Nonprofits Would Benefit From Adopting For-Profit Business Practices, Accenture Research Finds
Specific Operational Improvements Could Alleviate Fundraising Pressure; Study Highlights Six Steps For Success
NEW YORK; April 6, 2006 – Nonprofit organizations would benefit from adopting some of the for-profit world’s basic business practices related to operational efficiency, according to results of a study released today by Accenture.
Accenture surveyed more than 230 senior executives involved with nonprofit organizations in the United States in an effort to help nonprofits identify and address key barriers to and accelerators for achieving high performance in the nonprofit community. This study is unique in that it is one of the few studies to poll senior-level executives on both the nonprofit and for-profit sides: executive directors of nonprofit organizations and for-profit executives serving on nonprofit boards of directors.
“Despite the hundreds of billions of dollars raised by the approximately two million nonprofit agencies in the United States each year, nonprofits continue with the struggle to grow their organizational capacity,” said Ed Fikse, chairman of Accenture’s U.S. Geographic Council. “With the backdrop of 2005 and the unprecedented pressure put on the sector by Hurricanes Katrina and Rita, it’s particularly timely to explore the challenges and new opportunities facing nonprofits.”
Overall, the research found that an overwhelming percentage of nonprofits in the United States are primarily focused on donors and fundraising, rather than basic operational improvements that might actually enhance nonprofits’ success. In fact, three of the top five issues for survey respondents are related to generating income. Specifically, the study detailed the following “top ten” issues as ones cited as “most important” in the minds of nonprofit executives and their board members:
- Expanding the current donor base (77 percent)
- Recruiting high-impact board members (61 percent)
- Increasing donations from current donors (40 percent)
- Attracting and retaining skilled staff (37 percent)
- Increasing donor loyalty and retention (33 percent)
- Cultivating a dynamic and effective culture among board members (32 percent)
- Establishing a clear set of quality benchmarks for assessing services (32 percent)
- Using IT to reduce costs and create value (31 percent)
- Pursuing collaborative partnerships with public sector agencies, including government (31 percent)
- Pursuing collaborative partnerships with the private sector (31 percent)
Six-Step Prescription for Success
Accenture’s research found that nonprofits would benefit from embracing some basic business operational practices and tools that can help them use their money more effectively, ensure their sustainability and make bigger impacts on the communities and people they serve. The report recommends six actions that nonprofits can take to improve their operations and address the internal and external challenges they face:
- Make better use of technology. Despite the fact that information technology (IT) is the backbone of modern enterprises, few respondents indicated that capitalizing on the benefits of IT was a major focus for them. Nonprofits seeking to get the most from their scarce resources should judiciously apply IT to their operations.
- Overcome inherent limitations in headcount by more effectively organizing and managing volunteers as an extension of paid staff. While a limited number of respondents said that attracting and retaining volunteers was a top priority, the need to augment paid staff with “free” labor and skills was evident in their responses. Specifically, when asked how corporate America/the private sector could play a role in building capacity with the nonprofit sector, 44 percent of respondents indicated shared training, management experience and employee expertise was the most important way they could help, and 31 percent noted the cited as most important the corporate role/responsibility of encouraging employee volunteers and promoting a culture of volunteerism.
- Explore and adopt new collaborative business models with complementary organizations. In an environment where organizations are pressured to do more with less, executives at nonprofits should work with other organizations and consider joint activities, sharing of resources and even full-fledged mergers.
- Convince corporate and private-sector donors to fund general operations instead of “signature” or “vanity” programs. While these programs might advance the donor’s agenda, they do little to help the organization’s day-to-day financial viability. To be successful, nonprofits would benefit from being more aggressive and adept at communicating to donors the value of undesignated gifts and demonstrate how such gifts can have an even greater impact on the organization’s ability to carry out its mission than defined programs.
- Adopt appropriate metrics that enable organizations to evaluate the success and impact of their delivery of services and programs. Nonprofits should have a measure of rigor and discipline in how they deliver their services and the ways in which they measure and evaluate the impact of those services.
- Engage board members to ensure quality governance structures. Such governance structures not only minimize the risk of malfeasance and abuse, but also help create an effective and efficient operation that can be sustained over time.
“This research illustrates how now – more than ever – nonprofits do need to develop and adopt higher order business skills,” said Stephen Jordan, vice president and executive director of the Business Civic Leadership Center of the U.S. Chamber of Commerce. “We need to see an increased commitment to transferring expertise and people to nonprofits so that they are better able to address the complex issues they face. The work these organizations perform is of the utmost importance to society. We can’t afford not to help them manage their affairs wisely.”
To access a complimentary copy of Accenture’s full research report, visit the company’s Corporate Citizenship website at: www.accenture.com/community.
Accenture is a global management consulting, technology services and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills and technologies to help clients improve their performance. With more than 129,000 people in 48 countries, the company generated net revenues of US$15.55 billion for the fiscal year ended Aug. 31, 2005. Its home page is www.accenture.com.
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