The Non-Profit Perspective: Yes, You Are a Business Too
Here at Impono we are inspired every time we talk to nonprofits about their business.
Against the gravity of the fundraising required to perpetuate a nonprofit business, often started by a non-business person with more passion and courage than the average soul, nonprofits must find and keep a balance with elements rarely in balance.
We regularly observe an indisputable dedication among nonprofit employees and volunteers-- a level of engagement and sheer will to succeed that would render any for-profit envious.
After all, with nonprofits there is usually a personal connection, a personal goal, a personal mission aligned to the overall mission that drives those involved.
And that "personal thing" matters.
What also matters? Remembering that nonprofits are businesses too.
THE NONPROFIT IDENTITY: SURVIVE FUNDRAISING OR THRIVE AS A BUSINESS?
When we talk about Impono's mission and unique business model, we are often stopped at the "...and nonprofits" section of our discussion. We have found a trend where non-nonprofit types tend to forget that nonprofits are a business.
(a-hem) (Some nonprofit types also forget they are a business.)
After all, they're not in it to make money, right? Nonprofits are, well... "nonprofit."
Not so fast. A nonprofit must still be profitable in order to achieve their mission, ultimately advancing a cause that will make things better for society at-large.
Unlike for-profit businesses that make money to distribute to diverse shareholders, the nonprofit business makes money for the nonprofit's sake, the public's sake, and the ultimate goal to do good in the world. (There are different nonprofit types and tax structures we will save for a more focused future article).
For those under constant pressure of for-profit business shareholders, this probably sounds easy, right?
Ah... not so fast again. What tends to hurt the nonprofit is the very hiccup in identity that I just described: often times even the nonprofit doesn't identify itself as a business. Rather, it views itself as a fundraising machine, whether it has the talent to drive fundraising or the structure to successfully manage it.
"So what?" my nonprofits will say: fundraising is the name of the game in our world, it starts and ends with fundraising!
Hm. Maybe, but not really.
NONPROFIT CRITICAL SUCCESS FACTOR: THRIVE AS A BUSINESS FIRST
The name of the game for successful nonprofits is the same as any other business:
Effective Leadership, including an effective Board that holds themselves and leaders accountable;
Clear Vision and Mission, followed by a sound strategy linked with fiscally-aligned goals and a simplified plan to achieve or exceed those goals;
Clear roles and responsibilities with the right people doing the right things, from the Board level, through leadership and employees, through volunteers; and,
The appropriate fundraising and operational structure to enable the nonprofit to thrive, not just survive
As with our small business and start-up communities, we watch many nonprofits click into chaotic-brute-force-survival mode well before they've even given themselves a chance to thrive. This is a mistake. Profit is based on an equation of many linked and influencing factors. Fundraising is a critical variable, but not the only one.
If the nonprofit itself has taken on an identity as an ask-factory, beholden to the goodwill of people and organizations giving [time, energy, compassion, money] and solely focused on fundraising without focusing on the other aspects of its business, it will stunt growth just as for-profit businesses do when they only look at revenue lines.
FINAL NOTE ON HOW NONPROFITS THRIVE: REMEMBER YOU ARE A BUSINESS TOO
You do not need to have a business degree to effectively run a nonprofit.
Repeat: you do not need to have a business degree to effectively run a nonprofit.
One more time: you do not need to have a business degree to effectively run a nonprofit.
You do, however, at minimum need three elements:
Have the right Board in place to offer guidance, monitor effectiveness of programs, and support and approve annual financial plans with a priority on obtaining and utilizing the right resources at the right time (finding, obtaining and then keeping the right resources remains a top concern for nonprofits-- and be clear about whether you need a "working board" or a "guiding board");
Know the basics or how to learn the basics of running a nonprofit, including a means to search for and engage the right talent at the right time (HINT: if you know the importance of paying your bills while still having some money in the bank, and you understand the risks of including your entire family in your nonprofit, then you likely know the basics).
Have a nonprofit expert available to you to help you navigate the particulars. Often nonprofits have the benefit of receiving pro-bono work from lawyers and University MBAs about to graduate looking to improve their resumes as you look to benefit from their acumen and higher-education-network (which typically has an abundance of resources very willing to help a nonprofit). However, after your start-up phase, we recommend an expert come in to review your nonprofit and assist with your plan as you look to your next-step growth or a potential transformation if momentum seems to have stalled.
This last bullet is an important one, and since nonprofit resources are so scarce, and revenue is usually based on fundraising programs and campaigns, it's often a catch22: should I spend money to strengthen my structure and/or improve the effectiveness of my nonprofit? Or should I not spend money right now and instead strengthen my profit line... which may weaken over time without a strong structure and/or improved effectiveness of my nonprofit.
(By the way, this is precisely what your Board should help decide...)
Look at the long game whenever you can, and talk to the experts who can drive structure and efficiency anyway. Most of us are in this business because we spent a long time in our careers enabling a single company's success at a time, and now we want to give back to the masses, as much as we can.
We are more than willing to work with our clients to determine the best and most responsible path for them to meet their goals, which always includes healthy financials. We have others in our Impono Community who may be what you need too.
While Impono focuses on setting up the structure or improving an existing structure to effectively optimize your nonprofit, we have in our community companies that provide specific guidance and expertise (roll-your-sleeves-up expertise, just like us) on the fundraising side, including the development of campaigns and various programs while analyzing the strategic plans and goals already in place.
We are all the hands-on type, with flexible reach and style.
BONUS ROUND: WHERE TO START...
If you are a nonprofit looking to improve, talk about a potential start-up, seeking advice or guidance, contact us and let's talk. We love talking with people about business, and we provide complimentary advisement all the time through the basic back and forth of dialogue.
If we think we can help you, we will. If we think someone in our Impono Community can help you, we will forge that introduction and remain with you as long as it's appropriate.
Meanwhile, as a general rule, and sitting on a nonprofit Board myself, I direct nonprofits to The National Council of NonProfits to wet their whistle. Be aware that as with all informational sites, it may feel overwhelming to browse, so in addition to that site you should be going to your state's nonprofit resource page. Every state offers support and assistance to nonprofits.
We know that launching a new or transforming an existing organization isn't simple, but it can be easier with the right advisors and doers. If you have additional questions about this topic or how it can impact your business, contact us. Let's see what we can do for you.
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