Developing a Learning Culture in Nonprofit Organizations

SAGE Publications

Stephen J. Gill

• Publisher: SAGE Publications, Inc
• Year: 2009
• Print ISBN: 9781412967679, 9781412967662
• eBook ISBN: 9781483343006
• Edition: 1
• Topic: Social Sciences
• Subtopic: Social Work
• Index: Social Sciences

How can today?s nonprofits demonstrate effective use of funds?

How can they motivate employees and volunteers and combat burnout and high turnover?

How can they ensure that they are performing in accordance with their mission and purpose?

Author Stephen J. Gill answers these questions and more in Developing a Learning Culture in Nonprofit Organizations. Filled with practical tips and tools, the book shows students and managers of human services, arts, education, civic, and environmental agencies how to implement a learning culture with individuals, teams, the organization as a whole, and the larger community.

Key Features

• Draws on the author?s more than 25 years of consulting experience
• Demonstrates how to create a culture of intentional learning that uses reflection and feedback, focuses on successes and failures, and builds a strong organization that motivates employees and volunteers
• Offers specific, hands-on tools for each level of the organization, from the individual and team to the whole organization and the community
• Discusses not only the need for a learning culture but also the barriers that may stand in the way
• Takes a step-by-step approach that facilitates managers? and students? understanding and learning
• Incorporates practical tools that can be used in nonprofit management and in actual field instruction

Developing a Learning Culture in Nonprofit Organizations is appropriate for courses in Social Work Evaluation, Public and Nonprofit Management, and Evaluation.

1

Need for a Learning Culture

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If you continue to do things the way you’ve been doing them, you’ll continue to get the results you’ve been getting.

—Author Unknown

Need for Change

Expectations for the performance of nonprofits are increasing dramatically. Nonprofits are being held accountable for, at the same time, solving all the ills of our society, showing measurable results, and being financially solvent. Politicians, funders, boards of trustees, clients, and nonprofit managers are all demanding more from these organizations.

The increased attention on the sector is inevitable. Nonprofit organizations have become key players in the social and economic development of communities. Nonprofits fill service gaps that are not being addressed by local government and private business. Nonprofits form the backbone for the development of any community’s social capital, and they make a significant, direct contribution to quality of life. In many communities, a nonprofit organization is the largest employer.

Nonprofits are critical to the maintenance of a democratic society. According to the Peter F. Drucker Foundation for Nonprofit Management, a healthy society requires three vital sectors: a public sector of effective governments, a private sector of effective businesses, and a social sector of effective community organizations. This last group is the primary focus of this book, with government being secondary.

Lester Salamon and his associates at the Center for Civil Society Studies, which is part of the Johns Hopkins University Institute for Policy Studies, have concluded that the nonprofit sector is “a major economic force” around the world (Salamon, 1992). As recipients of more than $200 billion in charitable giving in the United States, the nonprofit sector accounts for 5% to 10% of the nation’s economy (O’Neill, 2002). More than 1.1 million nonprofits (charities and private foundations) were registered with the U.S. government in 2007, a 4% increase over 2006 (Chronicle of Philanthropy, 2008). We can only conclude that the health of nonprofit organizations and their effectiveness in building the social capital of our communities is of vital interest to our nation and the world.

The rapid increase in size and economic impact of the nonprofit sector in the United States means that there will be greater demand for accountability. O’Neill (2002) writes in Nonprofit Nation:

The new size of the nonprofit sector—11 million employees, $ 1 trillion in revenue, 1.8 million organizations—makes it inevitable that there will be more scandals, more negative press coverage, and more political attention. These developments will likely lead to more government oversight and regulation. How extensive and hostile this will be probably depends greatly on nonprofits’ ability to work with government to make these changes as palatable as possible. (p. 247)

Negative articles by the media have created interest in nonprofit management reform like never before. According to Paul Light (2000),

The nonprofit sector has never been under greater stress, as evidenced by doubts about its performance and ethical conduct. Federal budget cuts and private competition have affected already thin operating margins, while the highly publicized United Way and Salt Lake City Olympics scandals have sparked a broad debate about the effectiveness and legitimacy of nonprofit organizations. (p. 11)

He goes on to say,

Despite all the warnings about reform, the pressure to get better is unlikely to abate and the number of reform efforts is unlikely to decline. To the contrary, the reform pressure seems to be increasing for the nonprofit sector. All the pieces are in place: growing demand from funders, rising expectations from clients, increased pressure from advocates both inside the sector and outside, burgeoning competition from other providers also both inside and outside the sector, and an apparent explosion in the number of organizational consultants ready to help the nonprofit sector identify problems and implement solutions. (p. 16)

The pressure from funders is especially acute. Foundations are looking for ways to ensure that their money is being invested wisely in these nonprofits. Foundations desire to make better decisions about where the money goes and want greater accountability for how the recipient uses the money. These philanthropies want to know that even if they are taking a risk on a new social venture, that grantee is managing the money well. The United Way of America’s promotion of outcomes measures, the formation of Grantmakers for Effective Organizations, the W. K. Kellogg Foundation’s Building Bridges programming effort, and articles on nonprofit management appearing in business journals such as Harvard Business Review are all evidence of this intensifying interest.

Prompted in part by a few of the more notorious scandals and by the amount of money that is controlled by a few very large nonprofit organizations, the media have taken special notice of what is happening in the sector. Harvard Business Review has published articles that put a microscope on private foundations and 501(c)(3) organizations (Bradley, Jansen, & Silverman, 2003; Porter & Kramer, 1999). The Washington Post ran a series of articles examining the Nature Conservancy’s practices related to for-profit ventures (Stephens & Ottaway, 2003). Even Fast Company magazine has covered management practices at some of the most successful nonprofits (Hammonds, 2003) and has brought attention to an effort to track the financial performance of U.S. nonprofits by using data from the Internal Revenue Service’s 990 tax filing form (Overholt, 2003).

At the same time that nonprofits are coming under greater scrutiny, they are being put under more pressure to plug gaps in the life of our communities. Stakeholders are expecting more from nonprofits and being vocal about it.

• Nonprofit board members want to feel confident that things are being done right and that they are not going to be embarrassed in the press.
• Nonprofit staff and volunteers want to be part of a well-functioning organization that provides needed services, is respected in the community, and will be around for a long time.
• Customers of nonprofits want responsive, timely services, and they want their needs met.
• Private donors want confidence that they have invested their money in a worthwhile and trustworthy organization.
• Foundations want to know that their money is being managed well, is being used for the purposes intended, and is making a difference.
• Legislators want to know that the tax-exempt status of nonprofits is not being abused.

Change does not come easy for nonprofits. Unlike for-profit businesses, nonprofits are driven by a social and educational mission, tax exempt because of this mission, accountable to the wider community, reliant on fundraising, dependent on volunteers (including board members), and staffed by people who are motivated heavily by intrinsic rewards. This combination of factors has made organizational effectiveness subordinate to providing services. Whether their missions are delivering health care, feeding the homeless, protecting the environment, representing a profession, staging theatrical events, or raising funds for cancer research, mission comes first, and often at the expense of long-term effectiveness and sustainability. Their very reason for being is to contribute to the public good in some significant way. That’s the primary reason why people work for and volunteer with nonprofits. Understandably, developing an organization that has the capability to learn and change over time has not been a priority for nonprofits.

However, nonprofits can no longer put organizational learning on the back burner. The demand for change is too hot. They risk further government regulation, loss of funding, difficulty attracting competent employees, unwillingness of community leaders to serve on their boards, and dissatisfied customers.

Cultural Transformation

The response to this pressure on nonprofits to transform themselves shouldn’t be piecemeal and bureaucratic; that will result only in temporary fixes that are not sustainable. Significant, sustained change will be born only out of a culture of learning. Like a petrie dish that provides a rich environment for microorganism growth, nonprofits that have a culture of learning are creating the conditions for growing their capacity to achieve maximum performance. They are continually growing, adapting, and becoming stronger. Learning and change is not only in response to outside stimulus, it is in their organizational DNA.

Schein (1985) has defined organizational culture as the values, basic assumptions, beliefs, expected behaviors, and norms of an organization; the aspects of an organization that affect how people think, feel, and act. Members of an organization have a shared sense of culture. A culture operates mostly unconsciously, manifested in every aspect of organizational life in subtle and not-so-subtle ways. From the rituals of celebration to how decisions are made, organizational culture is the artifacts and actions of members. Culture is passed on to new employees by what they are told and what they observe in the behavior, symbols, and documents around them.

A culture of learning is an environment that supports and encourages the collective discovery, sharing, and application of knowledge. In this kind of culture, learning is manifested in every aspect of organizational life. Staff and volunteers are continuously developing new knowledge together and applying collective knowledge to problems and needs.

In his definition of the kind of learning that helps people and organizations deal with the “permanent white water” faced by organizations today, Vaill (1996) talks about three kinds of learning: know-how (developing the skill to do something), know-what (understanding a subject), and know-why (seeing the meaning and value of something). A learning culture supports all three. Staff and volunteers are constantly learning new skills and improving old skills; increasing their understanding of mission, operations, and service to communities; and finding meaning and value in the mission, goals, and activities of the organization.

Organizational Learning

The kind of learning that results in organizational capacity building has been labeled organizational learning (Kim, 1993b). Organizational learning is the process of forming and applying collective knowledge to problems and needs. It is learning that helps the organization continually improve, achieve goals, and attain new possibilities. It is learning that taps into employee aspirations, fueling commitment and creating the energy to change.

An organization is learning when people are continuously creating, organizing, storing, retrieving, interpreting, and applying information. This information becomes knowledge (and, hopefully, wisdom) about improving the work environment; improving performance; improving operational (e.g., accounting, administration, communications) processes; and achieving long-range goals that will make the organization successful. The learning is intentional; it is for the purpose of increasing organizational effectiveness.

When an organization is learning, and not just individual members becoming more knowledgeable or more skilled, the dynamic interrelationship of its various parts contributes to the organization as a whole constantly becoming smarter about its effectiveness. It is creating an infrastructure that supports achieving the mission and attaining financial sustainability.

This infrastructure might be enhanced by an individual’s participation in training programs, degree programs, certification, and other forms of education. However, unless the organization as a whole becomes stronger because of this learning, these kinds of individual activities are not organizational learning. The danger in thinking that smarter people make for a smarter organization is to assume that your organization is prepared when it isn’t. For example, just because one or more managers in your nonprofit know about fundraising does not mean that the organization is maximizing its capability to raise money. Does your organization have a consciousness about fundraising that permeates everything you do? Are you continually trying to learn from successes and failures to become more effective? Have you learned how to put processes in place to support ongoing donor development? If your staff members do not understand their relationships to donors and you don’t have a process for assessing these relationships, then your organization may not yet have the capacity it needs to succeed financially over the long term.

Researchers at the Urban Institute’s Center on Nonprofits and Philanthropy have studied capacity building in nonprofits and have concluded that effective and sustainable organizations have:

1. Clear vision and mission that provide direction to the staff
2. Leadership that is continually being nurtured and developed
3. Resources that are used efficiently and creatively
4. Outreach that builds connections in the community and promotes a positive image
5. Products and services that are high quality (“How Are We Doing?” 2000)

Urban Institute is saying that all five of these conditions must exist for an organization to be effective and sustainable. Absent from this list are the usual demands: more money, more time, and more people. Although more resources might help a nonprofit develop some of these qualities, for most organizations, they need to learn how to use what they have more effectively. That is what will make them effective and sustainable over the long run.

Examples of Organizational Learning

Organizational learning can look different in different kinds of nonprofits. Here are some examples.

Community-Based Service Agency

A start-up management support organization (MSO) for nonprofits has the mission of helping a Midwestern county’s nonprofits achieve their missions through effective management. This newly formed resource for other nonprofits is trying to become a model of capacity building in the community. To do this, the staff have had to take enormous risks in offering training, consulting, technical assistance, and information management. The process of taking these risks and experimenting with new programs has given the staff a better understanding of the ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Foreword
• Preface
• Acknowledgement
• 1. Need for a Learning Culture
• 2. Barriers to a Learning Culture
• 3. Creating a Learning Culture
• 4. Individual Learning
• 5. Team Learning
• 6. Whole Organization Learning
• 7. Community Learning
• 8. Learning From Evaluation
• 9. Using Models to Facilitate Learning
• 10. Summary
• References
• Index
• About the Author