Why You Should Run Your Nonprofit Like a Business

October 11, 2017

Business

Nonprofits are critically different from corporations because they are driven by a mission and aim to provide society’s needs. Nonprofits are organizations that have a social impact.

However, all corporations, whether “for profit” or not, need to solve a problem and create value for others. This value created could be a product or service for potential customers, as seen in the realm of business. But it can also be value in the form of programs and services that benefit hungry children, put a stop to the mistreatment of animals, or preserve the environment, as addressed by the work of nonprofit organizations. From the donor’s perspective, their “purchase” of investment in a nonprofit’s work results in the gratification of being a part of the solution to a societal problem.

With the common goal of creating value in mind, businesses have wisdom from which nonprofits can make a greater impact and perform at their most effective. When nonprofits “profit” by running their organizations correctly, the profit gained does not have to end in increased financial margins – the profit, ultimately, is the social impact. But in order to achieve the greatest impact, nonprofits must invest in their companies – just like a business would.

What can your organization do to succeed and make real strides toward accomplishing your mission? Read on for key ways in which your nonprofit can learn from time-honored business practices.


Invest in your team

You should invest in your staff, bringing the best talent possible onto your team. This entails having a high quality company culture, benefits, and decent salaries for employees. Your staff should feel valued and satisfied so that there is a long term investment in your nonprofit that leads to the highest value output from your employees. You have to take care of your organization in order to change the lives of the community for the better. Your staff are the people making the difference – they need to be taken care of.

Invest in technology

You also need to invest in quality technology to facilitate your communications, to analyze your data and impact, and to raise funds and support necessary for your work. While there are plenty of free tools to get your organization started, your nonprofit needs to grow, and these can only take your organization so far. By investing in the right technology for your organization, even at a cost, you are allowing your organization to utilize the tools it needs to succeed. Sign up today for an all-in-one fundraising and community engagement platform that won’t break the bank.

Invest in marketing

You should invest in marketing and the public face of your nonprofit, which includes having a solid brand, advertising, a social media presence, a well-designed website, and a network with whom to share your campaigns. This will also help ensure that your nonprofit continues to get resourced.

treat donors as customers

For both nonprofits and businesses, meeting customer expectations is critical to the survival of your organization. Once you have created something of value (by identifying a problem to be solved, and the programs and services needed to address that problem), you must also deliver on your promise. A good rule of thumb is so to under-promise and over-deliver, so that your donors will be exceedingly satisfied in their investment. Set appropriate expectations, and deliver above and beyond what your donors expect. If your donors experience a problem, provide them with assistance as a business would customer service. Donors and customers alike will experience greater satisfaction resolving an issue with your staff than if they had no issue in the first place.

“The best performing organizations and their partners smartly evaluate short- and long-term opportunities to integrate, reapply, and scale.”

– Mohan Sivaloganathan, Chief Development Officer of ESS of NYC

Focus on both short-term and long-term ROI

Look to successful start ups in the for-profit world to see the importance of taking risks. As a nonprofit, you are still in the business of disruption – but major social impact changes don’t happen overnight. According to Mohan Sivaloganathan, Chief Development Officer of ESS of NYC, “The best performing organizations and their partners smartly evaluate short- and long-term opportunities to integrate, reapply, and scale.” Quality innovation happens as a result of smart investments, which are not necessarily lean. Risk is necessary for the innovation required to solve social problems.

According to Dan Pallotta, author of Uncharitable: How Restraints on Nonprofits Undermine Their Potential, “philanthropy is the market for love”.

See Pallota’s TED Talk: “The Way We Think About Charity is Dead Wrong”

He argues that nonprofits and for-profits have many of the same goals, yet are held to different standards that end up hurting nonprofits who do not invest in their own organizations. He believes that nonprofits should be measuring their success based on how they scale, rather than how low their overhead is.

What is your nonprofit doing to generate long-term ROI? What other business tips do nonprofits need to know to make the greatest impact? Tell us in the comments!

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