Tip of the Week The Consulting to Nonprofits Industry

Differences from Business Consulting

In comparison to business consulting, several factors complicated management consulting in the nonprofit sector. Together, these issues limited the efficiency of the nonprofit consulting market and posed challenges to the effectiveness of individual engagements. Consulting to nonprofits differed from business consulting in the following ways:

1. Both client staff and consultants often had less education or training than business counterparts in either management skills or the use and provision of consulting.

2. Some in the nonprofit sector were leery that business concepts associated with management consulting would threaten the values of social-purpose organizations.

3. Multiple bottom lines and difficulty measuring performance of nonprofits made it hard for consultants to drive clients toward objective results or demonstrate project effectiveness.

4. The wider array of stakeholders in a nonprofit made it difficult to identify the real "client" or clearly diagnose and gain consensus on the problem consultants were engaged to solve.

5. The general lack of discretionary income among nonprofits made it hard for many organizations to afford consulting, or other professional services.

6. The lack of scale among both clients and providers in the nonprofit sector relative to those of the business sector limited the impact of the industry.

7. The industry could be characterized as an inefficient or underdeveloped market, exhibiting poor information about providers and their quality, a lack of extensive competition for projects, unclear channels for connecting providers and clients, and low barriers to entry.

8. Lacking resources, nonprofits often did not pay for consulting, receiving pro bono work or asking third-parties to subsidize projects, potentially distorting consultant-client accountability.

9. Knowledge of best practices in the field of nonprofit management — among organizations, consultants, intermediaries, and academics — was less advanced than it was in business.

Source: Greiner, Larry, Thomas Olson, and Flemming Poulfelt, eds. The Contemporary Consultant Casebook: Educating Today’s Consultants. Eagan: South-Western, 2005. 244.

(Many thanks to SBANC http://www.sbaer.uca.edu/ for passing this along. Russ)