I once heard that, 22 years ago, when Peter Drucker wrote the Harvard Business Review article, "What Business Can Learn from Nonprofits," some thought that the magazine had committed a colossal typo and gotten it backward. Surely it meant to say: "What Nonprofits Can Learn from Business."
Although I suspect this story is apocryphal, clearly Drucker was way ahead of his time in identifying the social sector as an arena in which many of its foremost organizations are every bit as well run as the most successful corporations.
"The Girl Scouts, the Red Cross, the pastoral churches … are becoming America's management leaders," Drucker wrote. "In two areas, strategy and the effectiveness of the board, they are practicing what most American businesses only preach. And in the most crucial area—the motivation and productivity of knowledge workers—they are truly pioneers, working out the policies and practices that business will have to learn tomorrow."
Drucker was not exactly a nonprofit Pollyanna. While the top organizations are exemplars, he thought, there are far many more that are simply muddling along. In fact, only "a small … number of nonprofits are truly well-managed," Drucker asserted. The vast majority, he added, "can be graded a 'C' at best."
Drucker's assessment—capturing both the dynamism of stellar nonprofits and the deficiencies of most of the pack—came to mind recently when I read Give Smart (PublicAffairs, 2011), a book by Tom Tierney and Joel Fleishman. Tierney, chairman of the nonprofit consultancy the Bridgespan Group, and Fleishman, a professor of law and public policy at Duke University and an expert on charitable foundations, have written a guide not only to help wealthy donors achieve results from their largesse but to produce "more and better results over time."
As they note, that's no easy task. For one thing, they write, "feedback on the results of … philanthropic efforts can be ambiguous, even suspect." What's more, "philanthropy has no built-in systemic forces to motivate continuous improvement." To help overcome these difficulties, Tierney and Fleishman urge donors to "engage in a process of rigorous inquiry around six separate but related questions:"
1) What are my values and beliefs?
2) What is "success" and how can it be achieved?
3) What am I accountable for?
4) What will it take to get the job done?
5) How do I work with grantees?
6) Am I getting better?
All of these are fitting to ask in an age marked by tremendous wealth and a strong desire by many to change the world, a combination symbolized by the dozens of billionaires who have pledged to meet the challenge issued last year by Bill and Melinda Gates and Warren Buffett to give at least half of their net worth to charity.
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