That’s the debate I’d like to see in the social markets.

Keep in mind that, the vast majority of businesses are not Wall Street firms. We hear relatively little public criticism of the mom and pops or small cap businesses.

NCCS data shows that most NPO’s have small budgets of under $1m.

We DO hear a lot of public criticism of big dog nonprofits that are regularly profiled in the Wall Street Journal, the Chronicle of Philanthropy, Chronicle of Higher Ed, and all of the sectoral newspapers.

We love to dish dirt on nonprofit organizations in the media:

1) Universities - my favorite whipping boy.

2) Nonprofit hospitals and health insurers - always damned if you do, damned with you don’t.

3) The Red Cross, Shave the Children, Nature Conservancy, Sierra Club, and all of the empire-building mega nonprofits.

4) Blogs, diatribes, tatoos, and poetry have critiqued the goings on of major funders like Gates, United Way, Ford, Rockefeller, etc.

Who among us has not enjoyed the sport of major newspapers pillorying the excesses of our local foundations?

There are heaps of public and funder criticism of nonprofits out there in proportion to organizational size.

The big guys are obvious targets. They are visible. They are somewhat more accountable to a larger public of donors, constituents, clients, etc.

I challenge anyone in a major city to pick up the daily newspaper and not find a story about the strong leadership or dismal failure of a nonprofit organization.

If you don’t, let me know, and I will send you a free Tidy Sum is a Philanthropy Expert T-Shirt. (XXL Only)

And yes, NPO’s can handle criticism from funders and the public. E.D.’s have lizard-thick skin.

But I think criticism that is true is more important than being constructive. It is OK if something negative is said even if the funder walks away, so long as the criticism is true. It is up to the nonprofit to respond to the issue at the heart of the criticism.

There is a culture of being nice and helpful in the nonprofit world that does not always exist on Wall Street. I think the culture of the Third Sector is a hugely positive thing. But I’m struck by how outraged people were with the tone of how Holden Karnofsky expressed criticism. Holden’s defense was in part that he was use to being blunt from his Wall Street days.

I personally was critical of Holden’s lack of tact from the very first post I wrote about him. But I do think that as much as constructive criticism is more useful than simply talking bad about someone and walking away, that as long as the negative statements are true, they are a net positive even when they hurt.

At the end of the day, I think the Third Sector is strong enough to withstand criticism. I think it is producing far more social impact than it is given credit for. I think making the conversation more authentic will not unleash a torrent of critical comments, but instead will unleash a wave of increasing respect for the Third Sector from everyday people.

I believe that speaking the truth out loud is always the best bet.

Heck, any nonprofit leader supplied with a few cold beers can recount stories of funder cultural incompetency, supreme arrogance, and embarrassing ignorance of community or organizational dynamics.

We are philanthropoids — its what we do.

But sometimes funders do talk turkey in a way that can be helpful.

I have heard nonprofit organizations admit that funders have prodded them to address issues of organizational diversity, outcomes measurement, fundraising, founders syndrome, and strategic planning.

In the best cases, the foundations have quickly followed up with grants or resources that help tackle that issue.

Sadly, this approach is not the norm.

By the way, I read last week on Gift Hub that the last nonprofit in the world who had not heard a funder natter on about weak evaluation or monitoring of outcomes was located deep in the Amazonian jungle about 50 miles from the Rio Negro back in 1988.

That funder unfortunately never followed up as to whether they heeded his advice because he was eaten by an alligator on his way back to Manaus.