NonProfit Commercialism
The Diversification of Revenue article was interesting because I always assumed that individual donors were the main source of income for nonprofits but apparently there are numerous sources for an NPO to pull from. Froelich makes a statement about how the different strategies are viewed where, “private contributions are considered a rather sacred source of nonprofit support, [while] commercial activity is often viewed as sacrilegious”. I found this comment fascinating because after reading the article it would seem to me that the commercial side of a nonprofit would be the safe way to go as compared to other revenue streams. I understand that the NPOs might be worried about their mission statement as an organization that provides goods and services for those less fortunate; however, it’s obvious that the NPOs are more likely to lose sight of their original goal when they have to depend on individual, private, corporate or government funding sources.
Froelich states that the organizations could worry about becoming businesslike in their actions but according to their section on corporate and private funding sources the NPOs are already being shaped into a business based on what said funders require of the organization to receive the revenue. She makes a statement about the fact that over time “NPOs come to resemble for-profit corporations”. I think that I would rather have my NPO rely on the clients and customers who utilize the goods and services that my organization provides than on a corporate entity who might try to take over the organization in order to create a MiniMe tax break for their company.
Also, as Froelich points out, there is no goal displacement with this form of revenue. If the commercial activity is developed correctly it would only complement the organization itself. With this form of revenue strategy the organization is in complete control of the funds earned and are able to put that money where they feel – based on their goals and objectives – it belongs. All things considered, if I had a choice of where my NPO funds would originate from I would lean towards more commercial activities.
posted by Tanesha @ 8:08 PM
3 Comments:
At 10:52 PM, March 10, 2008,
cfriedman22 said…
I wanted to comment on the "private contributions are considered a rather sacred source of nonprofit support, [while] commercial activity is often viewed as sacrilegious” statement by saying that I think it's close minded to assume that all individuals who contribute to NPOs do so purely out of the goodness of their hearts. I'm sure plenty of people engage in contributions for tax breaks just like plenty of coorporations contribute because they want to enhance their image. Individuals are fickle, move, have economic troubles, etc. that make them hard to rely on without constantly replenishing the stock. Coorporations have large amounts of money at hand and typically do not relocate very often making them stable contributors. I think coorporate donations are acceptable so long as the coorporations (and their donations) don't interfere with the mission of the NPO. Like we discussed in class, it is good for the NPO to have big donors to gather other big donors but what good are donations that don't advance the mission of the NPO? That to me would seem more "sacrilegious" than the intent of tax break or public relations motivations behind corporate donation.
On the note that NPOs are becoming more business like, I think they have always been businesses. They handle money, service a customer base, have employees, etc. just like other businesses so why shouldn't they take on other beneficial characteristics of busineses?
At 11:51 PM, March 10, 2008,
SIUchristina said…
I've said it before and I'll say it again - I love when my class topics overlap! We've also been discussing goal displacement in my Management Systems class.
My book for that class states "goal displacement occurs when organizational members pursue goals other than the correct organizational goals." This certainly differs from the definition given in the article: "goal displacement occurs when goals and activities are modified to satisfy the wishes of contributors."
But both definitions have a similar theme - your work as an employee of the organization does not coincide with the mission and/or vision of the organization. I would argue that the definition related to the article appears to be more detrimental to the organization. The management definition of G.D. can easily be fixed, but the article's definition of G.D. is not quite as "fixable," especially when you consider the fact that fundraisers have admitted to altering their organization's goals or priorities in order to acquire a particular contribution (pgs. 250-251).
There is much more of a manipulation factor involved with the article's definition of G.D. The following quote from the article really hits this home: "the shifting of priorities to match somewhat faddish funding criteria has been considered a key failure in the treatment and delivery of human services (pg. 251)." And the G.D. can occur with the various types of contributions, not just one type (such as individual contributions).
At 11:18 AM, March 11, 2008,
Brittney Mills said…
I want to expand on a couple of things previously mentioned...
1)Donations from Corporations/Big Business
I don't see any problem with accepting and even depending on donations from corporations, as Christy said, they are more stable. However, I think that sometimes these big businesses want something in return that can often push the NPO away from their mission. To me there are two positive relationships that can come from receiving donations from corporations: 1) a partnership where the business provides the capital for the NPO and they support the mission of the NPO 100% and 2) blind donation relationships as I like to call them. These types of donations are the one's that are donated for the company to receive the tax break or look good to share holders and they expect nothing in return. To me this is a positive for the NPO because they can use the funds how they wish and the business has no alternative motive.
2)Why shouldn't they take on beneficial characteristics of businesses?
I agree that NPOs, to be highly successful, need to take on characteristics of businesses. However, I think that NPOs need to constantly stay mindful of their original purpose and not stray to a strict business model focused on the bottom line, which could easily happen.
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