Monday, April 6, 2009

Are Nonprofits Becoming Too Transactional?

A few months ago, I sat in on a meeting, listening to the leadership of a well-known nonprofit talk about the Obama election and what it would mean for this particular organization. A considerable amount of time was devoted to talking about “who’s in, and who’s out,” “how we can use so-and-so, now that s/he is part of the administration,” how we “can forget about so-and-so because s/he’s not ‘in’ with the new group,” etc.

Notwithstanding my general discomfort at feeling like I was back in high school, I was disturbed by this discussion, which, I suspect, has been taking place in the boardrooms of many other nonprofits these past few months as people rush to try to get a toehold into the new power elite circles. After two hours of this, I asked folks whether, um, hey, aren’t we supposed to be the sector whose bottom line is “relationships” and “the greater good”? What happened to all that? A participant turned to me and said, “We're just being transactional, which is the way the world works."

Wow. As anyone who knows me will tell you, I’m pretty aware of “how the world works” and about as far from the “let’s all hug and be happy” worldview as one can get, but frankly, I found this riposte to be one of the most cynical things I’ve ever heard. (Which proves the adage that if you scratch a die-hard cynic, you find a frustrated idealist underneath.)

Have we really become as transactional as the corporate folks a lot of these same nonprofit leaders sometimes castigate because all those “business types care about is power and money, not people”? If so, then what makes us any different than that sector? And does it matter whether we’re different from other sectors?

Some say that if the private sector has no qualms about using people for transactional purposes, why should we? I don’t have any definitive answers to these kinds of questions, but let me suggest one: That pesky issue of integrity. The private sector makes no bones about the fact that their “bottom line” is profit. Period. The nonprofit sector’s “bottom line”—or at least what most nonprofit sector leaders say it is—is the three C’s: community, collaboration, and compassion. When nonprofits forget that—or eschew it altogether—they risk losing their integrity, and ultimately, hoisting themselves on their own petard because they’re preaching one thing and doing another. As history shows, the latter has been at the crux of many a downfall or scandal.

But there’s another risk. As nonprofits adopt more businesslike approaches and practices into their operations—which, to be sure, many of them needed and benefitted from—they may be losing sight of their own missions and the mission of the sector overall. That is, working for the greater good – and putting that over one’s self-interest, whether it be individually or organizationally.

There’s a bit of concern out there, though, that while we may say publicly that we put that greater good first, it may not rise to the top of our priorities when it comes to day-to-day functioning. That’s understandable… but is it an excuse to lose sight of why nonprofits exist? In recent months, for example, I’ve heard more than one nonprofit leader say that “they don’t have time to meet with anyone who doesn’t have something to give me”—or words to that effect. And, there’s a sense among some nonprofit leaders that the economic downturn that’s ignited even more competition among groups for scarce resources hasn’t been bringing out the best in us. “We’re scrabbling all over each other, pushing each other out of the way,” said a good friend who’s been a sector leader for 30 years, “which is dividing us, rather than recognizing the multiple purposes we serve as a sector.” The issue, in short, has become, “how do I preserve my organization” (whether it deserves to be preserved or not—that’s another post for another time), rather than “how do I collaborate with others to meet a mission that transcends my individual or organization’s interests for what the greater good I say I want to achieve?”

Of course, let’s not be totally naïve. There will always be the power-hungry among us—no matter which sector they’re in. The danger, however, comes when this kind of behavior is rewarded, based on an assumption among some that “being more businesslike” means taking a more transactional approach to human relationships and the common good, which is frequently held up as the nonprofit sector’s currency.

But it’s important to note that there are many nonprofits out there that understand and embrace a spirit of the “greater good” and true collaboration, which a recent study by the Colorado Health Foundation has shown to be a factor in achieving goals shared by many nonprofits. The study, for example, found that rural organizations haven’t increased their collaborative efforts because “they’re already collaborating with each other” and that, unlike urban groups, haven't been using more volunteers more than ever before because they've always relied heavily on volunteers. As a result, “more rural groups met their fundraising goals that similar groups in urban areas.”

There's also some evidence indicating that nonprofits and nonprofit leaders who don’t view networking in a transactional light tend to have deeper and more interactive networks. And given that networks—rather than single organizations—seem to be the wave of the future, they may have a leg up on those who continue to hold tight to the “what’s in it for me or my organization” mindset. Even lawyers--who aren't necessarily the most touchy feely cohort in the world--are posting pieces about the need for their profession to recognize that "networking is relational, not transactional."

It’s admittedly hard to talk about these kinds of things without sounding moralistic, preachy or “Kum bah yah”—let alone downright naïve (one thing I’ve never been accused of)—but let’s face it: The nonprofit sector was built on values and it will probably rise and fall on them. So, why can’t we have an honest conversation about that—and one that involves all nonprofits—not just those on the progressive or conservative extremes that tend to be more values-driven? As the world holds its collective breath in fear of economic collapse, war, and other problems that nonprofits work everyday to address, what better time could there be to remind ourselves that what makes us different is not only what we do—but how we do it?


  1. Cindy,

    Would you mind elucidating a little more on what "transactional" actually means in this context?

  2. Cynthia,

    Great points, but I find a key component missing:

    The reason so many nonprofits are as "transactional" as they are-- at least those heavily reliant on foundation and government grants-- is because they are dependent upon a "transactional" funding paradigm in which they are "paid" for projects-- i.e., project support. And not only that, the project support they do receive rarely if ever covers the full cost of doing the work required for a successful project.

    Until grantmaking covers the full cost of doing business and provides organizations the space to pursue the expression of those values we all care so much about (through more flexible, multi-year support), I don't see how we can expect nonprofits to discard transactional ways of relating to the world around them.

    -- Jillaine Smith
    Bethesda, MD

  3. Hi Helen and Jillaine:

    First, Jillaine, I agree completely. And, yes, you're exactly right and I thought about including this... but frankly, that's such an important and big issue, it deserves a longer treatment of its own, so stay tuned! (And thanks for the idea!)

    Hi Helen,

    In this context, I was defining transactional in the frame of seeing human relationships and networks as less about being good things in and of themselves and more about them being objects that are evaluated in terms of "what they can do for me/us," i.e., "I don't have time to talk to them/him/her because they/him/her can't do anything for me/us." Does that make sense?

  4. Cindy,

    Very good points. You and I have talked about this before, how many nonprofit leaders play out scenarios based on their experiences from high school (Remember Mean Girls?). It's also a reflection of the goings on in the private sector which eventually brought about the economic meltdown. It wasn't about whether this a good idea or the best thing to do, but rather it was more about how I can make myself appear to be more "impressive" or "brilliant" or "cutting edge" in my thinking, even though the ideas are completely flawed or just outright wrong.

    Kudos to you for putting things in their proper perspective.

  5. Hmmmm. Food for thought. Just met our mayor yesterday, and tried to engage him in our cause, figuring it was good for him, as well. His response was, well - political. I realized that he was just protecting his own resources, but I did feel a lack of engagement on his part.

    So - this WAS "transactional". But, in a sense, when it comes to folks in the government, our relationship is with the POSITION, almost, rather than the person. Still, something about this doesn't FEEL right - didn't yesterday, either - a little "prostitutional" (is that a word!?).

    So, I'm chewing on your words...