Should Your Nonprofit Be Run More “Like a Business”?

We in the nonprofit world are always hearing from our for-profit friends and volunteers that we should run more like a business.  Heck, I often say it—especially when confronted with a poorly run organization.  But business, as we know, isn’t always run the way a business ought to be run. We certainly don’t follow in the footsteps of Enron, most of Wall Street (though I think our staff deserves at least as much salary as theirs!), or any of the companies in this article sent to me byRobyn Class, Executive Director of Orange Children and Parents Together http://www.salon.com/2013/12/10/ayn_rand_loving_ceo_destroys_his_empire_partner/

And I suspect, that when people tell us that we should “run like a real business” what they are saying is that we should be mindful of (a) having revenues that are bigger than our expenditures and (b) that we are doing the work that needs to e done in an effective and efficient way.

One would think that any marginally intelligent person would understand that you can’t spend what you don’t have—and you certainly can’t continue in this mode year after year after year.  But thousands of nonprofits operate in just this fashion.  It is so prevalent that too many people think that we think that being a nonprofit means we don’t have to end up in the black.

I think the problem is that too many people come into our field because they have a passion for the mission of this or that organization.  They care—completely—about what we do.  And this caring is focused completely on our programs.

And most nonprofits have great programs.  We do amazing things.  Alas, we don’t often do the work on which those programs sit effectively.

This means that, too often, our staff is not well managed; our budgets are not well thought out; we think that talking about our needs and our concerns is good enough for communications and fundraising.

We also think that there is a virtue in doing more with less—less staff, less salaries, less planning—at least on the non-program side of things.

So, should we be “run like a business?”  Well, yes—in the archaic sense of the word: purposeful activity.  More to the point, we should be well-run, with forethought as to what we are doing and how we are paying for it.  Indeed, we, like our for-profit colleagues, should be run in such a way that provide our constituents—who include not just our clients, but our staff and the community as a whole—with value and something worthwhile.

Janet Levine works with nonprofits, helping them to increase their fundraising capacity, which in turn assures more effective organizations. Learn more at http://janetlevineconsulting.com  Or email her at janet@janetlevineconsulting.com