Corporations Can Take Tips From Nonprofits

Foundation head says business executives must learn management style of charitable organizations

FRANCES HESSELBEIN will defend nonprofit organizations down to the last dime. In fact, she believes corporations can learn a thing or two from the more than 1 million nonprofits in the United States.

"Social-sector organizations have to be better managed than for-profit organizations ... because they have no margin of error," says Ms. Hesselbein, who is president of the Peter F. Drucker Foundation for Nonprofit Management in New York.

In the future, she says, corporations are going to have to learn to manage the work force the way today's nonprofits manage volunteers - by leading workers and not containing them.

As the former head of Girl Scouts USA for 14 years, Hesselbein disagrees with the notion that nonprofits are less efficient or less professional than for-profit corporations.

"Some corporations are extremely well managed, some nonprofit organizations are," she says. "It has nothing to do with the sector. It has to do with quality of management."

What differentiates the well-managed from the not-so-well-managed? A well-managed organization, she explains, has three characteristics. It is:

*Mission focused. The mission statement should be short, compelling, and revisited every three years. "Changes are rushing us into the future with such velocity that we cannot just keep the mission as it was 20 or 50 or 100 years," Hesselbein says.

*Values based. The values of the organization should be articulated to and embodied by the staff and volunteers.

*Demographics driven. The organization should know who its customers are, where they are, and how they think and feel. And it should understand the rapidly changing demographics of the US and its communities.

One of the most exciting developments that is emerging, she says, is the partnership between corporations and nonprofits.

It's not the usual "I write the check, and you do the work," Hesselbein adds. In many cases, the corporation is supplying not just the money, but corporate volunteers.

The nonprofit sector has taken a few hits of late from increased reports of the misuse of funds and skyrocketing salaries of some top executives (which Hesselbein says are an "aberration" and "not the norm"). In addition, giving and volunteering have been on the decline in America over the past few years.

In 1989, 54 percent of adult Americans volunteered. By 1993 that number had dropped to 48 percent, according to Independent Sector, a Washington-based coalition of voluntary organizations. During the same period, household giving declined 11 percent.

"Today there is a new kind of [public] scrutiny of - a very critical look at - nonprofits and the financial support [they receive]," Hesselbein contends.

Nonprofits are stewards of public trust and public money, she says. As a result, they have to "manage for results, and those results equal what they have done to change lives." Then they have to learn how to communicate those results to donors.

"It's a fact that donors no longer reward good intentions," she adds. "They reward good results."

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