Charities Urged to Focus on Management Strategies

By Laura Hruby

Nonprofit groups can greatly improve their performance by concentrating as much on upgrading their missions, strategies, and cultures as they do on more mundane subjects like computer systems, finances, and personnel policies, according to a report by Venture Philanthropy Partners, an organization in Reston, Va., that makes grants to nonprofit groups.

“Unless an organization has a clear idea of its purpose and strategy, it will never reach its full potential,” says the report.

The report includes detailed examinations of 13 charities that improved their management practices through a variety of measures, including revising human-resource practices and changing their management cultures.

For example, the Nature Conservancy, in Arlington, Va., worked with its state offices to revise its mission statement and strategies for conserving land, the report says.

“Where once its mission, vision, goals, and strategies were completely disjointed, now the Conservancy has attained a large degree of strategic alignment, with every operating unit aware of its role in advancing the overall objectives of the organization,” the report says. The result: The Nature Conservancy tripled its revenue and doubled its membership from 1990 to 2000.

In another example, Take Stock in Children, a charity in Jacksonville, Fla., that works to keep children from dropping out of school, used a new goal — reducing the statewide dropout rate by 1 percent — to assess the performance of its 31 offices, create a new organizational structure, and design new fund-raising and recruitment approaches, the report says.

Patience Required

The report, which was prepared by McKinsey & Company, a major management consultant, says that to make changes, nonprofit groups must employ staff members with strong managerial skills.

It also says that nonprofit groups should be patient when working to strengthen their operations, warning that nearly every step “takes longer and is more complicated than one would expect.”

The report lists several reasons why nonprofit groups have been slow to pursue the types of changes needed to make them stronger: a tendency among nonprofit managers and boards to focus on programs instead of the organizations themselves; skepticism about the relevance of business practices to nonprofit groups; and reluctance among many donors to give money for general operating expenses.

The resistance of nonprofit managers and boards to devoting resources to strengthen their organizations is not surprising, the report says, “given that donors and funders have traditionally been more interested in supporting an exciting new idea than in building an organization that can effectively carry out that idea.”

The report includes a guide designed to help nonprofit leaders chart their organizations’ progress in seven key management areas, and to identify ways to strengthen their operations.

Free copies of the report, “Effective Capacity Building in Nonprofit Organizations,” are available at http://www.venturephilanthropypartners.org.