David O’Brien & Matt Craig
We and a group of colleagues – all folks with a passion to assist nonprofit organizations to improve long-term sustainability and delivery of their mission objectives by expanding their adoption of evolving strategies and practices – have started this site to serve as a resource to others and to highlight best practices in what is becoming known as “the Fourth Sector.”
In addition to the various resources on this site, we’ll regularly post a blog written by one of our Distinguished Fellows, Guest Bloggers or ourselves. Our purpose is to create a space for individuals—educators, NGO practitioners, policy makers, professors, researchers, and others—interested in improving sustainability in nonprofits on whom we rely to alleviate the world’s most pressing problems.
We welcome your comments, contributions, feedback, and suggestions, and hope that you find the site and the blog to be informative, useful and inspiring.
Some folks thought our blog site name choice was “snarky” – but, to us, it’s a placeholder for ineffectual funding practices of many nonprofits.
We’ve all been there. It’s called the rubber chicken dinner – otherwise known as the “gala”- and it’s both a poor substitute for a way for a nonprofit to achieve sustainability and the posterchild for the default strategy of many nonprofits to supplement funding their operations. Food and drink are flowing; everyone is dressed up and bidding on silent auctions or raising their paddle when asked to give in full view of their table members (peer pressure); the staff is exhausted and fall behind in their “day jobs”; and the organization often doesn’t really raise a great deal of money after consideration of the hidden costs. And before too long, it’s time to start planning for next year’s event and hope it doesn’t rain if it’s outside.
Is this any way to fund the organizations we hope will fix our society’s problems? If Apple and Google were forced to finance their operations by reliance on donors, we certainly wouldn’t have iPhones and Gmail, let alone Amazon Prime!
Over-reliance on historical funding models – at galas, from philanthropists, or by chasing that next grant that won’t pay the organization’s true costs – is not only wasteful, counterproductive, and ineffective; its unfair to a great deal of dedicated people and establishes a destructive relationship among the participants with a mantra of “we’re not worthy” for the recipient. This mantra can set the tone for practices that prevent the nonprofit from achieving long-term success, including:
- Difficulties in hiring & maintaining the brightest and the best by inability to paying competitive compensation
- Not investing in longer – term projects that entail risk
- Avoiding innovation
- “year by year” budgeting Employing precious staff resources in attending to donors rather than working on mission activities
- “Making do” with substandard, outmoded facilities and equipment
- Fear of reporting any disappointing results, which discourages feedback and scares them from seeking independent assessments/measures of their efficacyRecruiting board members for their largess rather than their expertise
- Elevating the influence and role of board members who are large donors beyond that justified by their expertise, and diminishing the voice of those that contribute in other ways
- And many more
Fortunately, change is in the wind:
Certain “businesses” in the third sector – most notably those in health care and higher education – have emulated for-profit entities for many years. Why is this acceptable in these domains but not for the local soup kitchen? Is it because hospitals and universities must compete with their counterparts in the for-profit and government sectors? Maybe its because of their size, or because they have a more personal relationship (supplying direct services to their donors) than nonprofits that provide services to others, often in distant lands. Fortunately, there is growing evidence that successful deployment of evolving practices can attract and enhance – rather than diminish – “giving”. Hospital and Universities remain adept at fundraising – but don’t rely on it as their primary sources of revenue. They use donations to fund longer-term projects, such as facilities, and for scholarships, not to keep the lights on. Micro- lending institutions are another example; their approach attracts investors who want to use their funds to “do good” but also earn a return. The rise of social entrepreneurship and changing attitudes of millennials have impacted historical attitudes among nonprofit practitioners and philanthropists, who are increasingly adopting different approaches in pursuing their missions.
Emerging trends in the sector – including the viewpoints of social entrepreneurs, the adoption of different funding models, such as Pay for Success programs, and adoption of the United Nation’s goals for increased global partnerships – are driving a convergence of the for-profit, government, and nonprofit sectors, establishing a need for interdisciplinary education of stakeholders. Our institutions of higher education are responding – social entrepreneurship classes are now common in MBA programs. When one of us were recently enrolled in a master’s program in nonprofit leadership, these programs were offered simultaneously in the University’s Schools of Education, Business, and Peace Studies. Clearly, there is a growing demand for this cross-discipline education, driven by millennials and the market for such skills. Competition for resources among the sectors continues to increase, and differences among the for-profit and nonprofit sectors continue to diminish. Many nonprofits compete with the commercial sector when engaged in providing human services or in other activities, such as providing access to arts, culture and entertainment, or attempting to diversify revenue streams by engaging in non-mission activities.
Nonprofits’ use of evolving strategies and tactics is becoming increasingly important in view of a growing belief on the part of many that success in solving societal problems can only occur through the use of new approaches. These include hybrid models of service delivery and funding, cross-sector collaboration, social entrepreneurship and social innovation.
Change will come quickly
It is likely that the decrease in use of historical funding strategies and increased use of new approaches by the independent sector will accelerate. Just as adoption of technology was disruptive to old models – the change will come quickly. Can we even remember the world with typewriters and carbon paper? No Uber? Displacement of old funding strategies in the independent the sector will occur just as rapidly – and the sector needs to be ready. We hope this book will assist in this transformation, along with the substantial numbers of millennials graduating with cross-sector advanced degrees from our colleges and universities and increasing numbers of baby-boomers who will utilize their cross-disciplinary experience in their free time to help others and “give back.” Adoption of hybrid practices that blend the goals and objectives of both for-profit and nonprofit organizations will increasingly make meaningful contributions in alleviating the world’s most pressing problems.
 As reported in the Economist (2017), “a ‘Fourth Sector (after public, private, and voluntary) is springing up, consisting of organizations that straddle the line between business and charity. They call themselves ‘low- profit limited liability companies’, ‘social enterprises” and other names.”