The Non-Profit Perspective: The Necessity of a Profitable Mindset
In a previous article, we emphasized the importance of non-profit organizations realizing that they are a business too (and foremost!). It is, afterall, critical for a non-profit to be profitable in order to provide the products and services they provide AND perpetuate their success.
To support this, we impose on our non-profit clients to take on a Profitable Mindset, which isn't always easy to do. There is a lot of stigma when discussing profitability with a non-profit. Many of our clients (and everyone else, too!) view for-profit organizations as greedy, socially irresponsible, only in if for the profit. While there are many, and famous, cases where that is true, the bigger truth is that usually isn't the case.
For-profit and non-profit tax codes and business regulations are different, as are the "ownership" (per se) of their profits. For-profit company profit means the profit goes to the owners of the company; non-profit company profit is re-disbursed to their organization (there is no profit disbursement to employees, shareholders, etc). However, aside from the taxe codes and regulations, the business models to support product and service success in for-profit and non-profit businesses-- models that lead to being profitable-- aren't so different.
Truth: for-profit and non-profits must achieve the same in order to sustain their vision, grow their mission, and achieve their goals: they must be profitable.
We help non-profits transform their thinking into "profitable non-profits" with three key concepts:
Changing the mindset that profitability perpetuates your products and/or services;
Becoming friendly and comfortable with running your non-profit as a business;
Using your business savvy to strengthen your mission, your results and your competitiveness because of your profitability
Concept #1: Profitability perpetuates your products and/or services
This is a basic business concept and one that most non-profits agree with. The ones we have met that do not agree with this concept do so because they passionately feel it dissolves their bigger picture mission and highly philanthropic vision.
But the two must co-exist, and in fact the most successful non-profits fully embrace and respect the need to be profitable as a function of feeding and caring for their business.
Profitability enables infrastructure and support to create the products you offer and the services you provide.
Depending on the size and capabilities of your non-profit, part of that infrastructure also takes care of your valuable employees through sufficient payroll and even various benefits, or at the least: coverage for expenses so that volunteers are not donating more than they can comfortably manage.
Being profitable (creating financial gain and benefit from that gain) becomes a necessity to do good, be well, and perpetuate ongoing success, and that success ultimately enables you to do more in that bigger picture mission backed by a highly philanthropic vision.
Once you make peace with that P word, the next truth to speak is that your non-profit is a business.
Concept #2: Get Comfortable with Running Your Business as a Business
"We work here because of the mission-- we definitely don't do it for the paycheck."
"Oh, we're an all-volunteer non-profit. We wouldn't feel right about getting paid."
"We can barely raise enough funds for our little non-profit, nevermind raise enough to cover expenses. We all pitch in with our own money to pay for those."
"We don't really see ourselves as a business."
And so the brand of non-profits is usually one where people talk more about what they give than what others receive, when the whole foundation of non-profits is about what others receive.
We at Impono call these statements "non-profitisms" where those affiliated with it talk about their non-profit as though it is a pick-up team, or free help group or -- which is great, but the first two sentences are at least somewhat aligned to mission and values... the last two reflect "non-profitisms" that we have heard non-profit volunteers say without realizing that they are essentially stating that they volunteer for a free group, not a non-profit business.
Concept #3: Use Your Mindset and Business Savvy to Strengthen your Mission, Results and Competitiveness
Mindset matters in everything we do-- everything. All businesses should align goals and opportunities, values and behaviors, clients and internal teams to a mission. Your mission is your purpose, your reason for being.
The very essence of non-profits is about bringing mission to important needs, and this it the time to obsess about what that means.
If you think that non-profits cannot be results-oriented and still be causeworthy, think again. If you are to achieve your mission, you MUST be results-oriented. You must strive, achieve and bring the very value your mission guarantees to its donors and supporters. How can you possibly achieve that if you aren't thinking about your results?
And while we're talking about linking your mission to your results as a necessary mindset, let's also talk about the other piece most non-profits don't always like to consider: competitiveness.
When we talk to non-profits about being competitive, they instantly interpret our language into being cut-throat, rough or mean. Unfortunately, that is often what people see in Hollywood movies, in politics and yes even in for-profit businesses, but that's not what being competitive is about. Being competitive first means you are worthy of competing: you have something of value that could be meaningful to others. In the case of non-profits, that is your Mission... and you remain competitive through your results.
Now, what are you competing for? You are competing for mindshare, interest, donations, time, energy... you are competing for the good will that so many good people want to give to non-profits, and so as you wrap around this last Concept it's important to shift to a mindset that the way you honor, engage with and keep interest of your supporters will help fulfill your mission.
Doing so loops you back to perpetuating your products and/or services.
BOTTOM LINE: Having a profitability mindset does not make you greedy-- it makes you a smart business owner who will do well having done good.
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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