Managing at the Leading Edge

In his latest book, Mike Hudson, visiting fellow at the London School of Economics and founder and director of Compass Partnership consultants, advises nonprofits on how to stay ahead of the curve. Thanks to interviews with sixty-five leaders of U.S. nonprofits, Hudson has identified a number of trends in the sector, including capacity building, strategic alliances, and shifts in the way financing flows to nonprofits.

Capacity building is an idea taken straight from the corporate handbook. According to Hudson, nonprofits need to strengthen their internal systems and external strategies to be more effective. Best practices in capacity building encompass everything from keeping the organization flat to diversifying the funding base. The struggle right now, says Hudson, is to perfect how capacity building translates to the diverse sector of nonprofits. He would like to see more work that will determine which components of an organization's capacity have the greatest impact.

Strategic alliances are also surging. These can happen through partnerships or even federations—nonprofits that work under a united name but maintain their own local identity. Hudson goes further to suggest that mergers, though unpopular in the cause-driven world of nonprofits, may become a necessary and useful way for organizations to develop powerful brands.

As for the nonprofit capital market, program-related investments and venture philanthropy are new ways that foundations and corporations are giving to nonprofits. For leading-edge nonprofits to exploit changes in the flow of funds, Hudson recommends fewer, larger, and more strategic grants; more partnerships; greater accountability; and shared learning across the sector.

The book's appendix lists the names, titles, and organizations of his interviewees, data point comparisons with the U.K. nonprofit sector, and "the best reading"—books and reports that the author feels are the most authoritative and engaging.

- Manda Salls

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