Forces for Good

by By Leslie Crutchfield and Heather McLeod Grant

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After traveling through the United States in 1831-32, Alexis de Tocqueville famously marveled at the American phenomenon that gave rise to what we now know as the social or independent nonprofit sector.

Americans group together to hold fêtes, found seminaries, build inns, construct churches, distribute books, dispatch missionaries to the antipodes, wrote Tocqueville in Democracy in America. They establish hospitals, prisons, schools by the same method. Finally, if they wish to highlight a truth or develop an opinion by the encouragement of a great example, they form an association.

The French essayist would probably not be surprised to learn that today 1.5 million nonprofit organizations account for a combined $1 trillion in annual revenue, growing faster than the U.S. economy for the last 15 years and becoming the third largest U.S. industry, behind retail and wholesale trade, but ahead of construction, banking and telecommunications. These groups have emerged from the unprecedented wealth of corporate foundations, the retrenchment of government and a heightened awareness of social problems that are often of global scale.

It is surprising, therefore, that Leslie Crutchfield and Heather McLeod Grant came to their subject by chance. When Crutchfield, managing director of the nonprofit organization Ashoka, was preparing for a meeting of the change-makers her group seeks to inspire, she found there was no single source in which time-tested practices to make a difference could be found. Joining forces with Grant, a business administration specialist, she learned that success defies traditional management and accounting measures.

Being an extraordinary nonprofit isnt about building an organization and scaling it up. Its not about perfect management or outstanding marketing or having a large budget, they concluded. Rather, its about finding ways to leverage other sectors to create extraordinary impact. Great nonprofits are catalysts; they transform the system around them to achieve greater good.

In This article appears in February 11 2008.