Global Policy Forum

By Jeremiah Hall

Philanthropy-watchers hail entrepreneurial prowess of ex-high-tech execs, but say many have much to learn

Entrepreneurial zeal carried Tiffany Brown far during the dotcom bonanza, eventually landing her a job developing websites for a business-solutions firm called Organic.com. But when the economic downturn led Organic to scrap her position in 2001, she decided to redirect the energy she had poured into reinventing business into a nonprofit organization that aimed to deliver Web access to people in Africa. With the technology industry in the doldrums, many former "dotcommers" like Ms. Brown are enlisting in the nonprofit world. It's the newest wrinkle in nonprofit management - and it is grabbing the interest of many of those who monitor the universe of nonprofits.

Executives with experience in the Internet business have reinvigorated many nonprofits with fresh thinking and new philanthropic approaches. But experts are also concerned by questionable or failed charities managed by dot-commers who may lack the necessary experience, altruistic values, or understanding of nonprofit regulations. No one knows how many former technology executives have emerged in the land of nonprofits. But the Management Center, a San Francisco firm that trains nonprofit managers, says that as many as a quarter of its programs are filled with former high-tech and dotcom executives.

That figure is consistent with a random sampling of nonprofits the Monitor surveyed using data provided by GuideStar, a leading source of nonprofit information. That research found 17 of 100 nonprofits formed since 2000 had former technology executives as top directors. In high-tech hubs like San Francisco; Boston; and Austin, Texas; the occurrence was even more significant. The chief reason for the trend: The three-year economic downturn has flooded the market with talent that typically bypassed nonprofit work. Many entrepreneurs, tired of technology's struggles, have seen an opportunity to start anew in the nonprofit sector. "They've done their stint in technology and are ready to get out of the cutthroat environment and do something that has a real impact," says Matt O'Grady, the Management Center's associate director.

Earlier this month, Kevin Hartberg of Fort Collins, Colo., created the nonprofit Northern Colorado Idealabs. The firm hopes to draw businesses to the region by showcasing the area's business-friendliness. Before starting Idealabs, Mr. Hartberg ran his own technology firm called Critical Dimensions. Mr. Hartberg says that he hopes many dotcom qualities will serve him well. "You learn how to be aggressive and decisive," he says. "And you also learn a very different management style."

Success with merging the worlds of quick-minded dotcommers and often slow-moving nonprofits has been mixed, but Mr. O'Grady says those who prevail often have previous nonprofit involvement. "If they've volunteered or served on a nonprofit board, their success rate is much higher." Ultimately, boards of directors and donors want managers who know the culture and intricacies of working with nonprofits. For Deborah Sheldon, being laid off from IBM, where she marketed to dotcommers, allowed her to reassess her goals and return to more philanthropic endeavors. But the change wasn't without sacrifice. "I had to learn everything all over again. IBM had a very different culture from my nonprofit and that was a hard change.... [But] I think I'm having a positive impact on my community," says Ms. Sheldon, who is now an executive at CyberSkills, a Burlington, Vt., nonprofit that trains job seekers to use the Internet. "I also took a better than 50 percent pay cut."

Nonprofits are learning a lot from technology executives, according to Paul Light, a senior fellow at the Brookings Institution and a professor of public service at New York University. "Their style is aggressive, intense, and very focused on outcomes and deliverables," he says. "Nonprofits are quickly adapting and learning the new language." Mr. Light says that new approach has helped nonprofits better communicate with today's donors, who appear increasingly focused on a nonprofit's community impact.

Sheldon joined an existing nonprofit, but others have ventured off to start their own. That's vexing many industry watchers, who are concerned about a start-up management team's experience and understanding of nonprofit regulations. Take Idea Village, a New Orleans organization that helps build small businesses by offering them consulting services, funding, and business-development training. "We started this as a for-profit entity and raised over $1 million," says Timothy Williamson, its founder. "But we quickly realized there were a number of advantages to being a nonprofit, including access to community funding," he says. That's where he may run into trouble. Lack of understanding the financial-management issues is the No. 1 shortcoming for technology executives entering the nonprofit world, according to the Management Center's O'Grady.

"Understanding tax laws and fundraising regulations is ... where many are coming up short," he says. Such a gap helped cause the demise of Joko Club, a nonprofit that hoped to bring the Internet to Africa, says Ms. Brown. The firm opened its doors in 2001 and closed a year later. "It's not easy to start a nonprofit, and we had some big goals," says Ms. Brown. "Ultimately, the funders of the project decided to dramatically scale back the project." Brown is now doing freelance consulting work.

Having lofty goals is the way most dot-commers run into trouble, says NYU's Light. "Don't expect to snap and get results immediately - you won't solve the world's problems overnight," he cautions high-tech executives making the leap. But Light believes dot-commers will have a positive impact on the nonprofit world. "As arrogant as dot-commers may seem, they are worth listening to," he says. "They'll bring a new discipline and entrepreneurial approach that the industry can really use."

Verifying a nonprofit's credentials

Unsure about the validity of a given nonprofit?
The Federal Trade Commission and GuideStar, a nonprofit information provider, have compiled a checklist for donors examining charities.

Verify an organization's charitable status.
If a charity is not on the GuideStar website (www.guidestar.org), ask to see its letter of determination or, if it is faith based, its official listing in a directory for its denomination.

Get the cold, hard facts.
A reputable organization will define its mission and programs clearly, have measurable goals, and use concrete criteria to describe its achievements.

Avoid charities that won't share information.
Ethical charities are willing to discuss their programs and finances.

Avoid charities that pressure you.
Reputable nonprofits don't use pressure tactics and are willing to provide literature or direct you to a website discussing their activities.

Trust your instincts.
If, after going through the previous steps, you still have doubts about an organization, don't contribute to it. Find another nonprofit that does the same kind of work and with which you feel comfortable, and then make your donation.

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