Running a Non-Profit Like a For-Profit Business

As my friend Chaya pointed out a couple weeks ago, in order for a non-profit to succeed, it should be run like a for-profit business. This includes audits (in my opinion by both internal and external audits), budgets, work plans, etc. How can we accomplish this?

As I see it, there are a couple ways this can be accomplished. One way is that non-profits should try to attract people with business backgrounds (MBAs, etc.) to work at our organizations. However, in my opinion, this is easier said than done. Usually people who go for a business degree or an MBA are doing so because they want a job with high earning potential … which is usually not the case in non-profits. So is the answer to make non-profit salaries more attractive to people with business backgrounds? (I certainly wouldn’t mind! :))  

Another possible way to “professionalize” non-profits is for organizations to finance continuing education for their employees, so that their current employees become more business-savvy. Of course this again comes down to a question of money. However, I am pretty sure there are foundations out there that would fund this sort of thing. And employees who are invested in are happy employees 🙂 

Any other ideas as to how we can run non-profits more efficiently … a.k.a. like for-profit businesses?

Chava Ashkenazi

Jerusalem, Israel

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10 Responses to Running a Non-Profit Like a For-Profit Business

  1. I worked with nonprofits (evening serving as E.D.) for the first 20+ years of my working life. Then I started my own business, and have worked these past 20+ years as a business owner assisting nonprofits. I found that a lot of what I learned about management, and running an organization, from my days working in the nonprofit sector, to be very helpful with running my own businesses. And, I have found simple business practices to be easily adopted and usually successful when applied to nonprofits. So, I believe, the river flows both ways.

    I do think that integrating some standard business practices into a nonprofits overall policies and procedures is smart. But I wanted to say that I run my company very much like a nonprofit, and I think we have done well and continue to serve the common good. At the same time we pay our employees a ‘competitive’ wages (at least in the small business world). And, like most nonprofits, I find that my employees are very dedicated to the work we do, and the nonprofit sector we serve. So it is a win-win situation. But I think this approach is only successful when the leadership always keeps in mind the true mission of the organization, or in my case, the small business.

  2. chavaleh1127 says:

    Hi Cynthia,

    Thanks for your feedback! It was really refreshing for me to hear your perspective, as someone who worked in the non-profit sector, then started a for-profit business (that assists non-profits!). You have really seen things from both sides and I’m sure that you benefit from having experience in both worlds.

    You also bring up a good point- it is very important to have dedicated employees. And I personally feel that paying a competitive wage can help with this. Employee turnover is also costly to companies. I think that non-profit employees who feel that they are receiving competitive market wages are more likely to be dedicated and engaged (we are employees after all, not volunteers, board members, or major donors- unfortunately! 🙂 )

  3. Some for-profits can learn from non-profits and vice versa. I see many for-profits that are run terribly and inefficiently. Public charities that I work with know how to stretch a dollar and utilize ever inch of their facilities and stretch the limits. I think the notion that business knows best is incorrect and we should look for efficient models in whatever form they come.

  4. chavaleh1127 says:

    Thanks for your comment, Jon! I agree with you … both models can learn from each other. Thanks for reminding us about this!

  5. Suren says:

    http://www.uncharitable.net/. Funny I should run into your topic, reading the book mentioned in the link. I have no interest financially in the book. The topic got my attention, and deals with exactly the same issue you are bringing up.

  6. Monica Collins says:

    Chava,
    I think you bring up an interesting and often discussed point. The “non-profit” label is misleading to many who don’t work in them. They are in fact businesses. The difference is that their tax status is different than “for-profit” businesses. Without solid business plan, strategic goals and communication plans in place to support the mission of the organization, it will likely fail.
    I agree with Cynthia that the river flows both ways. Being mission oriented (not just profit oriented) helps businesses thrive and grow with integrity and being business savvy helps non profits flourish. Sort of a “balance in all things” model seems to work best.

    • chavaleh1127 says:

      Hi Monica,
      Great point- just because an organization is a “non-profit”, it does not mean that it is not a “business”. As you and Cynthia mentioned, most likely the winning combination is to apply the best practices from both the non-profit and for-profit sectors.

  7. Kimberly Piccin, MSW, LCSW says:

    I agree with those of you who point out that non-profit and for-profit can learn from each other. It is also important to be mission-driven. Just because we are paid less does not mean we are less professional. Many donors (corporate, foundations, government and individuals) will be more likely to fund an efficient, well-skilled organization. I also like the idea of an organization sponsoring (paying for) continuing education for its employees. In many non-profits, the work in undeniably hard, emotionally taxing. The more an organization can support staff, the better. Fueling its staff with new knowledge, encouraging mental health time off, and overtly showing support for the human beings who do the work of an organization is essential. This will result in more longevity for staff which builds reputation and expertise in your organization. Thanks for this discussion.

  8. chavaleh1127 says:

    Kimberly, I like the way you think! Thanks for your thoughts and feedback 🙂

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