Why charity needs to get down to business

“Charity industry” is a concept that usually produces an awkward silence when introduced in our management program for NGO.

We introduce the concept by means of a famous quote by Bernard Koucher (cofounder of MSF):  “If you want to achieve something in this area, you have to be a businessman and be sensitive to advertising and marketing … If you do not agree that the law of the market is also valid for the charity industry, you get your nowhere introduction”.

To most nonprofit managers, charity industry reads like an oxymoron; exempt as they consider themselves to be from the mundane considerations of business.

But the “b word” is the reality of the situation. In the US alone there are a whopping 1.4 million separate nonprofit entities, making up 10% of the total economy.

Nonprofit organizations are not exempt from the notion of “industry” and all its concomitant human problems: job insecurity, a bit of corruption here and there, not much transparency; not to mention a lack of clear incentives attached to operational efficiency (probably because donor euros are not regarded as investments).

As a result, the charity business is increasingly perceived as the unsavory side of humanitarian intervention.

Let’s take a tour of what’s been said about it in the last few months alone.

First there’s Arte TV’s investigation, which highlighted numerous instances of fund-raising activities that had gobbled up most of the donations – in some cases up to 100%, meaning that not a single cent arrived at its intended destination.

Then there’s Valentina Furlanetto’s book, “L’industria della Carità” which sheds light on the “hidden side” of charity: a litany of inefficiencies, delays, misuse of funds and exploitation of labor.

And there’s also With Charity for All from Ken Stern a provocative examination of this billion dollar industry; because, yes, an industry is what it is.

Let’s talk marketing.

To increase their chances of achieving stated goals, organizations should think in terms of value: value to mass media, to donators, to citizens, to volunteers, even to workers.

If they don’t, they are doomed to suffer all the usual human and organizational failures.

And to lead a new, strategic approach to market orientation, we need professional leaders, as illustrated in this brilliant (as usual) TED talk.

We’re at a crossroads. And what we need are management leaders to fully develop the charity industry. And create some meaningful standards, may be an innovative Corporate Social Responsibility approach.

 

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