PROFESSIONALISING NONPROFIT MANAGEMENT VIA EDUCATION
Beryl A. Geber, Ph.D.
There has been noticeable growth in the number of institutions offering master’s level programs in the area of public and not for profit management. Some of these programs are traditional Public Administration programs expanded to cover the field of private non profits, while others such as that at Boston University are traditional MBA programs allowing for a concentration in non profit management. Yet others, such as that offered at the University of Judaism, are MBA programs tailored to meet the needs of the growing non profit management sector. This growth reflects the increasing professionalization of the management of not for profit institutions.
There used to be an assumption that “not for profit” meant “run by amateurs”. The thinking implied that since business ought to be a profitable enterprise, something that is not for profit is distinct from normal business, both in its purpose and in its management. The belief that “not for profit” is synonymous with “voluntary” has no doubt contributed to this misconception. This is not true any longer, if ever it was. Today, both the professional staff and the lay volunteers in the expanding non profit sector of the economy bring to the enterprise a perspective and expectations different from that of the traditional social worker or the kind hearted do-gooder.
The range of not for profit organizations is as wide as for-profit businesses. It includes small grass roots neighborhood groups organized to meet local needs and major national enterprises such as the Red Cross; they serve in the area of health and social services, in recreation and character building, in the arts and entertainment, in education and in training. They serve our spiritual and our intellectual needs. They raise funds for research, and ensure blood supplies. They help the starving in Africa and victims of natural disasters throughout the world. They work alone and in collaboration. They cooperate with government and with private sector enterprises.
Non-profits employ thousands of people, providing them with pensions and health benefits, negotiating with unions and dealing with grievances. As of the 1990 Census, 5.3% of the County work force, or 223,631 people, were employed the private not for profit sector at that time. Figures from the EDD for 1996 showed an average state employment in the non-profit sector of 586,895. This third sector of our economy takes its place alongside the first and second sectors in the life of the community. And like government and business, not for profits have had to rethink and restructure to meet the changing expectations of the 90’s and to position themselves to adapt to the needs of the next century.
Over the last quarter of a century increasing amounts of funding came to social service, arts and educational institutions from both federal, state and local government . This is changing. Welfare Reform will redirect and reduce the pool of dollars available to human service agencies, many of which contract with government to provide government funded social services. Attitudes to the use of tax dollars to support the arts are at least in flux. And donors are no longer committed to the traditional federated giving programs to which they used to give a major part of their discretionary dollars.
Not for profit organizations therefore have had to become more skilled in marketing themselves and their products and more sophisticated in raising charitable dollars both from the individual donor and from corporations. Marketing skills and an understanding of public relations as well as product differentiation are now as essential to the operation of a non profit venture as they are to a business. How would the public otherwise be able to distinguish one counseling program from another, or choose which disease from the many that afflict us, to provide with research funds?
Volunteering is no longer ( if it ever was!) the sole province of women with time on their hands. Raising the amount of money necessary to run a complicated organization cannot be done simply by relying on volunteers. Women work, and although they are still in many cases the majority of the volunteer force, they, like their male counterparts, bring to the role of volunteer high levels of skill and sophistication in business and the professions. The change in the nature of the volunteer is connected to changing expectations about the skills of the paid professionals with whom they work.
As in other fields, power in the world of charity is passing to the Baby Boom generation. It has been estimated that over the next decade large sums of private wealth will pass to the next generation. Much has been made of the differences between the Baby Boom Generation and their parents in their attitudes to giving, and many organizations are changing to meet the requirements of the Baby Boom generation in order to insure that they continue to receive the charitable dollars that enable them to exist and work.
Baby Boomers want more hands on involvement with the objects of their charity and a greater ability to see the impact of their generosity than their parents generations required. And they seem to expect the not for profit to operate under management as skilled as that in the world of business and the professions.
The traditional path to the top management of a not for profit agency was through the ranks. In human service organizations the social worker could move from direct service to supervision to top management. This still happens but there is an increasing call for top management to come from the ranks of those trained and skilled in the law or in management itself.
Any not for profit organization looking to the future has to secure sufficient capital to ensure its continued functioning. Planned giving programs and the establishment of endowments or even foundations which can maintain the corpus of resources intact and provide income to support the organization’s activities is as important as annual campaigns or fundraising events.
Managing money, investing and watching the markets, have become important in the non profit world. And although most foundations and many agencies with sizable endowments will get advice from professional money managers there must be sufficient understanding within the organization to filter advice and make the essential commitments of resources. A piece in the Wall Street Journal of December 18th 1997 pointed out that non-profits are now issuing bonds to maximize their assets and being given ratings by Moody’s and Standard and Poor’s!
What all of these changes require is a professional managerial staff to administer the non profit institutions. The expertise that is demanded goes beyond employing a staff accountant. MIS (Management Information Sytems) departments handling everything from client information to lists of donors, tracking investments and supporting multi-million dollar budgets cannot be run without adequate backup staff. Answering the probing questions of donors who want evidence that their charitable dollars are being spent wisely and doing good requires skill in evaluation and data analysis often comparable to the level needed in sophisticated theoretical research.
Human Resource Management in a charitable institution is no less complex than in a for profit enterprise. Employees do not lose their rights nor become less litigious because they are working in the nonprofit sector. Most agencies can tell stories about suits alleging age discrimination, or sexual harassment, or talk about the constant concerns they have to keep staff contented.
As in most MBA programs, students generally work before they discover the need for greater skills and a strong theoretical framework to assist them in their management roles. Although some students enter MBA programs in non profit management directly following their bachelor degree, these are the minority. Most come to the program after a period of working in the field and so bring practical knowledge to integrate into the academic challenges of the course.
Many decide to move into non profit management from the business sectors and need to develop an understanding of the role of the non profit sector in the economy. The boundaries between the sectors are permeable. What this means for the individual hoping to make a career in non profit management is that the competition for jobs will come not only from individuals moving from service delivery to management but also from people in management in other sectors of the economy. The competition is tougher, but the rewards that are offered are also greater when salaries have to be competitive as well!
The not for profit sector will continue to offer exciting opportunities for well trained people in the arts, in education, in health and in human services. It will increasingly offer equally exciting possibilities to those who have good management and administrative skills that meet the requirements of an increasingly sophisticated segment of the economy.
Beryl Gerber, Ph.D., is Director of MBA in Non-Profit Management programs at the University of Judaism.