Critical Issues in Non-Profits - Coursework Example

Critical Issues in Non Profits Philanthropy is known as an act which is done voluntarily for the betterment of societies. It helps the people in many aspects such as providing education, health, infrastructure and a better standard of living. The concept of philanthropy is further categorized into many areas and one of the foremost areas which, today, are highly regarded because of its efforts to make this world a better place for everybody, are the nonprofit organizations. The word ‘nonprofit’ in them clearly gives a rough idea that these organizations are not working to make big profits. The money they generate to help people are mostly through charities and donations. The stakeholders of nonprofit organizations do not look at the financial statements at the end of the day as they do not expect profit from their investment, rather the money they get into the organization is all spent on the social welfare activities (Boris, 2013). On the whole, it seems very easy to open a nonprofit organization and help the society, but the case is totally opposite. Steven Goldberg, a well known author, has identified some of the critical issues regarding nonprofit organizations in his book “Billions of Drops in Millions of Buckets: Why Philanthropy Doesnt Advance Social Progress”. People, at first, used to rely on government to provide them with all the major facilities. It was sooner realized by the rich community that the government, alone, cannot provide people with all their needs and that’s when the nonprofit sector came into existence. The nonprofit sector did not only bring huge funding with it but also came up with creative ideas. For example in building a school in a remote area, not did these organizations funded the construction of the school but also provided the school with well educated staff and improved education system. Goldberg has also appreciated nonprofit organizations for the extra efforts they put in for the betterment of the people (Schambra, 2013). According to Goldberg, there are two important factors which a nonprofit organization look at before taking any decision. The first and the most important factor for any nonprofit organization to start a project are to get the funding for that project. Funding not only determines the intensity of the project but also the life of it. The second factor is choosing the number of people the organization will look to target. The best number is said to be a “mid-cap” nonprofits, somewhere between “large-cap” (Red Cross and United Way) and the “small caps”. It is said as the best numbers because they are joined by a lot of voluntary groups who not only works efficiently but also make small but important differences in the hearts of millions of people they are serving. The advice given by Goldberg is followed by most because it focuses on their finance on a drop of national ­project, the less money will go to small “groups and ­associations”. The nonprofit organizations are not working for their initial purpose, nowadays. People working in the nonprofit sector today, have also been driven towards a money making program. Today even, in every field of social policy, however, it remains the same. Favorable ideas contained to narrow because of the many interests who have a lot much at stake in the way things have always been done, however, powerlessly. Well-heeled ­benefactors may idle-talk about funding only the latest and innovative solutions, but, as soon as it is clear enough that a particular grant may increases the chances causing to repel post line in front of a corporate office or foundation headquarters, the passion for modification omits (Anon, 2013). Goldberg criticizes on the funds allocation method adapted by the nonprofit organizations. The funds are given to the organization as a whole, while Goldberg suggests that the funds should be to the organization into several different parts so that the efficiency is increased rather than the funds provided to them. Goldberg has not only identified critical problems in a nonprofit, but also has identified the role of major stakeholders of the country such as government. According to him, to improve the workings and the management of funds in a better way, there should be some mechanism which keeps the measure of the philanthropic money. However it is very important for the donor also to keep a check on how their money is being utilized. The donors can play an important role and can help improve the image of nonprofit sector in a healthy way. Though, for this, it should be clear in the minds of donor that the money they are giving to the charitable organization is not just for the sake of “giving” only rather they should make a system in which they keep a track of their money and force the organization to spend the donor’s money only for to benefit the society and nothing else (Venture philanthropy, 2013). Goldberg entered into the nonprofit field at a time when the concept of nonprofit organizations was at its peak and the nonprofit sector was well established. Donations, at the time, when Goldberg entered into the nonprofit sector were completely opposite to what it should be. Donations which are given by many different donors are explained by Goldberg as hard earned money of donors which they want to give for a good cause. But all their money is projected as the cash which will help run the organization and enhance its performance. A major problem which the nonprofit organizations face is to keep track of the philanthropic funds and to make sure that whether the funds are used in the philanthropic purpose only. This is difficult because most of the time the donors have a personal experience or a relation with the cause they are donating for. This can be in relation to religious beliefs, family, relatives and so on. The problem is not that the money will not be received, but how will it be used? Donors when, somehow, are related to the cause, they tend to spend the money the way they want. This can be anything such as an unnecessary dinner. The question now is who will pay for that added expanse? Will it be from the personal expense of the donor or from the organization expanse? The time wasted on this activity could have been used in a productive manner. Who is responsible for the time wasted? The donor or the organization? Goldberg argues on keeping donors involved in the decision making so they know as where their money is being spent, which in my opinion is very right. This will help donors know about the expanses made by the organization and they will take more interest in the actual activity (Accenture, 2013). We have totally ignored the part of government in the whole discussion up-till now. Government has a big part to play at its side and can be very useful in establishing the trustworthiness of the nonprofit sector while not affecting the work they have done or are currently doing. The aim and objective of both, the government as well as the nonprofit sector are same that is to protect and enhance the right of the general public. When the nonprofit sectors are delivering their projects, it is government’s responsibility to coordinate and keep a check on the activities performed by them. If something goes wrong, people would not go to the nonprofit organization for answers rather it will be government who will be answerable to them. Government, for that matter, should impose legalities on the nonprofit sector so that they avoid unethical practices and do what they are meant to do. Local people have more trust on government initiatives rather than the private ones so it is government’s responsibility to maintain the trust of the people. It is not that the government should discourage private investments. Private investments are as equal or sometimes more important than the public sector investments but there should be some method to keep a check and balance. Government is often considered as inefficient while private sector is considered to be more effective and efficient. Government should use this as their weapon where they pay the nonprofit sector to make and implement projects while government on the other hand should make tough rules and regulations to make sure that the nonprofit sector is doing the work in the right manner and in an honest way. Taking example of American Red Cross that is a nonprofit organization and has a unique relationship with the US government. It is a nonprofit organization and a charitable institution which is funded by the US state government. The government invests in the Red Cross because they know that Red Cross can deliver things in an efficient way. So the main idea is that the government should do joint ventures with the private nonprofit organization to get work done accurately while if the government looks after the funds and the finances, I am sure that government can get the project done in a cost effective way. In short, it is about getting work done in lowest possible cost and gaining highest possible benefit. The critical issues of the nonprofit sector have been identified by many companies as well and they are working for the best possible solution to counter these problems. Meetings are conducted on regular basis in which it is discussed as how this problem can be overcome. One suggestion which seems to be the best up-till now is the collaboration of businesses, nonprofit organizations and government. This will increase work efficiency and the work will be delivered timely. Secondly, when businesses get involved in this, they can bring in innovative ideas which will be implemented by the nonprofit sector while regulated by the government. Nonprofit organizations also provide a lot of opportunities to the general public as well. Volunteer work is one of them which will support public policy and enhance the democratic culture. People will feel more responsible when they are involved in the decision making process. Besides that, by working for the nonprofit organization, young generation specially students are able to develop a sense of responsibility towards their society. Students and young generation is the main asset of a country, and in such scenario, the asset appreciates increasing the goodwill of the country. For a nonprofit to gather finds and people to work with them, it totally depends on how people have trust on private organizations and government. (York, 2013). Talking about the investors, with their utmost support and concern towards the development and growth of the nonprofit sector, this sector has been able to achieve its targets of better humanity and society. But the investors must follow the policy of accountability of their investment in the nonprofits. It is hereby not advisable to invest in any nonprofit one time and then leave everything upon them. The investors need to act wisely, and must do the complete check and balance of their investment as to if their investment is put in the right direction. This does not mean that the investors are suffocating the receiving organization. But through this approach, sense of responsibility stays alert among the donor, the receiving company and company on which the investment is made. Though the nonprofits are NON-PROFIT organizations, that means they do not strive for the profit of the company and the investors do not get any return for their finance, yet accountability can be maintained through proper regular audits. And nonprofits do get their audits done on a regular basis. In that way, nobody gets a chance of getting distracted from their goal. The nonprofit sector does face crisis in the emerging world but these problems can be sort out. Though government has a strong standing and credibility in the eye of public as compared to the non-governmental nonprofits, but this problem can be solved by the government itself that can establish credibility of nongovernmental nonprofits in the general public. And this can then solve almost 90% problems of funding and financing of projects. The issues highlighted by the author stand valid and they can be eradicated by the idea of joint ventures between government and nonprofit sector. These joint ventures can be a venture between nonprofits and big giant enterprises as well as between nonprofits and government. With governments initiatives of joint ventures with the nonprofit sector, it may help establish credibility of nonprofits among donors as well as young generation that might avail the opportunities created by nonprofits. Works Cited Accenture. (2013, 1 16). Executive Issues in Nonprofits Study: Identifying Enablers of Nonprofit High Performance -- Full Text . Retrieved from Global Management Consulting, Technology and Outsourcing Services from Accenture : http://www.accenture.com/us-en/company/citizenship/Pages/executive-issues-nonprofits-study.aspx Anon. (2013, 1 16). Retrieved from http://www.uk.sagepub.com/upm-data/23270_Chapter_3___Nonprofit_Governing_Boards.pdf Schambra, W. A. (2013, 1 16). Book Review: ‘Billions of Drops in Millions of Buckets’ - WSJ.com. Retrieved from The Wall Street Journal - Breaking News, Business, Financial and Economic News, World News & Video - Wall Street Journal - Wsj.com: http://online.wsj.com/article/SB10001424052970203609204574314580689861174.html Stannard-Stockton, S. (2013, 1 16). Investing In Nonprofits | Tactical Philanthropy. Retrieved from Tactical Philanthropy: http://www.tacticalphilanthropy.com/2009/01/investing-in-nonprofits/ Venture philanthropy. (2013, 1 16). Venture philanthropy | Social Innovator. Retrieved from Home | Social Innovator: http://www.socialinnovator.info/ways-supporting-social-innovation/third-sector/mission-related-investment/venture-philanthropy York, P. (2013, 1 16). Investing In Nonprofits | Tactical Philanthropy. Retrieved from Tactical Philanthropy: http://tccgrp.com/pdfs/SustainabilityFormula.pdf Read More