What your nonprofit can learn from for-profit businesses
If your not-for-profit is “stuck” and you’re not sure how to move forward, consider adopting some for-profit business practices. The essential missions of businesses and nonprofits are different, but the ways to achieve them often are the same.
Make a plan
The strategic plan — a map of near- and long-term goals and how to reach them — lies at the core of most for-profit companies. If your nonprofit doesn’t have a strategic plan or has been lax about revising an existing one, make this a top priority.
Set objectives for several time periods, such as one year, five years and 10 years out, paying particular attention to each strategic goal’s return on investment. For example, consider the resources required to implement a new contact database relative to the time and money you’ll save in the future. Working through the financial implications of ideas can help you avoid the kind of initiatives that sound good in theory but are unlikely to provide returns.
Next, your annual budget should follow your strategic plan. For-profit businesses use budgets to support strategic priorities, putting greater resources behind higher priority projects.
Businesses also routinely carry debt, believing that it takes money to make money. Nonprofits typically do everything in their power to avoid operating deficits. Unfortunately, it’s possible to operate so lean that you no longer meet your mission. Building up your endowment, applying for a loan or even creating a for-profit subsidiary could provide you with the funds to grow.
Pay for experience
Most for-profit companies budget for experienced leadership. Although nonprofits typically can’t pay their executives as much as businesses do, you can ensure that compensation is competitive relative to other organizations.
Paying for experience is particularly critical when you’re embarking on major fundraising campaigns or looking to expand your program outreach. You may even want to consider candidates from the for-profit world, who might bring greater marketing and financial management expertise and new ideas to the table.
Take baby steps
Translating for-profit business practices to your nonprofit won’t necessarily be easy, so start with baby steps. If you need help, please contact us.
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