Wednesday, March 02, 2005

HBR Article -- Not Much New

Just finished the HBR Article Should Nonprofits Seek Profits? by William Foster and Jeffrey Bradach. Pretty disappointing. Not a lot new here, although the reminders are good, that business is risky and nonprofits often try to go into business naively. But it takes a very negative tone, in my view. Nonprofits seek profit naively? So do for profits, but that doesn't get mentioned. And, the authors focus pretty much exclusively on commercial ventures outside of the mainstream of what they seem to infer is "what a nonprofit should be doing"....
What about nonprofits expanding a service to a new county? That's a new venture....or fund raising in general; isn't that supposed to be profitable? I mean, would you ask your fund raiser to NOT seek a profit when planning a special fundraising event?

I've been preaching that nonprofits should seek profits -- overall--- for 25 years. Profits enable more mission. I've also been preaching that new ventures are risky, need to be focusing on a mission outcome and need to be well planned and executed--and even then may fail. Nonprofits need diverse revenue streams - a mix of government, community, foundation, and earned income.

I must say that I work with with a great group of nonprofits who provide products and services to the federal and state government by employing people with disabilities. If you see folks with disabilities cleaning your post office, or mowing the lawn in front of a military base, they are almost certainly from these programs. The chemical protection suits our servicemen and women have in Iraq? Made by these people. The new Army Combat Fatigue? Same thing.

These nonprofits do much more than just provide goods and services to the feds, but the key here is that they have learned the skill of business planning and business operation to help pursue mission, and they are making money at it.

Read the article, but don't get scared away. Just learn the business skills FIRST, before you consider expanding into now areas of work.


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