The World is Flat -- Implications for Nonprofits

Thanks to an insistent donor, I read The World is Flat by Thomas Friedman. It is an insightful and well researched book, and I recommend it. Thanks to Mr. Friedman, I understand better the implications of the technology revolution on global geopolitics. Friedman describes the promise and peril of this new age with the detached perspective of an observer/reporter/editorialist, which lends credibility to the conclusions he draws from his observations.

Given my now-broadened perspective, what observations can I make about nonprofits? I continue to receive a flood of mail from local nonprofits, whether for solicitations, announcement of events or in the case of this community foundation for quarterly statements of donor advised funds. Why is everyone not using the Internet, when such a huge percentage of supporters have access? How much trouble would it be to narrow down the few that do not have access and cut costs dramatically?

Think also about a nonprofit’s internal operations, the inefficiency of which came to light when a donor to a local charity called me frustrated because a check he mailed from his donor advised fund with Fidelity was lost. This has happened to him three times with three separate charities, and he strongly suspects the problem is not from Fidelity’s end.

Consider how many small nonprofits struggle with functions that are generic to them all. They each have to figure out the finance function, including banking and investments, internal controls and financial reporting. Does anyone have the imagination to devise and invest in a system into which any nonprofit can join? Think about how much cost and duplication this would wring from the system.

Gifts would be sent into a central processing location (likely electronically) with proper controls to see that the correct nonprofit is credited for the gift. A proper acknowledgment would be sent to the donor, and the funds would immediately be invested in the highest yielding short-term investments. Why do any of these functions need to be handled by an employee of a small charity going to a post office box, handling a paper check, entering it onto some kind of antiquated spreadsheet on a computer discarded by a for profit company that has just upgraded, generating a thank you note (non-automated), driving the check to a bank for deposit and likely accomplishing all of the above without proper dual control?

Taking this thought process a step further, why does all of the finance function need to housed in the U.S., where costs are relatively high compared to a place like India? For profit companies have operations abroad. They achieve efficiency by outsourcing information processing and reporting functions to places like India where talented people are working at night, while we are asleep, and doing so at lower cost. Why can’t we make these same efficiency savings available to nonprofits?

Why does the third sector need to be stuck as if it were in the third world? It is time for an innovative nonprofit leader to join forces with an equally innovative donor to devise this system, which would revolutionize the nonprofit world; or, more aptly, simply bring it into the 21st century.

Robert Thalhimer