Non-profit Management – why should we care?

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Gabrielle Ritchie, Director, The Change Room

11th August 2016

Without strong leadership and effective organisational management (where “management” does NOT translate into masses of bureaucracy and internal red-tape), organisations can’t survive.  This is one of the key reasons that the Non-profit Service Providers Network, based in Cape Town, is running its second #ThinkGood event.  Building on the success of #ThinkGood2015, the Network is delivering up #ThinkGood2016 – another day of discussions, knowledge-sharing, expertise and engagement on key issues in NPO management.

These events are offered by the Network at no cost, as our contribution to the annual Mandela Day initiative in South Africa.  To ensure that non-profit staff, managers, and directors are able to participate in this free event, we schedule it for a few weeks after Mandela Day so that it does not clash with the many activities planned by non-profits for this day.

The #ThinkGood2016 programme for 2016 includes sessions on crowdfunding, crafting annual reports, board governance challenges, financial risk management, cyber-security for NPOs, communicating an NPO case for support, and a range of other topics.  For more information, go to https://www.facebook.com/ThinkGoodNonProfit/

Why is NPO management a key skills area in ensuring organisational resilience?

Most non-profits are established because an individual or two had a passion for a particular cause and wanted to take action to address this social challenge.  Non-profits are generally not established by people who want to run an organisation.  This means, very simply, that the skills required to establish, drive, plan, manage, finance and implement a non-profit organisation and its programmes are usually not the strength of the organisational founder.  Sometimes this is their strength, but most often the cause, the challenge and possible solutions are the driver – leaving many organisations under-resourced and under-developed in terms of organisational management.

Start-ups seldom have the funds up-front to employ a management-savvy person who understands and is on board with what is required to drive the growth of a new organisation.  If the organisation is reasonably successful in its financial resourcing and its capacity to implement and deliver on its programmes, it may well make the mistake of believing it can continue without investing in the organisation as a living, breathing entity in its own right. Definitely a mistake – an organisation that is not cared for as an entity with its own personality and needs won’t have the capacities required for resilience.

Increasingly, funders are understanding the importance of supporting capacity development within non-profits, along with recognising the importance of supporting administrative and overhead costs without seeing these costs as separate or “on top of” the funding required to do the work.  It is absolutely brilliant to see that funders are starting to recognise the need for whole-cost funding, taking a pay-what-it-takes approach, as outlined in a recent article on the Stanford Social Innovation Review site:

For years, nonprofits have campaigned for funders to end their widespread practice of providing full financial support for programs and services, but scrimping on overhead costs. This practice gives rise to the vexing “starvation cycle” that constrains nonprofits’ ability to invest in essential organizational infrastructure and creates tensions, and even dishonesty, between grantmakers and grantees.

Recently, a handful of major funders and important intermediaries have joined nonprofits in declaring that it’s time to develop a new approach to grantmaking. The model they collectively support centers on an idea that we call “pay-what-it-takes” philanthropy—a flexible approach grounded in real costs that would replace the rigid 15 percent cap on overhead reimbursement followed by most major foundations.

You can access the full article here.

Just as a restaurant can’t sustain itself by serving a meal and only recouping the cost of the ingredients and the chef, so too with non-profits – which would be unable to deliver any of their project work without appropriate levels of funding to cover the actual costs associated with running the organisational base from which such projects are delivered.

The rigid 15% cap referred to above is often 10% in South Africa, which makes longer-term sustainability something of a dream for most organisations.  If there is no funding to invest in growing and strengthening the organisation, and investing in management and ongoing capacity development, there will soon be no organisation to fund.  Truth.

 

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