How Trust Differs for Boomerang vs. Frisbee Businesses
Nate Pelletier is the Executive Director of Joseph House, a nonprofit in Ohio that seeks to provide homeless veterans suffering from addiction with the support to maintain a life long commitment to recovery and thrive in the community. He shares what he learned about building trust in moving from a for-profit to Joseph House.
It’s about 7 pm and I’m teaching a group of 20 University of Cincinnati students as a guest presenter in an organizational leadership class that’s exploring the difference between for-profit and nonprofit careers. I ask the group, “What do you want to play with: a Frisbee or a boomerang?”
In Steven Covey Jr.’s book, The Speed of Trust he discusses his trust equation, which is Trust = Character + Competence. Competence is easy for most to understand. But character is more complex, and this is where I discovered the “boomerang vs. Frisbee” analogy. With a boomerang business, money flows from the customer to the business, and the customer expects that something of equal value is going to come right back. But with a Frisbee business, a customer gives money to an organization with the assumption that the value will go on to another customer who receives the service. Most for-profit businesses operate on the boomerang model—here, a customer’s trust is based on whether the business produces something that meets their needs—otherwise, they won’t pay for it! However, in the “Frisbee” nonprofit context, the customer trusts the organization to effectively meet someone else’s needs. They catch the Frisbee but they throw it on to someone else. And this introduces the opportunity to mislead, because the donor often can’t see how satisfied the ultimate customer is with the service.
When I left P&G in 2012 to take over as Executive Director of Joseph House Inc., I learned that the “Frisbee” model often allows leaders to prioritize fundraising over effectively serving customers. Sitting in a forum of nonprofit leaders, I was surprised to hear them explain what they do and how much money they needed, but never discussing what they accomplished.
The special challenges of managing a Frisbee business were weighing on my mind as I sat in my office after 3 months on the job, faced with the loss of $190K in annual funding and a ranking of 35th out of 35 due to poor performance the year prior. I realized that because I’m playing Frisbee now, I need to make sure the person who throws it to me knows I can be trusted to throw it on to the clients who depend on me. This was the beginning of the transformational change of Joseph House.
As I prepared for my first board meeting, I knew my board members were anxiously looking for a new plan to raise money. Instead, I focused on how we were going to provide better service. “We’re not going to prioritize fundraising this year until we prove we have a right to exist,” I said. I informed them I would need to replace underperforming employees if they didn’t improve, and increase payroll to hire qualified clinicians. In essence, I planned to consume our reserves without a fundraising strategy. You can imagine the looks of disbelief in the room. But I argued this was the harder right over the easier wrong. I argued that better fundraising would come only after building stronger bonds of trust with our donors and with our clients.
And over the course of the next 12 months, I did exactly that. After a tedious process of coaching and then eventually terminating more than 75% of my staff, I identified the remaining members to build around. These core individuals had already demonstrated competence and character and had earned my trust. Together, we defined our end state: a clinical program that would lead to long-term recovery, sustainable income, and permanent housing for our clients. We put customers first, doing whatever it takes to meet their needs. This focus on clients reminded me of my “boomerang” days at P&G, where the hard work of understanding customers and serving their needs usually paid off with customer trust and higher market share. But now, my goal was not just to satisfy the client, but also to earn the trust and investment of donors.
It took 12 months to build, pilot and measure our program. But given our focus on the customer, we delivered some of the most impactful results in the region. And in return, foundations were coming to me asking us to apply for grants because they knew they could trust that we would deliver on our cause with meaningful results.
Many students in the organizational leadership class assumed that choosing whether or not to work in the non-profit sector is really about choosing money vs. nobility. I think it’s about choosing a customer you love. Carving a path to serve that customer even when adversity forces you to choose a harder right over an easier wrong lays a foundation for trust. And if you succeed, the game of boomerang and Frisbee is essentially the same.