should a nonprofit be more like a business? ??•your nonprofit is (in most ways) a business. that...

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  • Should A Nonprofit Be More Like a Business?

    PowerTools 2016

    November 16, 2016

    1

  • What Does this Mean?

    2

  • Businesses Defined

    For-profit:

    Established to earn profits

    Distribute profits earned(shareholders, partners, members)

    Nonprofit

    Established to benefit broad community

    No distribution of earnings to owners

    3

  • Legal Parameters

    Organized in accordance with state laws

    Registered to conduct charitable solicitations

    Approved for tax-exempt status by the IRS

    Annual reporting requirements

    Appropriate updates

    4

  • A Successful Business

    Creates and delivers something of value

    That other people need or want

    At a price theyre willing to pay

    In a way that satisfies the customers needs and expectations

    So that the business brings in enough profit for it to be worthwhile for the owners to continue operation.

    5

  • The Business of Changing Lives

    Your nonprofit is (in most ways) a business. That doesnt mean acting like a factory or relentlessly chasing profit.

    But it does mean

    creating something of value

    changing lives.

    investing enough in your organization so it can continue to make the world a better, more amazing place to live.

    6

  • How are nonprofits different?

    Purpose

    Ownership

    Control

    Revenue

    Accountability

    Impact

  • Common Ground

    Clear mission statement

    Strong leadership

    Sound operational structure

    Effective management

    Accountability

    Internal controls

    Performance monitoring

    Pursuit of capital

    8

  • Sound Business Basics

    Good money management Cash flow: making money vs. profit

    Transparency

    Reinvestment

    Professional staff

    Sound business plan

    Realistic strategic plan

  • Human Resources

    Recruit the right people

    Leaders

    Managers

    Staff

    Volunteers

    Build the organizational culture

    Commitment to the mission

    Diverse backgrounds

    Appropriate skills and talents

    10

  • Critical Focus

  • Strategic Foundation

  • Sound Business Plan

    Get strategic clarity

    Determine strategic priorities

    Understand resource implications

    Human resource investments

    Infrastructure investments

    Financial implications

    Stay on track

    Program milestones

    Operational and financial milestones

    13

  • Comparative Plan Focus

    Strategic plan: whats next

    Future focus

    What needs to happen to achieve success?

    How will success be measured?

    What resources will be required?

    Business plan: who/what/how/where/when

    Immediate focus

    Tasks, milestones and goals

    Potential for success

    Environmental and competitive risks

    14

  • Established Metrics

    How do you know youre on track?

    How do you forecast financial trends?

    What are key metrics?

    How do metrics guide performance?

  • Customer-centered

    What is our client profile?

    Who are our typical donors?

    What are their priorities?

    How do they get information?

    What do they expect from us?

    Who gives?

    Who is likely to give more?

    How do we identify the most likely prospects?

  • Appropriate Overhead

    Should it be high or low?

    It all depends

    on the work being done,

    on the context,

    on the industry (or field),

    on the competitors (or other players),

    on the stage of evolution of the business (or nonprofit).

    Focus should be on results 17

  • Systems Impact

    Impact through purpose think big

    Impact through talent (think Google)

    Impact through innovation (think long-term ROI)

    18

  • Questions to Consider

    Have we identified a clear problem or need?

    Do our programs make other peoples lives

    richer?

    Does the way we communicate make our

    donors feel valued?

    19

  • Measure of Success

    Forprofit: money for shareholders

    Nonprofit: money for mission

    20

  • View Your Nonprofit Like a Business

    Nonprofit perspective

    Mission

    Passion

    Dedication

    Business mindset

    Money

    Paperwork

    Procedures

    21

  • Obstacles to Business-like Behavior

    Reluctance to invest significant capital over the long term

    Overhead challenge

    Focus on expenses vs. results

    Aversion to risk

    Intolerance for failure

    Emphasis on sustainability

    22

  • What Business Can Learn From the Nonprofit Sector

    A companys social values are cornerstone of its appeal to constituents (customers, employees, stockholders)

    The best employees are a lot like volunteers (motivated by purpose, community, recognition)

    Customers are like donors (ladder of engagement, appreciation, stakeholder benefit)

    23

  • Bottom-line Basics

    Deliver value that others want

    Tell people about the value (marketing)

    Sell this value (generating revenue)

    Deliver the value

    Manage your finances

  • Contact Information

    Ronnie Hagerty, Ph.D., CFRE

    Nonprofit Connection United Way of Greater Houston

    rhagerty@unitedwayhouston.org

    www.unitedwayhouston.org Nonprofit Connection tab

    http://www.unitedwayhouston.org/

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