The not-so-simple world of the nonprofit sector


My career has been spent in the nonprofit sector and I've heard dozens of comments that marginalize the work that we do. Over the years people have said things like this to me:

  • I’d like your job when I retire.
  • Why can’t nonprofits be more business-like?
  • That person is the CEO of a nonprofit, so why honor them when they don't run a business?
  • Why would we consider you to participate in our coalition? You aren’t a wealth creator.

Nonprofits are a business — a big sector in Michigan. Periodically, the Michigan Nonprofit Association reports on the economic impact of the nonprofit sector. Their most recent report published in 2012 noted that there are 48,000 nonprofit organizations in Michigan employing 435,000 people, paying their employees nearly $4.8 billion each quarter. It is estimated that 239,711 additional jobs are indirectly impacted by the spending by nonprofits. The sector holds assets of $227 billion and receives more than $217 billion in annual revenue. The sector generates $137 billion in overall economic activity. Nonprofits include hospitals and health care, educational institutions, human services, arts and culture and many others.

The Grand Rapids Community Foundation works in partnership with other nonprofits, as well as the business and public sectors. This collaboration is essential for the betterment of our community. In terms of dollars leveraged, which is some measure of the multiplier effect of compounding resources, our grants were able to attract $55 million in additional resources in our community. In terms of future wealth creation, the Grand Rapids Community Foundation awarded 2,743 scholarships in the past five years totaling $3.5 million. Since our inception in 1922, we have provided $235 million to area nonprofits.

As Jim Collins, well-known business/management author, noted in his 2005 publication From Good to Great and the Social Sectors: “A great organization is one that delivers superior performance… For a business, financial returns are a perfectly legitimate measure of performance. For a social sector organization, however, performance must be assessed relative to mission, not financial returns. In the social sectors, the critical question is not ‘How much money do we make per dollar of invested capital?’ but ‘How effectively do we deliver on our mission and make a distinctive impact, relative to our resources.’”

We are all working to provide quality services and programs in a transparent and responsible fashion. A vibrant and robust nonprofit sector is essential to building a strong community!

Diana Sieger is president of Grand Rapids Community Foundation.

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