Why “Becoming More Like a Business” Is Not The Solution For Nonprofits

Becoming more like a business?
Not for nonprofits

“We must reject the idea – well-intentioned but dead wrong – that the primary path to greatness in the social sectors is to become ‘more like a business.’” This is Jim Collins’ opening statement in Good to Great And the Social Sectors, a monograph to accompany his classic 2001 management book, Good to Great.

It is also one of the first assigned readings in my class, “Nonprofit Program Development and Evaluation,” offered by Johns Hopkins University in both its Certificate and Masters degree program in NGO Management.

I needed something, and this fills the bill nicely, to help students appreciate that the business sector doesn’t hold a monopoly on the concept of effectiveness.   It would be as absurd to argue that the primary path to greatness in the business sector is to become more like a nonprofit charity.  The fact is that a great many organizations from both sectors are simply mediocre, because their practices are mediocre.  Collins explains this very nicely in both his books.

For the social sectors, Collins puts forth five principles, the first one — the necessity of defining “great” without business metrics – setting the stage nicely for explorations of evaluating effectiveness in the public and nonprofit realm.

Collins continues, “To throw our hands up and say we cannot measure performance in the social sectors the way you can in a business is simply a lack of discipline. … It doesn’t really matter whether you can quantify your results.  What matters is that you rigorously assemble evidence – quantitative or qualitative – to track your progress.  If the evidence is primarily qualitative, think like a trial lawyer assembling the combined body of evidence.  If the evidence is primarily quantitative, then think of yourself as a laboratory scientist assembling and assessing the data.”

I’ve espoused this principle for years, first in a 1983 project that mimicked a courtroom presentation of evidence on the merits of a school-based drug prevention program, using a model advanced by the National Science Foundation.  “Pretend you’ve been accused of running a trivial or ineffective program – what evidence can you marshal in your defense,” I ask.  This – the presentation of worthwhile evidence of effectiveness – is one of the core themes of my class at JHU.  As it says in the description of the Masters and Certificate programs, “The coursework focuses on building the specific analytical and management skills needed by those assuming leadership roles in a variety of nonprofit fields. All the courses feature a global perspective for relevance in today’s world of interconnected economies and communication.”

Preparing and then presenting the course on nonprofit and public program development and evaluation will provide me many opportunities to create blog posts informing the larger themes of on this website of the Effective Communities Project.  Who knows – maybe someday there’ll be an online course on philanthropy, justice, and evaluation.

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Steven E. Mayer, Ph.D. / Effectiveness Communities Project / April 18, 2012

Lightly revised July 5, 2020

Originally appeared: JustPhilanthropy.org - a project of the Effective Communities Project

Original date: April 17, 2012

Author: Steven E. Mayer, Ph.D.