Comments on: Do Nonprofits Dream of Electric Sheep?

By: Gary Nickerson

Gary Nickerson — Wed, 25 Jul 2007 23:16:33 +0000

I like the post a lot and I think the main point is right-on target. However, I also think you miss the point of “market-oriented” economists (as do most conservertives). It’s not that each individual enterprises are efficient or don’t screw up, a la Worldcom. It is that the market has a mechanism for weeding the bad ones out when it works right. Of course, deep pockets can cause lots of market inefficiencies to keep the market from working right. So one argument is that markets don’t always work well and allow bad organizations (GM, Chrysler) to survive beyond their time. (Of course, perhaps we want GM & Chrysler to survive so that the workers aren’t totally thown into poverty.)

The stronger arguement for non-profits, I think, lies in the area of public economics. Markets (1) don’t necessarily produce fair outcomes and (2) they ignore externalities, which are pervasive, including in areas of human capital.

By: Gavin

Gavin — Wed, 18 Jul 2007 21:11:06 +0000

Hiya Robert,

Humm… I don’t mean to imply that nonprofits actually DO think long term, rather that they SHOULD…

In fact, I agree totally with you that short-term-ism is endemic. And, I think it’s a real problem.

By: Robert Goldbach

Robert Goldbach — Tue, 17 Jul 2007 17:41:35 +0000

I don’t agree with the premise that long-term thinking is associated with nonprofits. The lament that I often hear (in my work as a consultant to nonprofits) is that the strictures of day-to-day survival often take priority over long-term perspectives. In effect, short-term thinking has become a universal problem, in the for-profit, nonprofit and public sectors.

By: Gavin

Gavin — Fri, 29 Jun 2007 14:51:43 +0000

Hiya Beth,

Well actually… if it’s the title you’re referring to, the reference is to a Philip K. Dick novel entitled “Do Androids Dream of Electric Sheep.” — You might know it better by the title used for the movie version: Bladerunner. Bladerunner, coincidently was released 25 years ago, this week.

It was, I believe, the first vision of a future where there was actually trash on the streets.

Regardless, thanks!

By: Beth Kanter

Beth Kanter — Fri, 29 Jun 2007 14:38:34 +0000

Gavin,

As always, terrific post! I love this point you make:

“Outcomes, put in the perspective of years, instead of months, become clearer, easier to identify, and easier to measure. Part of what sets the nonprofit sector apart from the for-profit is its perspective, its focus on the long-term good over short-term profit.”

Then I remembered the reference
http://beth.typepad.com/beths_blog/2006/12/the_answer_to_t.html

By: ThomasT

ThomasT — Wed, 27 Jun 2007 04:42:33 +0000

Thank you for this wonderful post. MSOs, funders, and individual nonprofits have been berating nonprofits for years for not acting like for-profits, when of course, the problem is that they’re not acting like efficient, well-managed businesses, regardless of their financial status. And there ARE well-managed businesses, both for-profit and nonprofit, whose best practices should be emulated.

The new piece for me here is the paragraph that begins, “All that said, it is equally true that the economic incentives and feedback mechanisms of a nonprofit are, for lack of a better word, perverse.” The perversity of the feedback mechanisms is the key point here.

It seems to me that what those who would like ill-managed nonprofits to behave more like for-profits actually want is for the nonprofit marketplace to behave more reliably like the idealized for-profit marketplace: those organizations that fail to meet mission would consequently lose funding and fail, while those who efficiently meet mission would receive more funding.