Should Nonprofits Run More Like a Business?
OVERVIEW
We all hear this statement all too often - "Nonprofits need to run more like a business." On its face, this statement is flawed but does reveal an underlying issue that presents nonprofits with an opportunity.
CONTEXT
The "like a business" (LIB) sentiment is born out of mounting expectations by individual donors, foundations and corporations that wish to see better outcomes and improved stewardship of gifts. And, while this notion is born out of real concerns, it does not mean organizations should run "as a business."
The thought leaders in our space share a common message: organizations can never let the bottom-line take precedence over the mission. However, it today's climate, the organizations that will survive, thrive and/or prosper will not be those that are run more LIB, but rather, those that focus on a high-level of organizational effectiveness.
This area is where nonprofits can take a page from the business book. And, while this in not a comprehensive list, following are some of the effective habits that can be developed:
- Succession planning for key leaders
- Clearly defined outcomes (tied to mission) that evidence effectiveness
- Sophisticated financial management
- Increased rigor around human capital including better hiring practices and nearer-term severance decisions for poor performers. This notion also includes putting the interests of the constituents served ahead of certain staff needs
- Enhanced executive acumen and organizational development
ACTION ITEM
While few organizations possess the internal resources to advance the above capabilities, that can be achieved through board development - specifically, properly staffed committees. With diligence and resolve, organizational effectiveness can be improved and an agency can meet the ultimate challenge - to "operate like a highly effective organization"!
We all hear this statement all too often - "Nonprofits need to run more like a business." On its face, this statement is flawed but does reveal an underlying issue that presents nonprofits with an opportunity.
CONTEXT
The "like a business" (LIB) sentiment is born out of mounting expectations by individual donors, foundations and corporations that wish to see better outcomes and improved stewardship of gifts. And, while this notion is born out of real concerns, it does not mean organizations should run "as a business."
The thought leaders in our space share a common message: organizations can never let the bottom-line take precedence over the mission. However, it today's climate, the organizations that will survive, thrive and/or prosper will not be those that are run more LIB, but rather, those that focus on a high-level of organizational effectiveness.
This area is where nonprofits can take a page from the business book. And, while this in not a comprehensive list, following are some of the effective habits that can be developed:
- Succession planning for key leaders
- Clearly defined outcomes (tied to mission) that evidence effectiveness
- Sophisticated financial management
- Increased rigor around human capital including better hiring practices and nearer-term severance decisions for poor performers. This notion also includes putting the interests of the constituents served ahead of certain staff needs
- Enhanced executive acumen and organizational development
ACTION ITEM
While few organizations possess the internal resources to advance the above capabilities, that can be achieved through board development - specifically, properly staffed committees. With diligence and resolve, organizational effectiveness can be improved and an agency can meet the ultimate challenge - to "operate like a highly effective organization"!
posted by Rob Huxtable at
5:29 PM
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