Through my forty-plus years of practice as a volunteer with, consultant to, and teacher of leaders of hundreds of diverse nonprofit enterprises, I have come to believe that there is at least one universal truth about 1.56 million registered nonprofits operating in the U.S.1: no matter the size or the mission, social capital — relationships among people — is the lifeblood of every nonprofit enterprise. This article explores the role of social capital and identifies key attributes and assets of social capital that nonprofits can use to their advantage.
The Role of Social Capital, the Theory
Robert Putnam popularized the notion of social capital in Bowling Alone, arguing that declining membership in social and community organizations reflected a decline in trust and community engagement. His argument holds that actual or perceived aloneness devalues interpersonal engagement and reduces social capital. Later research building on Putnam’s work suggests that the capacity for bridging and political engagement inherent in social capital may well be a predictor of the growth of the nonprofit sector overall and the vitality of the community being served. 2
Jo Anne Schneider goes further to identify organizational social capital as “established, trust-based networks among organizations or communities supporting a particular nonprofit.”3 While the networks represent relationships among people, as Putnam indicated, Schneider suggests that over time, these relationships become important assets for the nonprofit even when there are changes in personnel. Such networks which are “reciprocal, enforceable, and durable”4 evolve over time, and can help the organization obtain access to the resources needed to serve their clients and community. Building out the notion of generalized trust located in social networks, Schneider argues that trust in social capital goes beyond civic engagement5 to build bridges to and bonds with diverse constituencies and across distinctive cultures.
Key Attributes Leaders Can Use to Maximize the Power of Social Capital:
- Recognize that social capital is as valuable as financial capital. The social capital nonprofits create and sustain are investments of time and talent that sustain the mission and, frequently, lead to needed gifts of funds (as fundraising expert John O’Kane likes to remind me: if you want advice, ask for money; if you want money, ask for advice). Because social capital is not the same as financial capital, nonprofits are hard-pressed to appreciate its value, offering instead a transient feel good moment of recognition that quickly becomes a request to do more. Like so many natural treasures, the value is most apparent when the treasure is most at risk.
- Seize social capital to enable nonprofits to be adaptable, flexible, and resilient. With the power of social capital, nonprofits can regenerate valuable connections after problems arise within the organization or in the community at large. Resourceful, nimble, and quick in seeking out relationships that help the organization respond to challenges, social capitalists can navigate the mission in ways that build bridges and renew the mission in a dynamic environment.
- Integrate and coordinate through social capital to create a path to sustainability. In the old-style nonprofit paradigm, the myth is that board members express community will in the form of policy, strategy, and oversight, instantiated through the working relationship with the executive director and staff. The board writes the rules and the staff behaves as directed—an impossibility in the real world of the nonprofit enterprise where personal commitment, resourcefulness, and attention to individual needs are paramount. In a dynamic environment, effective nonprofits integrate and coordinate connections with key constituencies, ensuring the sustainability of the enterprise, and providing oversight and protection as required.
Blending Theory and Practice
Over time, an organization’s social capital tends to self-organize into clusters based on interests and abilities. Individuals may be members of more than one constituency simultaneously, and each constituency has specific values and interests that may at times be in conflict. Understanding and respecting these values and interests, nonprofit leaders must facilitate and integrate the various constituencies so that they work together to advance the nonprofit’s mission. The leadership challenge is to ensure the reciprocity, enforceability and durability of these relationships despite changes in personnel.
The most common clusters include the following:
- People we serve: those clients and constituents who directly consume the products and services created by the nonprofit enterprise. Organizational social capital is key to securing needed resources, providing appropriate referrals across a variety of needs, and cultivating vibrant and robust connections between otherwise marginalized populations and their communities. Nonprofit leaders who maintain a focus on mission and service as well as the financial bottom line are well positioned to take advantage of this asset.
- People with jobs at stake: those individuals who are employed directly or indirectly by the nonprofit in the course of advancing its mission. A major source of organizational social capital, employees and volunteers alike can bring strong and loose networks into play if they trust that these resources will be used wisely. Nonprofit leaders should resist the temptation to burn bridges after personnel changes because these very bridges can become important organizational assets.
- People who invest money: individuals, businesses, government agencies, and foundations who fund the activities of the nonprofit through philanthropy, membership, or contractual arrangements. In many ways resource development is an overdeveloped strength in today’s nonprofit, which tends to weaken traditional fundraising, especially when the organization is always perceived as having its hand out. Nonprofit leaders who understand how to “bond” —build trusting, long term, non-financial relationships—with donors can add to social capital assets as well as the bank account.
- People who invest time: individuals who volunteer to time for the nonprofit either in direct services, as advocates (for or against) or otherwise support the operation. Volunteers and advocates are most frequently included in maps of an organization’s social capital. I would also argue that, in some cases, the loudest critic may also become a best friend, especially if that criticism is coming from a place of caring about clients and the overall mission. Leaders who can have a cup of coffee with friends and so-called enemies alike are well along in building organizational social capital.
- People with power: individuals or institutions in the community that have direct or indirect power over the activities and future of the nonprofit, including government, the media, and other influencers. While networks with people with power tend to be loose and fleeting, nonprofit leaders are well advised to cultivate these connections through membership in interest groups and community activities. In that way, the organization can draw on these resources as needed and maintain respectful contact at other times.
These basic constituencies apply whether your nonprofit is a global giant or a local food pantry. So, when you’ve seen one nonprofit, you have also seen the power of organizational social capital in our communities.
1Urban Institute, “The Nonprofit Sector in Brief 2018,” updated by National Center for Charitable Statistics January 3, 2019, accessed May 14, 2020, https://nccs.urban.org/project/nonprofit-sector-brief.
2Gregory D. Saxton and Michelle A. Benson, “Social Capital and the Growth of the Nonprofit Sector,” Social Science Quarterly 86, no. 1 (March 2005): 16–35, https://www.researchgate.net/publication/4790809_Social_Capital_and_the_Growth_of_the_Nonprofit_Sector.
3Jo Anne Schneider, “Organizational and Social Capital and Nonprofits,” Nonprofit and Voluntary Sector Quarterly 38, issue 4 (2009): 644.
4Schneider, “Organizational and Social Capital and Nonprofits,” 649.
5Robert D. Putnam, Bowling Alone: The Collapse and Revival of American Community (New York: Simon & Schuster, 2000).
Until retirement, Janet Rechtman co-led Fanning Institute’s nonprofit leadership development and capacity building practice at the University of Georgia. Janet has a doctorate in the field of Leadership and Change from Antioch University, a master’s from York University in Toronto, Ontario and a BA from Emory University in Atlanta, Georgia. Her dissertation, On Being a Nonprofit Executive Director, documented the lived experience of nonprofit executives, and is the foundation for her work in leadership development in the sector. Janet lives in Chico, California, where she continues to be engaged with the nonprofit sector and that community’s response to the devastating Camp Fire and current coronavirus.