Sustainable Nonprofit Organizations
October 24, 2011
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.
[youtube=http://www.youtube.com/watch?v=i-zMF9ouwno]
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
Related Articles
October 29, 2011 at 2:53 pm
Hi Chris,
Good points!
Where does leadership fit into this equation for new start ups?
Professor Green
October 29, 2011 at 2:34 pm
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
October 29, 2011 at 2:56 pm
Hi Miguel,
Interesting insight?
Based on your experience with this medical nonprofit, how critical is marketing?
Professor Green
October 31, 2011 at 6:54 pm
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.
October 29, 2011 at 5:29 pm
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.
October 30, 2011 at 2:50 pm
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.
Leave A Reply
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.