What Nonprofits Can Learn from Organized Crime

Mark Goodman, senior advisor to Interpol and founder of the Future Crimes Institute wrote a brilliant article in the November issue of the Harvard Business Review titled ‘What Business Can Learn from Organized Crime’. The article identifies ‘best practices’ of organized crime and argues that business can learn from organized crime’s ability to recruit great talent, use technology, and adapt quickly to market conditions. We in the nonprofit sector can also learn valuable lessons from organized crime.

Let’s discuss Mr. Goodman’s five areas of learning opportunity and explore what we in the nonprofit sector can learn and how we can use that information to get ahead.

1) Use the news to create opportunity. Criminals capitalized on the disaster in Haiti to set up false mobile media donation networks through Facebook and Twitter.

What can we learn? We should be aware of the news, assess potential trending that may affect your business, and use the most efficient media tools to disseminate information.

How we can get ahead: Set up social media tools as soon as possible and understand the value of each for your organization. Don’t wait until a news opportunity presents itself to set up your information disbursement network.

2) Outsource to specialists. These days, the confederations of terrorist networks like Al Quaeda are made up largely of loose affiliations and freelancers.  Organized crime is fantastic at outsourcing talent and drawing upon the strengths of individuals over vast geographic regions.

What can we learn? As nonprofit organizations with a constant eye on keeping overhead costs down, we can think about outsourcing certain functions such as grant writing to freelancers. Also consider consolidating back office services with other nonprofit organizations.

How we can get ahead: Network, network, network. Talk to colleagues and build a database of well-respected freelance professionals. Begin a dialogue with other organizations to assess the feasibility of sharing services.

3) Cash isn’t the only incentive. No doubt organized crime pays well, but these days there is a trend of people who are drawn to the world crime as much for the money as for the intellectual stimulation and the ability to ‘beat the system.’

What can we learn? Nonprofits excel at creating a culture of belonging and recognition so keep the culture going.

How we can get ahead: A feeling of belonging and of recognition for employees as well as donors is created through stewardship and appreciation. For donors, build a stewardship system in which every gift is acknowledged seven times (see my post ‘How to say Thank You in Chinese’ for more information), and for employees something as simple as cupcakes in the office or a designated ‘Employee Appreciation Day’ can do the trick.

4) Exploit the long tail. This is my favorite lesson because here we can begin to think differently. According to Mr. Goodman, there is a trend among criminals to execute many smaller crimes versus one large and splashy crime. Executing many smaller crimes reduces the likelihood of detection and therefore creates a stronger and more sustainable enterprise. Credit card fraud is a perfect example in which many small transactions are favored over a single large purchase.

What can we learn? Nonprofit organizations can increase their likelihood of sustainability if they look ahead and continually ask ‘what’s next?’ Sending out many feelers into the market by talking to colleagues and attending conferences on economic and technology issues can identify societal or economic shifts that may impact the future of your organization. If you are not aware of these changes your organization may be scrambling to react to the new reality rather than creating systemic proactive change.

How we can get ahead: As part of your Board committee structure create an Innovation Committee with board and staff members to discuss trends in the nonprofit industry and in your sector. If possible, form a multi agency committee to share viewpoints and ideas. 

5) Collaborate across borders. Organized crime partners with competitors to expand into new markets. The Colombian drug cartels have partnered with the mafia in Eastern Europe to expand their international drug market and increase their business opportunities.

What can we learn? The economic downturn of 2008 forced the consolidation of many nonprofit organizations with similar Missions. The advent of these partnerships is a positive outcome born from economic necessity. Further, more and more foundations are requiring organizations to partner to be considered for grant money. It is in the nonprofit sector’s interest to seek out healthy partnerships. Partnerships can create strength and sustainability.

How we can get ahead: Partnerships can promote organizational efficiency and introduce new avenues of exploratory thinking. But effective partnerships can only come about through strong leadership. To create a successful partnership, leaders should create employee incentive programs based upon the goals of the new partnership and be intolerant of departmental silos. Partnerships can substantially increase an organization’s impact in the market, but like all relationships, have to be managed by clear policies and transparent practices.

Criminal enterprises are market and technology savvy and employ innovative practices to expand their market share. As a sector, we can learn a lot about adaptability to societal and economic forces and adoptability of creative practices from these illegal ventures. The next time you are watching a news story about a criminal group ask yourself, ‘How can my organization benefit from organized crime?’

(My thanks to Marc Goodman for providing the framework for this post. For Marc’s full article please see the November 2011 issue of the Harvard Business Review).