Nonprofits Need to Be Better Managed to Survive, Drucker Says
Focusing on results will be essential as pressure to perform grows
GOOD intentions are no longer enough for the increasingly diverse array of nonprofit enterprises from churches to Girl Scout troops, says management consultant Peter Drucker.
Nonprofit organizations must focus clearly on results, he says. Those that ``will not learn to be results-focused will not be with us in 10 years.''
Absorbing the efforts of almost 95 million adult volunteers across the country, nonprofit groups are facing stiffer competition for donor dollars and a greater level of scrutiny. Yet these organizations also stand increasingly on the front lines of dealing with the country's most serious problems.
The nonprofit sector ``is going to be the one thing that stands between us and social catastrophe in the next 10 years,'' Mr. Drucker says.
Drucker, who has been one of the most prolific and influential writers on business management in the postwar era, says the tens of thousands of nonprofits are managed roughly at the level of business in 1950: ``A few are well managed and the great majority have good intentions.''
In 1990, Drucker set up a foundation that bears his name to improve the performance of nonprofit institutions. He avers that the effectiveness of these institutions is more important than ever. The most fundamental problems in the United States are not economic but social in nature, he says, adapting the Clinton campaign watchword: ``It's the society, stupid.'' And nonprofits are best positioned to help mend the crisis of community.
Drucker says many nonprofit executives in the past year have asked him, ``Why are they [the critics] suddenly so mean to us?''
His response: ``Because suddenly we matter. We're important.''
Prominent controversies such as the extravagant salary and expenses of ousted United Way executive William Aramony have helped to make life a little meaner for nonprofit organizations too.
The New York-based Drucker Foundation introduced a new workbook last week to aid nonprofits in focusing their missions and planning for results. The conclusion that hits nonprofit leaders the hardest as they sharpen their focus, Drucker says, is that they are misdirecting their energies. ``In the nonprofit sector, there is no market force to force it to give up things that are no longer necessary.''