The important role of NPOs

As Korea’s discourse on public welfare unfolds, nonprofit organizations (NPOs) will likely attract greater attention as platforms for individuals, corporations and the government to demonstrate their concern. Expectations of current and newly hatched NPOs can be expected to be higher. They will need to exhibit the type of strategic management and innovation that leading companies possess, according to the late management guru Peter Drucker.

In his book “Managing the Nonprofit Organization: Practices and Principles,” Drucker emphasized activities must begin only when plans based on the NPO’s goals and achievements are clearly defined. In short, all NPO members and interested parties must first agree upon the organization’s basic mission and compatible long-term goals.

Outstanding NPOs establish social values and attract attention with management strategies, leadership and systems that rival leading companies. For example, Teach For America (TFA) places new university graduates in poor rural and urban schools for two years to give disadvantaged children a better chance of a quality education. For this, the organization hires results-driven students with a sense of responsibility and encourages them to share ideas and experiences.

TFA’s business model and achievements has become a fresh stimulant to public education systems, sparking the interest of the government in educational reform policies and an increasing number of companies and public charity organizations who are becoming sponsors.

Another example is Mayo Clinic, a leading nonprofit medical group in the United States. Doctors around the world refer patients to the clinic, where “the needs of the patient always come first” is the primary value. Established in 1889, the medical institution is known for its system of collaborative treatment. As such, the clinic recruits doctors who understand its values and are competent team players rather than those who only have outstanding medical technique. As a testament to its efforts, the Mayo Clinic has acquired the reputation of being a “global medical pilgrimage” destination, and patients who have received the clinic’s treatment have become its sponsors; 115,000 of whom donated a total of $360 million in 2010. The clinic also was voted one of Fortune magazine’s “100 Best Companies to Work For” for 10 straight years.

The Bill & Miranda Gates Foundation is an example of wealth helping needy people. Its mission is increasing equality and opportunities for those who need it the most. The foundation provides medical care and famine relief, and conducts global development projects all around the world. With plentiful funds from Bill Gates, the co-founder of Microsoft and one of the richest persons in the world, the foundation selects issues that have an expansive ripple effect but receive little attention, and provides long-term investment to discover creative and innovative solutions.

The Gates Foundation tracks its effectiveness and social changes through a performance measurement index. And beneficiary organizations submit performance reports to the foundation and the foundation receives evaluations from outside experts. Above all, the foundation aggressively promotes its activities. It emphasizes strategic partnerships and links stakeholders such as companies, NPOs and government groups. Their specializations are then combined for the foundation’s projects, which typically revolve around regional development, combating poverty and promoting education.

While corporations and wealthy individuals may be tempted to set up or sponsor a NPO to answer public pressure to “give back” to society, Drucker stressed that the motives for starting a NPO should not be mistaken for a sense of reward but the sense of an obligation to achieve results.

The type of NPOs that would be the most successful in Korea is an open question. Certainly it would be risky to try to import ideas without considering the nation’s own customs and values. For example, can we realistically expect new university graduates to apply to an organization like Teach For America instead of pursuing higher pay? Still, the broad range of social issues that need to be addressed suggests many types of NPOs.

In particular, NPOs must bear in mind that their mission and achievements directly affect society and the public good. Exaggerated and missed goals by a NPO and their sponsors can have more serious consequences than a company. As such, NPOs must honestly assess their unique success factors and focus on the capabilities that can maximize effectiveness and efficiency. It is also important to quickly adapt to new information and social changes but not neglect periodic performance checkups.

Finally, in order to increase a ripple effect, NPOs should not be shy about communicating their goals and activities to the news media. They must share their achievements to change the public’s awareness of global as well as local social issues. This will create social arguments that could make our world more desirable and raise the trust people have in NPOs and their activities.

* The author is a research fellow at Samsung Economic Research Institute.

by Syn Mi-joo