The
Idea Incubator
Establishing
a Management
Support Organization
to Serve the Nonprofit Sector
Allen
Larson
Sustaining
Cape Cod involves a lot more than attention to the Cape's natural
environment. Equally important are the people who live here, the factors
that affect their ability to make a living and to use each day to fulfill their
interests and ambitions. In this context, one sector of the Cape's economy
that tends to be overlooked is the region's active and extensive nonprofit
sector.
Over the past several months, the
Center for Sustainability has been working with many of the nonprofit
organizations that direct their efforts to serving Cape Cod and its
residents. These organizations define their missions in terms of the
economy, the environment, health concerns, and social welfare. Many have
been struggling recently. Some have even closed. These events compel the
effort to determine if there is anything to do.
From these
discussions and observations, we've concluded that there is an outline of an
idea that merits closer scrutiny by others who have knowledge and
expertise. We suggest that there is a void in the nonprofit sector that
could be filled and lead to improved administrative and operational
efficiency. Doing so would provide economic and operational benefits that
could help sustain our nonprofit sector.
Common
organizational tasks provide the context in which technology advances as well as
specialized professional services could be used in ways that would save money by
realizing efficiencies of scale and by providing access to a deeper reserve of
managerial experience and counsel. These savings could be applied to the
programmatic purposes for which any particular charity was formed.
In the
parlance of the nonprofit sector, the idea is to form a "management
support organization," a term that defines an organization that operates to
enhance both the operations management of nonprofit organizations and their
compliance with the regulatory structure by which they derive their tax-exempt
status.
If the term
"management support organization" is not a familiar one, consider that
it performs functions that are quite similar to an "operations center"
that connects a bank with its branches. There are many differences, to be
sure, but the idea is conceptually consistent. A “management support
organization,” like a bank operations center, performs routine tasks that cut
across the operations and administration of each of its branches. It
connects its nonprofit branches with professional services firms, foundations,
individual donors, businesses, and nonprofit organizations in the effort to
realize a higher standard of operations as well as administrative
efficiency.
The underlying
premise of this discussion is not a particularly rosy one: It stems from
the view that nonprofits often struggle to realize their charitable objectives
because they are operationally weak. While nonprofit directors and
executive officers are often passionate about their organization's mission, they
are also often less skilled and experienced in operations management and less
attentive to their compliance requirements.
There is no fault to attach here, just a perception that
throughout the sector, nonprofits often possess managerial skills that are not
equivalent to the size of their budget or comparable to the competency they
display in the conduct of their charitable tasks.
As one example, consider
the information technology (IT) function. Overall, the nonprofit sector has far
more computer power and software capacity than many of its individual
organizations either understand or actually use. If a management support
organization developed and maintained an information system to provide database
expertise while at the same time also reducing the need for hardware, there
would be a sizable budgetary savings realized throughout the sector.
Consider also that
nonprofits often lag in meeting their filing requirements at the attorney
general's office. This noncompliance raises real regulatory concerns. Fund
mismanagement, purposeful or not, may go undetected entirely or detected too
late to realize any realistic chance of recovery. If a management support
organization helped nonprofit organizations to file reports in a more timely
fashion, the nonprofit sector overall would suffer fewer losses due to
mismanagement or actual fraud. And as with the IT function, the savings could be
applied to each organization's own particular passion.
A management
support organization operates generally along the following lines:
Professional firms in law, accounting, public relations, IT, grant writing,
marketing and communication, events planning, and so on serve as
"advisors." In this capacity, advisors present regular programs
that lay out the sector's best practices and update managers on these
developments.
The
"members" of a management support organization are the nonprofit
organizations themselves. As members, they gain access to the expertise of
the advising firms as well as an opportunity to share experiences and
information with their peers.
"Sponsors" of a management support
organization are established for-profit businesses, large nonprofit foundations
and even individual donors. By sponsoring the establishment of a
management support organization, these businesses, foundations and large donors
realize greater efficiency in their own giving as well as an increased
assuredness that any specific grant will be one that a recipient will use as
intended by the donor. A management support organization reduces the
possibility that a charitable donation donated may be misused and result in embarrassment
to the donor rather than goodwill.
The idea of a
management support organization is distinguishable from other well-established
and purposeful entities like a community foundation or the United Way for the
simple reason that its primary focus is on nonprofit management and
operations. These others have primary responsibilities that focus more on
grant-giving and fiduciary duties. By contrast, a management support
organization focuses specifically on ways to improve operations management and
administrative efficiency.
In the nonprofit sector nationally, there are several
models of management support organizations to study. Other states that
have set up support organizations of this type include Minnesota, Maryland,
North Carolina, and Georgia. There is no such organization operating in
Massachusetts.
There are several Internet sites one can go to for
background information. These include the site that the state of Georgia
maintains, www.nonprofitgeorgia.org,
a site maintained by the National Council of Nonprofit Associations, which can
be found at www.ncna.org, and a site
maintained by Community Wealth Ventures, which can be found at www.communitywealth.com.
Conmergence
("Facilitating convergence in the twenty-first century") has good
information about nonprofits' using XRBL technology to file their annual 990
federal tax returns.
The National
Council of Nonprofit Associations web site states that the only management
support organization in Massachusetts is the Massachusetts Council of Human
Service Providers. And the fact is that this organization is not a
sector-wide support service. It deals only with human services and does
not apply to nonprofits operating in other contexts such as ones that relate to
the environment or the economy.
Establishing a management support organization would be
relatively straightforward assuming that the will to do so existed. And
that's really the question. To answer it, we need to convene professional
nonprofit managers and lay out the concept in greater detail. An initial
survey would go a long way to determine whether or not this idea is appealing
and whether it is one that nonprofit organizations would participate in as
"members."
The Center for
Sustainability, operating on the web at www.SustainCapeCod.org,
is interested to explore this concept further and undertake steps that may lead
to the formation of a management support organization. If you have a
desire to assist and suggestions how best to proceed, we'd like to hear from
you. Soon.
Allen Larson
larson50@comcast.net
