“This organization needs to be run like a business.”
In some senses, they’re right. Effective enterprises of any stripe have clear goals, practical plans for achieving them, measurable indicators to tell them if they’re on the right track, and accountability to performance standards at every level.
But that is where the similarities end. Because the entire point of the public interest enterprise is that its focus and purpose is to deliver benefit that is not quantified in dollars.
If you could turn a profit by feeding the homeless, providing health care to the needy, delivering after-school programs to at-risk kids, or restoring wildlife habitat in a national park, someone would be doing that. (And if you can figure out a way…please do!) But mostly, these kinds of activities are funded by grants and donations by public agencies, foundations, corporations and generous individuals who recognize the value of the societal benefit these programs are delivering. They expect no monetary return on this investment, nor do they anticipate that the programs they support will become money-making enterprises. That’s not what the tax-exempt public benefit corporation is about.
While it’s great when possible, trying to turn public benefit programs into financially self-sufficient enterprises can make them inaccessible to the populations they seek to serve, potentially alienating supporters. It is the non-monetary deliverables of these programs that are their central point. As nonprofit managers, we know that we have to meet our budgetary targets in order to keep delivering those non-monetary public benefits.
The other primary difference in management of not-for-profit organizations relative to for-profit business has to do with the nature of your employees.
I’ve been managing nonprofit staff since the mid-1980s. The primary characteristic that defines them in my experience is that while they expect compensation for their work, they aren’t just in it for the paycheck. They have chosen a career path focused on bettering the world—nearly always at a reduced rate of compensation relative to what they could earn in the for-profit sector— because they care. They take joy and pride in advancing the public benefit missions of the programs they manage, implement and support. They have chosen to commit themselves to those outcomes.
In the context of the broader economy, that is a rare quality. And it is precious.
Many for-profit employees love their jobs. But the fundamental equation of that world is: “you give us your time and work, and we’ll give you compensation,” with the assumption being that if it doesn’t work out, there is always someone else out there who will take the same paycheck to do the same work.
The same cannot be said of a personal commitment to a public interest mission. An effective nonprofit is staffed not by people who are competent, but by competent people who believe.
Business-minded board members and NGO leaders must understand that when it comes to management, there is no apples-to-apples translation between managing the for-profit employee and the not-for-profit employee. In the ongoing day-to-day flurry of directing our staff, encouraging, supporting and holding them accountable, we must never lose sight of how honorable and valuable our staff’s commitment truly is.
We must respect and regularly acknowledge the choice our employees have made to work for a better world.
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