29 November 2006

Let's not confuse motion with progress.

I sometimes indulge in the fantasy that life is much simpler in for-profit organizations. After all, the desired outcome is to maximize shareholder value. If you can make a profit, then you're succeeding. If you can make a profit without incurring human casualties, harming the environment, or being indicted, then someone will probably even refer to you as a "socially responsible business."

It's a little more complicated than that, but it's not that hard to define success.

On the other hand, there are plenty of nonprofit organizations around that are conspicuous for achievements such as:
  • Maintaining longevity
  • Raising a lot of money, or managing an endowment
  • Accepting awards
  • Garnering a distinguished reputation
  • Arranging photo opportunities with heads of state
None of these things are (in themselves) successes.

If they help a nonprofit organization achieve desired programmatic outcomes, that's great. If the desired programmatic outcomes are closely related to an explicitly stated organizational mission, that's really great. But if the organization is just sticking around, racking up donations, and basking in the glow of widespread approbation, then it's just going through the motions.

Over time, most for-profit organizations that can't make money have to shut down. However, there are plenty of nonprofits that continue to operate without making any significant progress in the department of outcomes. They often mask this by pointing to all of their activities, but, as they say in the evaluation biz, outputs are not the same as outcomes.

If your mission is to reduce teen pregnancy, then it doesn't matter how much street outreach, peer counseling, home visiting, or curriculum development you do - if you don't reduce teen pregnancy. If you fill a sports arena with 10,000 teens and they cheer wildly while you deliver your message, but you don't reduce teen pregnancy, then you are confusing motion with progress.

There doesn't seem to be an economic principle that causes nonprofit organizations to fold if they don't make any progress toward their missions. I don't know whether the nonprofit sector is a zero-sum game; if it is, then these organizations are simply using up resources and occupying niches that would otherwise be taken by more effective groups.

1 comment:

Antman said...

Great post! You are absolutely correct, market economics do not drive non-profits the way the do private enterprise. With private enterprise it is simple, how much money did you make, how much more was it than we were expecting and how much do I get? With the non-profit, it is much more, oh how do you say, arbitrary, subjective. Many non-profits missions are just too arbitraty and out of their control. Because of this, non-profits are given an accountabilty pass. So looking busy is how they can demonstrate they are at least working towards their goals and therefore worth donations. It's all too mushy and it doesn't feel good to actually hold people who "care" and are only trying to make a difference accountable. So keep busy and we will all be happy. Too bad, in poker we call that throwing good money after bad! Oops, better call gamblers anonomys, their non-profit right? :)