Change : Do We Still Need Non-profit Agencies ?

Errol Seltzer is a healthcare administrator who has experience working at nonprofit and for-profit corporations.

Currently, Errol acts as an administrator for NJ’s Broadway Adult Medical Day care Center, the Just Home Adult Medical Daycare Center, and the Zabota Foundation. He holds a Masters degree in Health Administration and has written numerous articles on this and related subjects. Currently, Errol is writing a book about nonprofit agencies in cooperation with Waterside publishing.

He can be reached at +1 201 797-1177x280 or at Eseltzer@JHCare.com


Times are quickly changing in America. Ten years ago would you ever have thought that you would be thrilled to get “free air” from a gas station ? What about ATM’s ? Do you think that getting cash after a store purchase in order to avoid fees would have qualified us as “bargain hunters”? Our country is quickly moving away from many “entitlements” and we are being expected to take care of ourselves, as well as, each other. While many people may think that this is a disaster waiting to happen, change is not necessarily a bad thing. We just need to plan and be responsible citizens. In part, that includes investing our resources, such as time and money in nonprofit agencies. In his first year of Presidency, George W. Bush began a push to get American’s more involved in charitable causes. At the time, this may have been a “polite suggestion,” made only a few months before the world changed on September 11th. Ultimately, American’s are simply going to have no choice about getting invo lved in non-profit agencies.

The nightmare of 9 - 11 was the catalyst for many changes. For a fleeting moment we thought and acted differently. One of our most impressive reactions was how we all pulled together. While our success was bittersweet, we certainly were a team that united together. Americans raised so much money to help others. Regardless, of this impressive act of kindness, it took several years to get most of that money to the people who suffered from the attack on our country. More so, it cost a tremendous amount of time and money to get those funds to them. You may recall that American Red Cross was one of the biggest recipients of those donations. However, they failed to act in a manner that was considered timely and responsible to its donor’s ( many of us ), and the agency suffered a great loss of trust. This backlash was felt for years and resulted in many lay-offs and total chaos within the agency. This was also a great example of how we gave of ourselves; judged the service providers, and were unhappy with their performance. And so, we became shareholders and investors in social service agencies. And no matter what some people may think, we cannot turn back.

Nonprofit agencies have been around for a very long time. For the most part, they are charities which mean they take donations. You may have heard of one or two nonprofit entities that do not accept donations. These may include agencies that say that they help people get out of debt and so they do not necessarily need donations. However, that sounds kind of “wacky”, and their validity should be scrutinized. Therefore, for our purposes, nonprofit agencies will be defined as organizations that are charities. They rely on the generosity of others to meet some type of common goal. In describing nonprofit agencies as charities, we imply that part of their job is to raise funds. That means that there are paid employees, consultants, or unpaid volunteers whose jobs include a variation of sales. They need to sell their product which will include some type of charitable work to consumers. The “consumers” are us and the competition for our affections is pretty intense. For example, there is not just 1 agency providing services to people who are disabled. There are thousands of them.

In theory, non-profit agencies are providing charitable work that benefit society. Therefore, they receive valuable tax exclusions and often are given priority when in comes to be chosen to provide funded services for the government. Like the badge of a police officer or the distinct collar of a priest, there is a trusting bond that accompanies funder's who are working with non-profit agencies ( I am not being facetious, I really think that most people have a comfort level when they deal with law enforcement and the clergy ).

In a nonprofit model, any funds that exceed its expenses will be reinvested into the company in order to provide more and better services. Essentially, that is the difference between nonprofit and for-profit corporations. For-profits take profit, and nonprofits do not. Regardless of what the company calls the money left over after its’ expenses are paid, the operators have a certain responsibility to ensure that the services provided are adequate. Let us assume that competing organizations provide similar services. One might very well be “For-profit” and the other could be “Non-profit”. Both of these organizations could potentially be providing the same level of care and still have money left over. The for-profit can do whatever it chooses with its “left over's”. However, the nonprofit has a duty to ensure that those funds are used to improve services or provide more of them. Sometimes, the agency may even need to return those monies to the funding source.

We would like to believe that most charities are well intentioned and operate soundly. Unfortunately, there are many that do not. Part of the problem is the fact that many of these agencies are currently unable to operate like their “for profit” counterparts. Many charities have simply developed bureaucratic systems that they do not want to change. More so, many are not supervised sufficiently by their internal Board of Trustees. Some have Executives and staff who are managing without oversight. Others are not getting held accountable by their licensing bodies. All in all, we have many problems that must be addressed in order to secure the future of these desperately needed programs.

We reside in an era when for-profit agencies have aggressively entered the social services arena. While they (for-profits) have historically been viewed as “uncaring businesses,” many of them do a very good job. Further, they are often “leaner”, “faster” and more “efficient” then their nonprofit counterparts. Therefore, now is the time for nonprofit agencies to vigorously change in order to compete in this new age market. The argument that nonprofit services are “better” will only remain valid until for-profit providers are tested and prove themselves acceptable to the public. In theory, we can argue about the differences between these two models. However, unless nonprofit agencies become fully accountable to their donors and funding sources, their usefulness to society is going to be questioned like any other business sector.


© Copyright Errol Seltzer, 2005

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