Stealing Smart: For-Profit Best Practices for Nonprofits
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.