Let’s Be What We Should Be!

By Art Dykstra

Let’s be what we should be, public benefit organizations.

As the CEO of a nonprofit organization for the last fifteen years, I have spent time with corporate officers from the for-profit sector on many occasions. Frequently, they share a general misperception about how a nonprofit actually works. People don’t understand the business practices it follows, and they underestimate its employees’ skills and talents. The organization’s “cause” is better understood and appreciated than the work it performs.

Perhaps you have heard or made comments like “They mean well,” “They sure are United Way Warriors,” or “They are such nice people; they’re my favorite charity.”

It is common for CEO’s of for-profit corporations to believe that nonprofits use unsophisticated management practices, are not troubled by difficult management decisions, and are led by staff who prefer a “social worker” lifestyle to a satisfactory income.

Peter Hero, president of the Community Foundation of Silicon Valley, believes that much of the problem lies with the designation of 501(c)(3) organizations as “nonprofit.” He observed recently in the San Jose Mercury News, “What other sector of our society defines itself by what it is not? (The term) does not convey professionalism, vigor, imagination and the skills of nonprofit leaders.”

No organization will remain viable if it doesn’t make a profit or have revenue over expense. Just because an organization does not distribute profits to shareholders does not mean that it is a second class operation.

A better term, and one used in several other countries, is “public benefit corporation” (PCO). This term, Hero says, is preferable for at least five reasons. It affirms the value of the sector in a positive way, by explicitly defining who benefits from its work—the public. It affirms the sector’s public transparency and accountability. It reflects the sector’s organizational dynamic of civic engagement and consensus decision-making. The term greases the gears of connectivity and understanding between two disparate cultures—public and private—that are spinning further apart. And, it affirms that the organization offers a good (charitable) investment opportunity and a good return on investment for donors.

I agree with Peter Hero. Those of us functioning in the nonprofit sector should begin to present ourselves to the public by letterhead and marketing as PCO’s. I think it would be an act of leadership.

Fast Foreword: 
Summer 2002