Nonprofit Imitates For-profit?

More and more, you hear about how nonprofit organizations either are or should run more like for-profit businesses than they have traditionally. It's a hot topic in the nonprofit sector today, and the conversation continues to pick up steam, particularly with technological advances changing the way donors/consumers engage with brands — both in the business world and nonprofit world.

It's an interesting dialogue because, inherently, nonprofits and for-profits are different at their core. As Nonprofit Coach radio host Ted Hart, CEO of Charities Aid Foundation (CAF) of America and president of CAF Canada, says in our cover story, "It's a very silly notion to say a nonprofit should run like a for-profit. The very fact that it's nonprofit means it is separate from a corporate entity — there are no shareholders, there is no profit margin, etc.

"On the other side, it's equally silly of nonprofits who do not immerse themselves in good business practices. Still, there is a world of difference," he adds. "Running a smart nonprofit does not mean running as a for-profit any more than running a well-meaning for-profit means running as a nonprofit."

That's the key. Nonprofits and for-profits are not the same. By definition, they are opposites. But as Hart points out, that does not mean nonprofits should ignore best business practices in their operations. There are a lot of strategies, learnings and techniques nonprofit professionals can take from the business world, as we detail on in our cover story, "Stealing Smart: For-Profit Best Practices for Nonprofits."

And even though Hart's assessment is 100 percent correct, the lines are definitely blurring in society between nonprofits and for-profits. Increasingly, for-profit ventures are being founded with social good components. These social ventures, as they are often referred to, either give back to society or at times set up their own philanthropic arms. Conversely, especially given the cutbacks in government grants and more discerning donors, many nonprofits have experimented with and launched for-profit subsidiaries to help them become more self-sustaining amid increasing competition for donors' dollars.