Proceed with caution: for-profit/nonprofit relationships

I was reading a tweet from ML Innovations this morning about opportunities for cause-related marketing and other for-profit/nonprofit partnerships. Rosen, as usual, brings up some good points. I thought I would take a moment to expand on his post and present more of a framework to protect nonprofits from mission dilution as it seeks, or reacts to, partnerships with for-profit enterprise.

My take:
Scholarly studies on organizational effects of nonprofit commercial activity are divided in their conclusions. Some consider any commercially-derived income as having negative effects such as mission dilution and loss of public legitimacy (see Lester Salamon's State of Nonprofit America). Others argue that there is no corollary between commercial revenue and damaging organizational effects (see Massarsky and Beinhacker's excellent piece for Yale School of Management).

The scholars engaged in the debate agree on both the underlying theory and the causes of nonprofit commercial ventures. Both camps rely on resource dependency theory and organizational isomorphism theory to explain why nonprofits are lured into what has historically been the domain of the for-profit. The scholarship also agrees that federal fiscal retrenchment and the ideological shift that accompany it force many nonprofits, if not the sector as a whole, to look to profit-making enterprise as a financial cure-all.

In my work with nonprofits engaged in for-profit activity, I find specific variables that impact the degree to which organizations are effected by commercial ventures. There are five variables that influence organizational effects:

1. the age of the organization (or combined experience of the executive staff);
2. the degree of reliance on homogenous resources;
3. the degree of environmental turbulence each experience;
4. the leadership of the executive and board; and 
5. the agenda of funding sources.

Properly managing these variables makes it possible and even probable that nonprofits can look to commercial activity without threatening core mission or other attributes necessary for organizational survival. Further, the variables show that organizational context is critical when making conclusions about the positive or negative effects of commercial activity. Each organization, even as they structurally resemble one another and are pushed into commercial ventures for similar reasons, respond to such activity differently.

Fundraisers are not Salesman

That's right. Fundraisers are not salesman, in spite of what you might hear from your colleagues or highly paid consultant. Here's why:

It simply does not make sense. If I am a "salesman", does that mean the donor is a "consumer"? If so, what exactly is the person consuming?

Consumer behavior is founded on the intersection of private desire and private benefit. Whereas donor behavior is founded on the intersection of private desire and public benefit. (Frumkin, Peter The Essence of Strategic Giving: A Practical Guide for Donors and Fundraisers). By both a moral and legal definition, a donor may not receive any goods or services in exchange for their gift. So, then, what are they buying?

Yes, fundraisers co-opt the vocabulary and techniques of other industries (often because professional development officers come from other industries - we are a new professional class). In my work I regularly deal with lawyers, accountants, and financial planners. To make myself heard, I use their language. But vocabulary alone does not make me an attorney or CPA.

A lot of this confusion stems from the fact that most professional fundraisers don't have a formal education in fundraising/philanthropy. Many of my former and current colleagues have "learned on the job". Myself included. That's not necessarily a bad thing, but it means that as we learn we lean on what we know or what we see. For many, that means borrowing heavily from established sectors, such as sales.

DiMaggio and Powell, noted organizational development theorists, refer to this tension as normative isomorphic tendencies that stem from the “collective struggle of members of an occupation to define the conditions and methods of their work” (1983, 152). They suggest that uncertainty about professional work responsibilities causes people to mimic successful patterns outside their fields. (Paul J. DiMaggio and Walter W. Powell, 1983. “The iron cage revisited: institutional isomorphism and collective rationality in organizational fields.” American Sociological Review. Vol. 48, April. Pp. 147-160))

So, we can easily imagine a major gifts officer, with little formal professional training looking to the world of sales as a model of success and co-opting its language and approach. The risk here is that as the major gift officer co-opts from sales, s/he can no longer distinguish between sales and fundraising.

The lesson here is simply that we need to stop comparing ourselves to established fields that appear similar, and focus instead on establishing our own field.