Why Should Charities Emulate Businesses?

To the Editor:

In the April 15 article about Pierre Omidyar (“Founder of eBay Announces New Approach to His Giving”), the foundation’s chief executive officer, Iqbal Paroo, says: “People in the nonprofit field are used to getting money without any expectations attached.”

My first question to Mr. Paroo is: Exactly how many years of hands-on fund-raising experience do you have? How many proposals have you written that had to follow the stringent, exacting guidelines of the majority of private-foundation and corporate-contribution programs that provide support to nonprofits? And, how many reports have you prepared for those same funders who require measurable outcomes and extensive documentation to meet those guidelines? In my 15 years of fund raising, I have yet to work with a funder whose expectations weren’t very high and demanding. In fact, I don’t write a proposal until I know the project can meet those expectations.

A second stunningly ridiculous statement is attributed to Mr. Omidyar, who told Forbes in 1998 that he wanted to persuade charities to run like businesses. Really? Which ones? Enron? Tyco? Worldcom? Obviously, these are the all-too-familiar examples of bad businesses and one can point to examples of scandal-scarred nonprofit organizations as well.

But the common denominators in all these examples are greed and hubris, not whether they are for-profit or nonprofit organizations. I can find far more examples of well-run, extremely efficient and effective nonprofit groups that are run like businesses because they have to be to maximize limited human, financial, and material resources.

The last of the irresponsible statements, attributed to Mr. Paroo, is that the Omidyar Foundation tries to make sure charities understand that no group is guaranteed long-term support. What real and long-lasting impact is he hoping the foundation will have by not providing long-term support?

It does seem too clichéd to cite the most serious social issues such as homelessness, hunger, and incurable diseases as examples of why long-term support is needed in many instances. And I don’t believe that all the assets of the wealthiest foundations combined would solve any one of those issues alone but they can, and have, made a difference over time.

I do not have the impressive business background of Mr. Paroo or Mr. Omidyar but it is my understanding that most new businesses like eBay, which was started in 1995, need investors and long-term financing. And many companies continue to need infusions of financial support to expand their operations and upgrade their resources. Not all projects in the nonprofit world need or, in fact, should get long-term funding but if this is a policy of your foundation for all your “investees,” then you can be assured that the impact of your “investments” will last as long as your funding.

The Omidyar Foundation’s work is impressive but its statements about the nonprofit sector cannot go unchallenged, no matter who makes them.

Cathy J. Sharp
Director of Development
Greenwich House
New York