Not for Profit Consulting
Harvey Bergholz, Jeslen Corporation
|This article appeared in The
Journal of Management Consulting
No, the title is not an oxymoron: consulting to Not-For-Profits
(NFPs) can be profitable, both psychically and financially. However, the crossover,
from For-Profits (FPs) to NFPs and back again, requires a resilience few
consultants possess. This might account for the specialization that is common. Some
consultants fish only one stream and that is probably more sensible. I prefer to vary the
adventure. Trout one day, bass the next, and shark the day after. I have observed several
critical differences between the NFPs and the FPs that can make or break a
consulting engagement. This article identifies these differences and approaches to
managing them; but we begin with a few similarities.
Note: It will be helpful in reading this article to keep in mind that the author works primarily with very large and very visible not-for-profits. Some of his comments, then, will not be a good fit with the thousands of very small not-for-profits.
The similarities between Not-For-Profits and For-Profits are few but worth noting. First, the consulting roles dont change very much. We are called upon to facilitate, to problem-solve, to manage projects, to advise and counsel, to teach, to research, and so on. The many different hats a consultant might wear in the FP arena fit just as well in the NFP arena. Its in the execution of the role and the selection of processes and methodologies that the differences are important as well explain later. Essentially, then, a consultant might perform all the same functions for NFPs as for FPs but how those functions are performed will likely be different.
The second similarity is simple: both types of organizations are trying to accomplish goals through an organized approach to grouping people and performing tasks. In the end, the consultant confronts a similar mix of variables maybe a classic 80/20 Pareto match that includes (a) people working together (b) across different functions (c) in some organized fashion (d) through a set of processes (e) to accomplish goals. But these five, which might be the 80% match with the For-Profits environment, are not sufficient for the consultant to succeed. Its the other 20% we need to understand and adapt to.
My focus in this article is on the differences between NFPs and FPs that directly affect the consultant. Though we might be able to list a dozen important differences between the two arenas, I am interested here in just three issues I believe a consultant must take into account in executing an engagement. These three are 1) Governance, 2) Passion, and 3) Money.
After a brief description of each difference, Ill suggest approaches to managing engagements with Not-For-Profit organizations.
Board level influence in the NFP is far greater than in the FP. Board members typically drive decisions and behaviors at far deeper levels in the Not-For-Profits. There are several reasons for this:
Regarding a board, the dilemma for a Not-For-Profit is this: they want members who are objective, knowledgeable, and dont have narrow personal interests; but they also need people who are passionate advocates for the organizations mission and goals and who, out of a narrow personal interest, are willing to invest their time and efforts. This is a conundrum not faced by the For-Profits, who do not invite board members based upon their passion for the organizations mission and goals.
In my engagements with NFPs, I regularly see a slowness in forward movement, if not outright paralysis due to the board. This comes in the form of multiple revisits and debates over many months as individual board members cling to their personal interests and passions. Most, after all, have joined the board out of some deeply held personal commitment to the mission and goals of this hospital, university, community group, or church. They do not surrender those personal beliefs easily. Again, well discuss implications for consulting in a summary section at the end.
The passion we find among board members goes double for the institutions employees. The level of dedication, passion, and commitment across the employee base leads to decisions that we who reside mostly in the For-Profit world must take time to understand. Programs are run and projects are undertaken that offer no financial return. Some performers might be a poor fit with the job requirements but have the passion for "the cause" and so are kept in place. Why? "This is the right thing to do: it fits our mission" is a response you can expect.
In the best of Not-For-Profits we find a passion for "the cause" that surpasses a commitment to a discipline (i.e. Information Systems, Finance, Marketing), to a process, or to financial goals. This is their greatest strength and their greatest weakness. To business people, many things inside a NFP organization are simply not logical. However, we cannot consult effectively if we are intent on altering this dynamic. Instead, we will need methodologies for succeeding within it.
"The rich are different from you and me." The quote is quite right when applied to the FP corporations compared to the NFPs. For-profit corporations pay great attention these days to cost structure and spending patterns; but, in this area, they are the amateurs.
The influence of cost in the decision-making process is far greater in the NFP world. When a For-Profit sees a high-value payoff down the road, it will take on debt, sell stock, or move large sums of money and other resources from one division to another with ease. The NFP does not consider financial "payoff, or return" as the driver and so the cost itself stands nearly alone as the major driver for a "go/no-go" decision.
This is not surprising. NFP funds typically have been hard-won and, consequently, they are well guarded. Anyone who wants to pry loose some of that treasure must present truly compelling evidence of hardship, or significant enhancement to the execution of the mission.
In the day-to-day operating environment, stoicism and a poor-mans-martyrdom are the personae of choice. People wear as a badge of courage their ability to perform without the appropriate resources. The consultant might be expected to do the same. Manual processes, PCs dating back to 1992, and three people doing the work of five these are not unusual circumstances.
One NFP client said, "We suggest you fly in and out of Milwaukee and then drive to Chicago, rather than flying directly into Chicago. Our people do this all the time and it saves us a lot of money." Typically NFP clients will pay closer attention to the consultants time and expenses. It fits with the culture.
There is a paradox here: the "big project." Those same frugal NFPs who wont invest in process development, systems, and manpower will let loose of millions of dollars at a clip for the "big project." The grand event, which "directly supports our mission," will go forward with relative ease. It might be an arts center, a new specialty wing of the hospital, or a field house for the university. Whatever form it takes, you can be sure it has strong support among a few high-influence, high net-worth board members. Operational issues generally dont theyre not "sexy," nor are they visibly mission-connected.
Is this different from the For-Profit corporations? I think so. Being so profit oriented, the FPs recognize the short and long-term value of operational efficiencies. Lean processes, appropriate head counts, and first-rate systems generate greater long-term profits and sustainable competitive advantages. Conversely, the big, sexy event (new buildings, acquisitions, new product line launches, etc.) presents a higher risk/reward ratio, and so is approached with great caution and skepticism.
Implications and Approaches
As youve been reading, you might have already identified these implications for the management consultant assisting Not-For-Profits:
By far (i.e. 80/20), Not-For-Profit organizations are like their For-Profit counterparts: an organized group of people managing their available resources in the pursuit of identifiable goals. For a consultant called upon to help in that pursuit, there are a few noteworthy differences in the NFP world that will affect what you do and how you do it. In my experience, the role of the board and its members is paramount. This tends to be the single greatest influence on the shape and execution of consulting engagement processes.
The second is the level of passion, or emotion, that participants bring to the problem solving and decision-making processes. Your logic, quantitative analyses, and color charts should not be your first line of defense or offense. Instead, know the history, the people, and the emotional triggers, and use those to drive progress.
The third differentiator is the orientation towardand the role ofmoney. In many large corporations, project cost might rank toward the bottom of the top five in influencing decisions; those five being marketplace positioning, growth imperatives, Wall Streets reaction, personal agendas, and competitive activities. All these might have greater import than "project cost" in a for-profit, but in NFPs cost is usually #1 or 2 in the decision criteria hierarchy.
Finally, there is a decided psychological dynamic Ive found in working with Not-For-Profits: you are clearly an interloper, an outsider who is there to get something done and get out of their midst before you "taint the culture or warp the processes" with too much pragmatism, capitalism, and cynicism. This might sound harsh, but I believe it.
Its not unusual for consultants to form long-lasting relationships with FP corporations; its less common in the NFP arena. Why? The outside consultant simply doesnt have the emotional intensity for "the cause," and the client knows it. The consultant might be seen as "passion-less." In the corporate world, this rarely matters because the majority of employees inside the corporation have no such intensity either. In the NFP environment, this matters as it should but it does make the psychology of helping a bit more complex.
For me, I focus on getting the task accomplished within the framework of the NFPs culture, style, and processes, and on drawing out my own high-value feelings of having contributed to the worthy mission. I also plan to move on. Though I am open to follow-on engagements, I do not aggressively pursue an ongoing relationship the way I ordinarily would with an enjoyable For-Profit corporation. The best NFPs Ive encountered succeed with minimal outside interference to their well-developed ecosystems and, consciously or unconsciously, they know this too.
|About the Author
Harvey Bergholz is president of Jeslen Corporation, a consulting company he has headed for 25 years. His for profit clients range from small ($100 million) companies to multi-billion dollar global giants. His nonprofit clients include large health care, religious, and educational institutions. His practice centers on providing senior executives with counsel and assistance in shaping and implementing large-scale, high-impact initiatives. Harvey also numbers among his clients some of the world’s largest consulting firms.
Harvey can be contacted directly at email@example.com
This page was last updated on June 14, 2015