Stealing Smart: For-Profit Best Practices for Nonprofits

By Joe Boland

How a Nonprofit Should Operate Like a Business

by Becky Lunders

I’ve always been a proponent of the idea that nonprofits must operate like a business (with a heart). The two components — business and heart — must be intertwined to achieve maximum impact. Without the heart, it’s just a business, and you’ll quickly lose volunteers, staff and donors who are drawn and powered by the mission. Without the business component, you may survive for a while, but it will be near impossible to thrive in this day and age.

While it’s the warm, fuzzy mission that pulls people to nonprofit work, it’s professional management of the organization that keeps them coming back. This comes in the form of operations (policies and procedures), program (measurable outcomes), development (income goals) and talent management (staff training and volunteer management). A strong and impactful mission brings people (both staff and volunteers) to the organization. A business plan can help keep them around! Today, let’s focus on the business concept of goal setting.

It’s amazing how the simple act of goal setting can drive behavior that produces results. By turning big goals into mini goals, you create a sense of urgency that moves people to action. This works magically. Take my 9-year-old, for example. He is not a voracious reader. He starts chapter books but rarely finished them. He simply loses interest. But when his teacher gives him a goal of reading 40 books this school year, he’s all over it! At first it was a bit overwhelming (40 books!). Then we broke it down into mini goals of about one book each week. Now it’s totally doable! The same concept works for goal setting in nonprofits.

Say you have a fundraising goal of $45,000 for your walk event. Use data from past events to determine how much your average team raises. For the sake of easy math, let’s assume the typical team raises $1,500 (15 team members each raising $100). That means you’ll need to recruit 30 teams to reach your goal. That’s a lot for one staff person, but you have a secret weapon. Like a sales team in a corporation, you have a team of volunteers, so break it down into individual goals. A goal of 30 teams is achievable if you ask five volunteers each to recruit six teams! Everyone does his or her part, and before you know it, you’ve reached your goal. It’s much more sustainable than one staff partner recruiting 30 teams!

In business, we call this a sales team. In the nonprofit world, we call this our volunteer committee. And when you mobilize that small group of deeply committed, passionate people, things happen. They are fueled by the opportunity to make a difference and fund the mission that brought them to the organization in the first place.

Operate your business with a heart, and you will reap the rewards that come with tying the knot of mission and business.

Becky Lunders is a consultant at teamWorks. Reach her at becky@totalteamworks.com

Among the ever-evolving buzzwords and old debates in the nonprofit sector, a new concept has entered the fray: running your nonprofit like a for-profit.

This conversation is natural. The nonprofit space continues to become more and more professionalized, with many people setting out on careers in the industry as opposed to "just falling into fundraising" or the like, as so often used to be the case. With further education both at the collegiate and professional levels for nonprofit professionals, this progression has become innate.

Add the influx of business professionals entering the nonprofit field or partnering with nonprofit organizations, and you see more and more "business practices" getting adopted by nonprofits.

That doesn't necessarily mean nonprofits should actually run like a for-profit. That would be problematic on many fronts — namely that for-profit entities are out to increase the bottom line and appease shareholders, while nonprofits are out to achieve their missions and serve their constituents. Just ask Nonprofit Coach radio host Ted Hart, CEO of Charities Aid Foundation (CAF) of America and president of CAF Canada.

"It's a very silly notion to say a nonprofit should run like a for-profit," he says. "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."

The key distinction is that there are best practices in management and marketing that the business world has developed over years of testing and research. Given the large budgets of corporate America for marketing and research and development, the learnings from companies can be invaluable to nonprofits that do not have quite the same financial flexibility to do the same. As Hart says, it's silly for nonprofits to not immerse themselves in those good business practices.

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