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February 2006 Researchers Find Nonprofits More Business Focused
by Janet Zich Within four days of its debut, spurred by little more than word of mouth and a 30-second mention on National Public Radio, the public downloaded 2,400 copies of the initial report of the Stanford Project on the Evolution of Nonprofits (SPEN) from the Business School website. The following month web visitors downloaded 2,100 more. Why the fuss? The 66-page report, Managing Through Challenges: A Profile of San Francisco Bay Area Nonprofits, is not the first study of nonprofits, but it is different, says SPEN managing director and co-author Denise Gammal. “It comes not from a center of philanthropy or a public policy school, but from a management school. The study looks at the entire breadth of the sector to see how the different pieces are managed.” It also distinguishes between operating charities and the foundations that fund them, a first in such a large-scale study. Researchers examined tax data filed by nonprofits throughout the United States to find out what these organizations did, whom they served, how large they were, and how they were funded. National results were compared with those from California, Greater Los Angeles, and the San Francisco Bay Area. What makes the study unique is that SPEN followed the number-crunching with extensive interviews of 200 randomly selected leaders of operating charities in the Bay Area to learn how they manage their organizations and why they make the choices they do. The researchers learned that the nonprofit sector is changing in dramatic ways, said Professor Walter Powell, faculty director of SPEN, as he introduced the findings to a conference of some 200 nonprofit managers. “It’s becoming more professional. The sector’s human capital is improving,” he said. The report noted that 38.5 percent of nonprofit directors in the Bay Area have advanced degrees. Ongoing professional development is now the norm: 69 percent of Bay Area charities go outside for staff- or volunteer-training events; 73 percent join peer networks to share ideas. While most directors have previous experience in the nonprofit sector, slightly more than half have worked in for-profits, and 38 percent come directly from positions in business. Pressured by foundations and government funders, charities are adopting business practices. Strategic planning, particularly long-range planning, is gaining a foothold in the sector. “The metrics used by foundations are changing, for better and worse, perhaps,” Powell said. “There’s a good deal more focus on accountability, on benchmarking, and also much closer, more sustained relations with grant recipients.” Not all the grantees are happy about the situation. They see a disconnect in measuring qualitative social results with a quantitative yardstick. “How do you evaluate if you are giving someone emotional support?” asked an executive director interviewed by the SPEN researchers. Others judge increased accountability as a needlessly expensive layer of bureaucracy. Government requirements are seen as especially onerous. One director told his former government funder, “We can’t afford to do business with you anymore.” Even a foundation director confessed qualms about the trend toward professionalism. A self-proclaimed “child of the sixties,” Pamela David, executive director of the Walter and Elise Haas Fund, is a longtime observer of nonprofits. “The war on poverty gave us an opportunity to say to government, ‘You’ve done a lousy job of serving my community; give us resources, we’ll do it ourselves.’ Now,” she told conference attendees, “there’s a whole generation of folks who don’t come out of that sense of community struggle who are coming into leadership of nonprofit organizations. I worry about what’s going to get lost in translation.” SPEN is preparing papers on many of the issues raised by the survey. “We have qualitative data that’s rich with experiences,” says Gammal. “You can’t accomplish with a survey what you can with an interview.” She recalls interviewing one church-related service organization that didn’t make the first report. “They said, ‘For 30 years we prayed to God and He always provided. Now we’ve hired a development director.’ We have a treasure trove of information,” says Gammal, “and we want to mine the heck out of it.” The SPEN report can be downloaded from www.gsb.stanford.edu/spen. |
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Study Reports on Bay Area Nonprofits
