business.

              david

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            • vhalfpenny
              What I do not understand is why people in the nonprofits seam to take up a deffensive tone whenever someone mentions concepts of efficiency. I do not measure
              Message 6 of 26 , May 2, 2007
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                What I do not understand is why people in the nonprofits seam to take up a deffensive tone whenever someone mentions concepts of efficiency. I do not measure efficiency based on cost. I measure efficiency based on effectiveness. Where I currently work the the money might come in, the service might be provided for an individual, but could we obtain and provide those things better? Yes, I truly believe that as a sector we could. Ultimately, I believe that as a sector non-profits have to recognize that "yes we need to have budgets and follow them", "that we need to have board members who will work and if they won't work kick them off", "that we need benchmarks and outcomes", "that we need to have capable competent employees and if they aren't then let them go." I want a strong effective sector, and I think we sell ourselves short by not shooting for the starts. Non-profits in general tend to be pretty innovative and resourceful, but imagine if that resourcefulness could be geared also towards technology and engagement? In one of my classes I still remember that a group I was working with said "oh a non-profit can't have a database, or website" And the resonning they gave? Money. My responce, "I can find you free equipment and hire a high school kid to set it up for the non-profit" so they said "Can't" before even thinking about the options. That is what I want the sector to do. To broaden their horizons and not think can't.

                Victoria
              • mwalls@insightbb.com
                David, you make an important point. I ve worked in public, private, and nfp sectors and am always amazed at the different mindsets of managers in the three.
                Message 7 of 26 , May 3, 2007
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                  David, you make an important point. I've worked in public, private, and nfp sectors and am always amazed at the different mindsets of managers in the three. Your post goes a long way towards clarifying the differences.

                  I would say, however, that efficiency and effectiveness measures in evaluation are not mutually exclusive. Indeed efficiency is defined as effectiveness per unit of effort! In your example, tossing the partially sober guy out of the shelter might be defined as efficient based on one version of the organization's goals (ie. getting the maximum number of people into shelter) but relatively inefficient from another (ie., helping the client deal with alcohol abuse and other problems).

                  To me, the long thread comes down to a question of level and quality of effort, regardless of goals. Some private sector firms and some government agencies (and some NFPs) have developed management practices that can be applied by an NFP to reduce the level of effort per unit of outcome -- without "selling their soul" by abandoning their idealistic and not very profitable definitions of outcome!

                  So, not being in a profit-oriented organization is no excuse for not trying to manage better. I've certainly experienced that kind of intellectual laziness in plenty of governmental agency staff, and I suspect it also occurs in NFPs. (And I hasten to add that sometimes its because the person is stressed out just trying to survive in their circumstances and they would do much better if they could.)

                  IT, of course, is supposed to be one of those opportunities to reduce the effort.

                  Michael D. Walls




                  -----original message-----
                  >>The whole for profit/ nonprofit management debate always seems to miss a very fundamental point (IMHO). For profit firms focus on efficiency. More efficiency means lower costs, higher transaction volume at the same expense level, etc. This works because of the mechanics of profitability... increasing transaction volume at the same expense level yields more free cash flow. Nonprofit firms need to focus on effectiveness. Lets say I lower the per-individual costs of providing homeless alcoholics with emergency shelter by kicking people out of the shelter as soon as their blood alcohol level falls below a certain level, even if that is 3AM. Though this is an efficiency action that would be rewarded in a for-profit environment, this is not a very effective.>>

                  [Non-text portions of this message have been removed]
                • sandwichchess
                  Like the IT & Sympathy discussion, this one has been very interesting and informative. I ve just joined this list recently and am already finding it to be a
                  Message 8 of 26 , May 3, 2007
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                    Like the IT & Sympathy discussion, this one has been very interesting and informative. I've just joined this list recently and am already finding it to be a great resource.

                    Since this is a discussion of management, I was wondering if people have any thoughts on how for-profit and nonprofit enterprises treat their employees (or possibly full-time volunteers if a nonprofit). It strikes me that, in addition to the differing motive (profit or social good), the second major difference between the corporate and nonprofit world is the top down decision making structure of a corporation, where individual members of the organization have little or no say in how decisions are made and very limited rights in general. Are nonprofits typically run the same, should they be, or should they be different?

                    I hope this isn't too much off topic. I did note the title originally included "management approaches to non-profit technology" but it seems already to have gone beyond just technology.

                    Thanks,

                    Mike
                    --

                    Mike Sances
                    Marketing & Development AmeriCorps*VISTA
                    Social Capital Inc. (SCI)
                    P 781.935.5820
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                    Connecting Citizens to Strengthen Communities



                    -----original message-----
                    >> The whole for profit/ nonprofit management debate always seems to miss a very fundamental point (IMHO). For profit firms focus on efficiency. More efficiency means lower costs, higher transaction volume at the same expense level, etc. This works because of the mechanics of profitability... increasing transaction volume at the same expense level yields more free cash flow. Nonprofit firms need to focus on effectiveness. Lets say I lower the per-individual costs of providing homeless alcoholics with emergency shelter by kicking people out of the shelter as soon as their blood alcohol level falls below a certain level, even if that is 3AM. Though this is an efficiency action that would be rewarded in a for-profit environment, this is not a very effective.>>
                  • abenamer
                    I agree with Victoria and Peter. HR, Finance, IT, executive management -- all those functions don t change just because you re in a nonprofit. Yet, how many
                    Message 9 of 26 , May 3, 2007
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                      I agree with Victoria and Peter. HR, Finance, IT, executive management -- all those functions don't change just because you're in a nonprofit. Yet, how many times have I heard of nonprofits in trouble in those areas? Those functions are shared by for-profits yet people are more than willing to give those departments a pass at many non-profits.

                      When I think of the need for nonprofits to act like businesses, I think of the need for nonprofits to grow up and realize that businesses and nonprofits share many of the same backoffice and management processes. This is not about imposing a corporate dress code or imposing a different "culture".

                      We're talking about giving people career paths at an agency, valuing them for their work, managing difficult decisions, making your people work better and smarter -- all the things that successful for- profits have been doing lately. I wouldn't want nonprofits to emulate crappy and generic for-profit practices. Nobody needs that. Dilbert is about a for-profit, right? However, there are innovative and more importantly, cheap-to-implement practices that nonprofits SHOULD try out.

                      And I promise that when I'm an ED on 5/14 -- it will happen.






                      -----original message-----
                      >> What I do not understand is why people in the nonprofits seam to take up a deffensive tone whenever someone mentions concepts of efficiency. I do not measure efficiency based on cost. I measure efficiency based on effectiveness. Where I currently work the the money might come in, the service might be provided for an individual, but could we obtain and provide those things better? Yes, I truly believe that as a sector we could. Ultimately, I believe that as a sector non-profits have to recognize that "yes we need to have budgets and follow them", "that we need to have board members who will work and if they won't work kick them off", "that we need benchmarks and outcomes", "that we need to have capable competent employees and if they aren't then let them go." I want a strong effective sector, and I think we sell ourselves short by not shooting for the starts. Non-profits in general tend to be pretty innovative and resourceful, but imagine if that resourcefulness could be geared also towards technology and engagement? In one of my classes I still remember that a group I was working with said "oh a non-profit can't have a database, or website" And the resonning they gave? Money. My responce, "I can find you free equipment and hire a high school kid to set it up for the non-profit" so they said "Can't" before even thinking about the options. That is what I want the sector to do. To broaden their horizons and not think can't.>>
                    • Fuller, Theron K Mr IMCEN
                      Customer service! Don t forget customer service! It s right in there with HR, Finance, IT, executive management. There s a good book from the old Quality
                      Message 10 of 26 , May 4, 2007
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                        Customer service! Don't forget customer service! It's right in there with HR, Finance, IT, executive management.

                        There's a good book from the old Quality Circle/Japanese management days called "Quality is Free." The major principle of the book is that quality is defined as giving the customers what they want. You find out what your customers want and give them more of it. You stop giving customers what they don't want and apply the savings to giving customers more of what they want. Thus, "quality is free." This works for any type of enterprise, however it's defined.

                        Of course, you have to know who your customers are. And your suppliers.




                        -----original message-----
                        >>I agree with Victoria and Peter. HR, Finance, IT, executive management -- all those functions don't change just because you're in a nonprofit. Yet, how many times have I heard of nonprofits in trouble in those areas? Those functions are shared by for-profits yet people are more than willing to give those departments a pass at many non-profits.>>
                      • Peter Campbell
                        I ve summed up my points on this topic on my blog: http://techcafeteria.com/blog/2007/05/04/are-their-barriers-to-effective-non-profit-management I don t agree
                        Message 11 of 26 , May 4, 2007
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                          I've summed up my points on this topic on my blog:

                          http://techcafeteria.com/blog/2007/05/04/are-their-barriers-to-effective-non-profit-management

                          I don't agree with Deborah that this is a "yawn and move on" topic. I think it's the big one that, once addressed, will allow us to actually practice what we preach - smart use of technology in non-profit organizations. When we talk about non-profits not acting like businesses, we are hitting very close to where we all live, because well-run businesses invest in technology.

                          --
                          Peter Campbell
                          http://techcafeteria.com

                          [Non-text portions of this message have been removed]
                        • Eddie Schott
                          It seems we re begging the question if our definition of non-profits assumes that none are well-run and our definition of business is well-run businesses. If
                          Message 12 of 26 , May 4, 2007
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                            It seems we're begging the question if our definition of non-profits assumes that none are well-run and our definition of business is "well-run" businesses. If 60% of business end up being virtual "non-profits" (not by design), I can't see how these assumptions hold up*.

                            If one simply says, non-profits and businesses need to work on adopting technology that achieves their mission efficiently, there would be no argument, would there? Thus, it does seem to me to be a "yawn-and-go" issue as well.

                            I would suggest many extended families, many tribal societies, and/or archaelogical hunter-gather societies could be fertile ground for non-profits to model. These seem to share much closer the same constraints, pressures and goals that non-profits face than corporate entities, especially given the high rate of business failure.

                            (*The Wells Fargo/NFIB Series on Business Starts and Stops, show that about half of businesses that employ people are still operating five years after they open. The real number is probably much lower since WF/NFIB didn't count the 79% of business startups that consist of one person.

                            The NFIB estimates that over the lifetime of a business, 39% are profitable, 30% break even, and 30% lose money, with 1% falling in the "unable to determine" category.)
                            --
                            Eddie Schott
                            Progressive Action Network
                          • Deborah Elizabeth Finn
                            ... I think it s the big one that, once addressed, will allow us to actually practice what we preach - smart use of technology in non-profit organizations.
                            Message 13 of 26 , May 4, 2007
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                              -----original message-----
                              >> I don't agree with Deborah that this is a "yawn and move on" topic.
                              I think it's the big one that, once addressed, will allow us to
                              actually practice what we preach - smart use of technology in
                              non-profit organizations. >>


                              Dear Peter, and other esteemed colleagues:

                              We probably agree more than we disagree. I definitely want smart use
                              of technology in nonprofit organizations. I'm extremely concerned
                              about nonprofit organizations being managed in ways that are
                              appropriate and effective. (I'd say "excellent," but that word seems
                              to be worn out in management circles.) I just can't get excited about
                              the question of whether the right management strategy is ultimately
                              derived from the nonprofit, for-profit, or governmental sector's
                              practices.


                              >>When we talk about non-profits not acting like businesses, we are
                              hitting very close to where we all live, because well-run businesses
                              invest in technology.>>


                              Right you are - that was one of my points in the original blog article
                              <http://blog.deborah.elizabeth.finn.com/blog/_archives/2005/4/1/629936.html>.
                              I think that most managers in for-profit organizations would be
                              appalled if they had to make do with the IT infrastructures that are
                              being used by comparable nonprofit organizations.

                              Best regards from Deborah

                              Deborah Elizabeth Finn
                              Boston, Massachusetts, USA
                              deborah_elizabeth_finn@...
                              www.cyber-yenta.org

                              Recommended reading:
                              "Universal Declaration of Human Rights"
                              <http://en.wikisource.org/wiki/Universal_Declaration_of_Human_Rights>
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