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?
November 16, 2016
What Does this Mean?
Established to earn profits
Distribute profits earned(shareholders, partners, members)
Established to benefit broad community
No distribution of earnings to owners
Organized in accordance with state laws
Registered to conduct charitable solicitations
Approved for tax-exempt status by the IRS
Annual reporting requirements
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.
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
investing enough in your organization so it can continue to make the world a better, more amazing place to live.
How are nonprofits different?
Clear mission statement
Sound operational structure
Pursuit of capital
Sound Business Basics
Good money management Cash flow: making money vs. profit
Sound business plan
Realistic strategic plan
Recruit the right people
Build the organizational culture
Commitment to the mission
Appropriate skills and talents
Sound Business Plan
Get strategic clarity
Determine strategic priorities
Understand resource implications
Human resource investments
Stay on track
Operational and financial milestones
Comparative Plan Focus
Strategic plan: whats next
What needs to happen to achieve success?
How will success be measured?
What resources will be required?
Business plan: who/what/how/where/when
Tasks, milestones and goals
Potential for success
Environmental and competitive risks
How do you know youre on track?
How do you forecast financial trends?
What are key metrics?
How do metrics guide performance?
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 is likely to give more?
How do we identify the most likely prospects?
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
Impact through purpose think big
Impact through talent (think Google)
Impact through innovation (think long-term ROI)
Questions to Consider
Have we identified a clear problem or need?
Do our programs make other peoples lives
Does the way we communicate make our
donors feel valued?
Measure of Success
Forprofit: money for shareholders
Nonprofit: money for mission
View Your Nonprofit Like a Business
Obstacles to Business-like Behavior
Reluctance to invest significant capital over the long term
Focus on expenses vs. results
Aversion to risk
Intolerance for failure
Emphasis on sustainability
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)
Deliver value that others want
Tell people about the value (marketing)
Sell this value (generating revenue)
Deliver the value
Manage your finances
Ronnie Hagerty, Ph.D., CFRE
Nonprofit Connection United Way of Greater Houston
www.unitedwayhouston.org Nonprofit Connection tabhttp://www.unitedwayhouston.org/