The Non Nonprofit

For-Profit Thinking for Nonprofit Success

Steve Rothschild

• Publisher: Jossey-Bass
• Year: 2012
• Print ISBN: 9781118021811
• eBook ISBN: 9781118180228
• Edition: 1
• Topic: Business
• Subtopic: Organizzazioni non profit e di beneficenza
• Index: Business

A top business leader shares the business principles he used to launch both a top company and a thriving nonprofit

Nonprofit leaders know that solving pervasive social problems requires passion and creativity as well as tangible results. The Non Nonprofit shares the same business principles that drive the world's best companies, showing how they can (and should) be applied to the realm of nonprofits. Steve Rothschild personally crossed sectors when he left corporate America to found Twin Cities RISE!, a highly successful poverty reduction program. His honest story, and success and missteps, create an essential roadmap for any social venture looking to prove and boost its impact.

• Distills essential nonprofit principles such as having a clear and appropriate purpose, creating economic value from social benefit, and establishing mutual accountability
• Shares successful approaches from innovative organizations such as Grameen Bank, Playworks, Common Ground, Habitat for Humanity, Lumni, Caring Bridge, College Summit and RISE!
• Draws from the author's success in founding and building Twin Cities RISE!, which trains unemployed Minnesotans for living wage jobs. RISE! serves 1, 500 participants each year

As insightful as it is inspiring, The Non Nonprofit can help maximize the positive impact of any nonprofit.

1

Principle #1
Have a Clear and Appropriate Purpose

Former Medtronic CEO Bill George likes to tell a story about an exceptional worker in his cardiac pacemaker factory. Her record of quality and speed stood out even in a group of high-performing peers. When asked what drove her, she replied, “I’m not making medical devices. I’m saving lives.” Whether your business is pacemakers or yogurt or job training and placement, your workers need a reason to give their best to your enterprise. They need a reason to tolerate the inconveniences and obstacles that are part of daily work life. They need a clear and appropriate purpose.

I define purpose as why an organization was created, which is different from an organization’s mission. Mission, what the organization intends to do to fulfill its purpose, speaks specifically to how this organization will bring value into the world. Purpose speaks to what that value is. Different organizations, including those referred to in this book, may use different terms for purpose and mission. The important thing isn’t the specific terminology; it is the clarity with which your organization understands and practices these concepts.

This is true whether the organization is a nonprofit, a government agency, an artistic organization, or a for-profit corporation. Many people think that the main purpose of a for-profit company is to make money. I disagree. In my three decades of experience in the for-profit sector, I have observed that the best-performing organizations think of the bottom line as the result of focusing on purpose and mission, taking action based on that focus, and executing those actions well. They consider their profits an outcome rather than their reason for existence.

At General Mills, for example, some people would have said that Yoplait was in the business of manufacturing and selling yogurt. We recognized, however, that consumers wanted more nutritious, convenient, and great-tasting food. We saw ourselves as providing a delicious food choice that met their needs. As a purpose, that’s not as earth-shaking as saving lives, but it provided a standard of excellence for our work that motivated employees and led to solid financial outcomes.

Why the emphasis on purpose in a book about social-purpose organizations? After all, organizations that tackle our greatest social problems already know why they exist. But the best organizations—whether for-profit or nonprofit—do more than know their purpose. They hold themselves accountable to serving that purpose in everything they do. They are more effective because they continually focus their efforts and resources on what will accomplish their purpose. They’re less likely to get sidetracked. Too many organizations fall into the trap of being distracted from their original intent.

Here’s how we might have strayed off course at RISE! Everyone knows that helping an unemployed person get a job is a good thing, so we could have been satisfied with getting any job for our participants. However, our purpose at RISE! is “to reduce concentrated poverty,” so the bigger question is, Will this job raise this person out of poverty? Does placement equate to rising above poverty? Not if the job pays minimum wage and the person leaves after six months. A clear purpose not only sets direction, but functions as a standard against which to test all decisions and actions.

HOW RISE! DEVELOPED ITS PURPOSE AND MISSION

I founded RISE! in order to combat poverty in the Twin Cities. But before I could do that, I had to learn about poverty in the United States. I discovered that when Lyndon Johnson declared a war on poverty in 1964, about 20 percent of the total population of the United States was living in poverty, according to the U.S. Census.¹ The figure dropped steadily over the next decade to about 11 percent, due largely to the extension of social security benefits to the elderly. It bounced up during the 1980s, leveled off in 2006 to between 12 and 13 percent, and steadily climbed to 15.1 percent in 2010. By the same year, the rate of poverty among black Americans had also risen to 27.4 percent, more than three times the rate for whites, with much higher figures among younger black men.²

After three decades of spending federal and private money on this issue, why had it grown worse and not better? I decided to find out.

In 1993, I visited antipoverty and job training programs in Minneapolis, St. Paul, Chicago, Indianapolis, Atlanta, Detroit, Los Angeles, and New York. I met with scores of people who were committed to guiding the poor toward economic self-sufficiency. I found a continuum of processes and results among the providers. At one end of the continuum were hundreds of nonprofits that provided short-term training and placement services for the poor. Their goal was to get people into jobs—any jobs. Typically these jobs paid minimum wage or just above it. These nonprofits were financed primarily by federal Jobs Partnership Training Act programs for poor adults or by welfare-to-work programs directed toward parents, who were almost always unmarried women.³

Most of these programs operated on the assumption that once people got started on the path to economic self-sufficiency, they could bootstrap themselves the rest of the way.⁴ I found no evidence to support this conclusion in evaluations of federal programs.⁵ In addition, little government support existed for programs that aimed to provide jobs that pay a living wage⁶ (about twenty thousand dollars annually, plus benefits) to people with multiple barriers to success like a criminal record, low academic skills, few occupational skills, or drug and alcohol abuse.⁷

At the other end of the continuum of antipoverty program providers were community colleges, technical and trade schools, and proprietary education programs. Although they often enroll people with multiple barriers to success, the graduation rate is low: fewer than 15 percent of them earn degrees.⁸ Without the skills to secure better-paying jobs and with limited access to training that would increase their job skills, these disadvantaged workers remain stuck in dead-end jobs where real earnings—as well as employment levels—have been decreasing since the 1970s.

At the same time I was researching antipoverty programs, I sometimes heard people who were not working with the poor say things like, “My father came to this country with nothing, and he made it to the middle class. Why can’t they?” Underlying this statement is the question: Why do some of our American poor remain stuck in poverty while many immigrants are able to work their way up? The answer lies in the distinction between situational and generational poverty.⁹

Those whose poverty is related to their situation—being an immigrant or having lost a job or a spouse—have been impoverished by circumstances. They often succeed in overcoming their poverty as a result of help from family support, skills acquired in previous jobs, and personal qualities like a strong work ethic. They believe that if they work hard and make sacrifices today, their tomorrows—or their children’s tomorrows—will be brighter.

The prospects are quite different for some groups of poor Americans, when two or more generations have lived in poverty. A culture can emerge that typically produces a damaged sense of self-worth combined with a feeling of entitlement: I’m a powerless victim. Someone else is responsible for my situation and owes me. Most harmful of all is the sense of hopelessness that accompanies this mind-set: If there’s no hope, why take action? But those who don’t take determined action to rise above poverty won’t do so.

In developing our purpose and mission, it became clear that we had to address generational poverty and come up with something that produces better results than those that existed at the time.

RISE!’S PURPOSE AND MISSION—AND HOW THEY HELP US SUCCEED

At RISE! we put a lot of time and energy into deciding what our purpose and our mission should be. The effort paid off by making us more effective at achieving our outcomes.

We define our purpose as reducing concentrated poverty and our mission as providing employers with skilled workers, primarily men of color who were once poverty stricken. Our purpose focuses on concentrated poverty. Generational poverty thrives in concentrated, economically depressed, mostly urban neighborhoods. This concentrated poverty is less amenable to change and more damaging to our society than poverty in general. Children who are raised in such an environment of high unemployment, high crime, housing decay, and hopelessness have a hard time escaping poverty. Therefore, improvements in concentrated poverty have the potential to bring great benefits.

Our mission focuses on employers as our customers because employers supply the jobs. They set the standards for the job market in which we place individuals. Our success or failure as an organization depends on our ability to meet their needs. Our mission also focuses on job training for men of color, although we enroll people of both sexes and all races. Why? Impoverished minorities have represented an increasing proportion of the Twin Cities population—4 to 8 percent in the 1980s when we were developing RISE!, a number that was projected to double in each of the next two decades.¹⁰ In addition, the Twin Cities have the dubious distinction of having an unusually high gap in unemployment rates between blacks and whites.¹¹ In 2010, according to the U.S. Bureau of Labor and Statistics, it was the worst in the nation.¹² Impoverished men are underserved because programs designed to get people off welfare serve custodial parents who are primarily women. At the same time, these men have great potential to help their families break the cycle of generational poverty by becoming role models and contributing to the family income as resident parents or through child support payments, to name just a few ways. Federal and state policy (and spending) doesn’t squarely address the great leverage that these men can have in reducing the long-standing poverty of these families.

RISE!’s Purpose and Mission

Purpose: To reduce concentrated poverty

Mission: To provide employers with skilled workers, primarily men of color

Because we are dedicated to breaking the cycle of poverty, we target jobs that start above the poverty line—jobs that pay no less than twenty thousand dollars a year plus benefits. In addition, our training is geared toward preparing our graduates to succeed at jobs that not only pay a living wage but provide benefits and offer prospects for advancement. In other words, RISE! is not a quick fix for the problems of poverty. We’re committed to long-term solutions. Training that enables a person to obtain a job but not keep it and grow doesn’t serve the interests of that individual or society.

Consciousness of our purpose reinforces our long-term perspective. The world is always changing; this includes the types of skills and employees needed, the kinds of participants who come to us at RISE!, the requirements of funders, and the economic and political climate. When something does change, focusing on our purpose enables us to adjust our course without losing our sense of direction.

A clearly defined mission operationalizes an organization’s purpose. It says, “Here’s what we do,” and, by implication, “Here’s what we don’t do.” A clear mission helps ensure that people have clear goals and don’t get sidetracked, wasting valuable resources in the process. The success of any organization depends on using that mission to guide your actions.

In our early days, for example, we considered operating a facility to house men in the program who were homeless, since a lack of safe and secure housing is a primary reason for dropping out of the program prematurely. Our research revealed that operating a housing facility would require additional capital, risks, and skills that we didn’t possess. It also identified other competent organizations already providing these services, and so we decided that operating such a facility wasn’t central to our mission. Furthermore, we could address the problem by developing relationships with independent housing providers, which we did. As a result, we remained focused on the areas where we had skills and were building a competitive advantage while avoiding a direction that would have diverted our attention and resources.

THE ALL-IMPORTANT ALIGNMENT OF PURPOSE, MISSION, AND PROGRAMS

When purpose guides mission and mission determines programming, you have a beneficial chain that makes any enterprise, business or social, more effective. With the organization headed in a clear direction, people make better decisions and use resources more wisely. The organization is more productive.

In the case of RISE! our mission states that we serve employers by providing skilled workers, so our programming must meet employers’ needs. To develop our curriculum, we solicit input from employers as well as from adult education experts and other human development experts.

Based on that input, we provide extensive training and development to prepare participants for jobs in two primary areas: operations (materials handling, warehousing, manufacturing, and machine operations) and office support (customer service, clerical work, financial services, and call centers). That training covers not only occupational skills but also remedial academic subjects, such as computer training, math, reading, speaking, and writing.

To accomplish our purpose and mission, we have discovered, we also must provide training in personal accountability and empowerment, two of the proven principles that are essential for success in the world of work. Including this training separates our approach from virtually all other poverty and training programs.

A new cycle of classes begins every ten weeks. On average, the program takes thirteen months to complete, although some participants take less than six months and others up to two years to graduate. The difference depends on what competencies and barriers they enter with and what obstacles arise along the way. For example, some have had to...

Table of contents

• Cover
• Praise for The Non Nonprofit
• Title page
• Copyright page
• Dedication
• Foreword: How This Book Will Benefit Us All
• Introduction
• 1 Principle #1: Have a Clear and Appropriate Purpose
• 2 Principle #2: Measure What Counts
• 3 Principle #3: Be Market Driven
• 4 Principle #4: Create Mutual Accountability
• 5 Principle #5: Support Personal Empowerment
• 6 Principle #6: Create Economic Value from Social Benefit
• 7 Principle #7: Be Learning Driven
• 8 The Principles in Practice
• Appendix A: What You Can Do to Make a Difference
• Appendix B: A Note on the Organizations in This Book
• Acknowledgments
• About the Author
• Index