April 10, 2007

John Picken, board chair of AAHSA member Kendal at Oberlin, and Benjamin Franklin think alike about not-for-profits.

Franklin established the Leather Apron Society in 1727 based on the premise that "The good that men do separately is small compared with what they do collectively."

Thus, the birth of the American not-for-profit organization. Our own publication, The Not-for-Profit Responsibility — Changing Lives, Enlarging the Hearts of Communities, quotes Franklin's belief that benevolence is the binding virtue of society. A century later, Alexis de Tocqueville commented that community action for the public good was honorable and uniquely American.

Fast forward a century. Peter Drucker discerned three fundamental sectors of American society that make it vibrant: business, government and not-for-profits. Each sector has a unique responsibility. Government's is to protect and oversee. Business' role is to generate an economy. Not-for-profits' responsibility is to change lives. More recently, Dr. Lester Salamon, director of the Johns Hopkins Center for Civil Society Studies, defines four major duties of the not-for-profit sector:

• Guardians of values
• Service providers to meet emerging and often difficult societal needs
• Advocates for those often without public voice
• Creators of community (or social capital)

Salamon, in his must-read book for not-for-profit boards, The Resilient Sector, offers facts and figures on the size, scope and impact of this sector on the American economy and our way of life.

Even more recently, Dr. Claire Gaudiani of Yale University, in another must-read book for boards, The Greater Good, discusses how American generosity is the economic engine that drives capitalism as an essential dynamic of democracy. Dr. Gaudiani, who will be a keynote speaker at our 2007 Annual Meeting & Exposition in Orlando, says, "The ultimate form of generosity is the investment in people, property, and ideas." She reflects on Maimonides, who wrote centuries earlier about the eight states of Tsedakah (which means "generosity that acknowledges the dignity of the receiver"):

"The highest level of Tsedakah is to enter into a partnership with the person in need so that he will become productive and eventually independent."

Gaudiani has a chapter in her book on the fragile balance between democracy, capitalism and generosity, in which she writes, "Most people think Americans are generous because we are rich. The truth is we are rich because we are generous."

I submit to you that the "fragile balance" that makes America great rests on the broad shoulders of not-for-profit governing bodies: yes, the volunteers who are generous with time, commitment, money and influence; people who see need and are not afraid to take risks and work hard to meet it.

Most AAHSA members have boards that are bedrock keepers of this fragile balance. Our largest 100 members have average life spans of three generations, compared to our counterparts in the investor-owned sector, which have only a third of that. I'm not making a value judgment with that comparison, but I mention the difference because the not-for-profit sector is expected to fulfill a unique and enduring role: to change lives, enlarge the hearts of communities, guard values, advocate and meet changing needs when it isn't profitable to do so.

Therefore, governing bodies need to know their jobs. In these complex times, many of our boards are asking that very question: "What is our responsibility?" Public pressure from Congress and the media, spurred by high-profile scandal, raises another question, "How do not-for-profits stand accountable for the recognition American society affords us through tradition and law?"

Salamon concludes that the not-for-profit sector is in danger of "losing its soul" because we act too much like businesses. Jim Collins of Good to Great fame also wrote a monograph, Good to Great and the Social Sectors: Why Business Thinking is Not the Answer (another must-read for our boards), in which he details special characteristics of mission-driven versus profit-driven enterprises.

Which brings me back to John Picken, who put the issue to me like this (I'm paraphrasing): Can our members and their boards "cite the good they do?" Do they "know the difference between doing good and doing well?"

Our boards must answer Picken's question! But how? There are numerous experts and tools to guide a thoughtful reflection process. Quality First offers an excellent framework for essential board talk. We have a social accountability guide we developed with the Catholic Health Association. We even published a resource that your organization can use to establish a social accountability program in 60 minutes. Experts like Richard Chait, William Ryan and Barbara Taylor are also helping members through their book Governance as Leadership and presentations at national and state meetings. Accreditation through CARF-CCAC is an excellent process that stimulates reflection about effective governance.

This year, AAHSA will hold town hall meetings all over the country about our not-for-profit responsibility and how we must stand accountable for our actions. You'll find the questions we'll be asking on our Web site. You can use them to hold a town hall meeting in your organization. I invite you to share your results with me.

The health of American society depends on such dialogue to maintain that essential yet fragile balance of democracy, capitalism and generosity. A key outcome of that dialogue is John Picken's challenge to know the difference between doing good and doing well. Not-for-profits must do both, or we will not fulfill our unique responsibility.

Larry

William L. Minnix, Jr., D.Min.
AAHSA President and CEO

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