Should Nonprofits Act Like Businesses?
Lessons on nonprofit management
I have just started working on a new book project focused on the challenges of running a nonprofit organization. As I have begun my research, several people have recommended that I check out David Schizer’s new book, How to Save the World in Six (Not So Easy) Steps: Bringing Out the Best in Nonprofits.
Schizer has played the nonprofit game at the highest possible levels: he served as the dean of Columbia Law School for a decade and also as the CEO of the American Jewish Joint Distribution Committee (also known as the “JDC”), an international relief organization with an annual budget of more than $300 million. In terms of prestige and scale, it doesn’t get much better than that.
Schizer’s book attempts to distill lessons from his career in nonprofit management. In doing so, it targets a pretty narrow audience: leaders of nonprofit organizations who are looking to improve performance. In truth, the potential audience for the book is even narrower than that. While there are more than 1.5 million nonprofits in the United States, it is estimated that only 3 percent of them have annual revenues of more than $5 million. This means that the vast majority of nonprofit organizations are basically living hand to mouth, eking out just enough revenue to achieve a limited set of goals. With its tales of complicated bureaucracies and multimillion dollar fundraising campaigns, How to Save the World in Six (Not So Easy) Steps does not have much to offer to these organizational leaders.
But for those who do operate in the rarefied air of large, sophisticated nonprofit agencies, How to Save the World provides advice from an experienced bureaucrat and a handpicked list of two dozen other executives. The book is littered with aphorisms from Schizer and his interviewees. A few examples:
“The strengths and weaknesses of nonprofits are often two sides of the same coin.”
“Good intentions can all too easily lead to bad outcomes.”
“Some professionals and boards are more interested in feeling good than in doing good.”
“It’s not enough to know what needs to be done. We also have to get everyone to do it.”
“It is better to do less but to do it right.”
“Real change, enduring change, happens one step at a time.”
These insights may not be startlingly original or counterintuitive, but in my experience they all ring true. Having run a fairly large ($70 million+) organization, I can attest that Schizer accurately describes many of the challenges of nonprofit life, which can include excessively ideological staffers, internal resistance to new ideas, and missions that are hard to achieve and difficult to measure.
Schizer is at his best when he is writing directly from his own personal experience. For example, he describes how he implemented an intensive annual planning process at the JDC. While the notion of rethinking organizational goals every single year seems excessive to me, I admire the thoughtfulness of Schizer’s approach, which sought to build internal buy-in and promote cross-agency collaboration by including a peer review process that enabled department heads to comment on each other’s plans for the year.
Significantly, Schizer doesn’t just share his personal greatest hits — he also details efforts that fizzled, including an online fundraising plan that he ultimately dropped because it failed to mobilize the necessary members of his team.
As a die-hard incrementalist, I appreciated Schizer’s cautions about attempting to drive too much change, too fast. “Moving too quickly is my main regret about my time at JDC,” he admits.
Contrary to conventional wisdom, Schizer makes the case that new leaders should not make significant changes in their first 6-9 months in office, instead spending this time to get to know their new teams and show respect for the traditions of their organization. Manhattan District Attorney Alvin Bragg would probably testify to the wisdom of this approach. When he took office in 2022, Bragg released a “Day One” memo changing a number of office policies. The backlash, both internal and external, was so strong that Bragg ended up walking back many of his proposed changes.
As a writer, Schizer is not much of a stylist. Perhaps inspired by the “royal we,” Schizer sometimes defaults to what might be called the “nonprofit plural,” which can make for an oddly schoolmarmish tone, as in: “Losing our temper is bad enough, but ad hominem attacks are much worse. This is something we should never do.” In other places, How to Save the World reads like a management textbook, full of sound abstract principles, but a little bloodless in its lack of specificity and texture.
Throughout the book, Schizer often compares nonprofits unfavorably to businesses. This came as a bit of a surprise to me. When I was a young nonprofit professional in the 1990s, I frequently heard this criticism levied against the sector. Back then, it was in fact true that many nonprofits lacked organizational drive and discipline. It was also true that some organizations did not seek to achieve measurable outcomes and spent an inordinate amount of time on internal discussions about their values.
As I got older, though, I heard fewer and fewer calls for nonprofits to act like businesses. Some of this is probably because, as the global financial crisis of 2007-2008 and other failures have taught us, the emperor often has no clothes — as a general rule, business leaders are not in fact demonstrably smarter than their peers in the nonprofit sector.
But it is also the case that, over the past generation, many large nonprofits have started to behave more like for-profit firms. Management became increasingly professionalized. Funders demanded metrics of success. Pay increased, at least at the executive level. The revolutionary fervor of the 1960s and 1970s was replaced by more technocratic language.
What we are living through now in the nonprofit sector is arguably a backlash to all of these developments. Increasingly, nonprofits are under pressure to behave less like businesses. This includes demands to accommodate the needs of staff without regard to the impact on organizational performance, to declare support for a range of social justice causes, and to create more democratic internal decisionmaking structures.
Because How to Save the World is silent on these issues, it is tempting to dismiss the book as an anachronism. But other books (including mine!) will no doubt come along to grapple with the impacts of Donald Trump, Black Lives Matter and other recent challenges to the nonprofit sector.
How to Save the World may be a bit square, but that doesn’t mean it does not make a contribution. By focusing on the importance of driving high performance, Schizer reminds readers of an enduring truth: the ultimate purpose of a nonprofit organization is not to serve staff or to have immaculate moral values, but to have an impact on the world. Nonprofit leaders ignore this wisdom at their own peril.