“Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not.”
- Dr. Seuss
“People are giving, and they have the right to give as they please, but the desire to get aid directly to the field creates some pretty big challenges for the managers of the nonprofits.” – Joe Walenciak
I’ve been working in the nonprofit industry for over 4 ½ years. Compared to many of my peers, I’m still an infant in the industry. When I began in the nonprofit industry, I held some common assumptions…I certainly didn’t understand the necessity for a nonprofit organization to function similar to a business. My assumption was that “nonprofit” meant “no profit”. I remember deciding what price to sell one of our books, and we included a $5 profit margin in the price. I was thinking, “What? How can we make a profit? We’re a nonprofit organization!” I’ve come to learn that it is a fallacy that nonprofit organizations don’t need to generate net income. In fact, I’ve come to believe just the opposite: nonprofit organizations must be managed in such a way that they do, in fact, make money. Does that come as a shock? I hope it doesn’t. Let me explain…
I’m speaking in generalities, but most nonprofit organizations begin their existence to fill a much-needed gap in social or spiritual services; however, if the organization does not have a well thought-out business plan and revenue streams built into it, the organization often begins to rely too heavily on donations, which then causes the organization to pursue outcomes that look good to donors rather than fulfilling their mission statement. This is commonly known as “mission creep.”
In general, most donors don’t want their money going to a salary of a person doing the work; rather, they want it to go to the benefactors of the organization (ie. kids in Africa, etc.). While this makes sense from a donor’s perspective (who wants their money going to another persons salary?), the reality is that the personnel of the organization are the one’s who are running the program! Thus, to accomplish the organizations purpose, they have to have a quality staff. To keep quality staff members, you have to pay them a competitive salary. The unfortunate result is that many nonprofit organizations who don’t have a sustainable model don’t have enough money to pay a competitive salary, which results in poorer quality personnel, which leads to even more inefficient processes, ultimately perpetuating the cycle of inefficient business practices.
If the organization is sustainable, it’s a win-win for the organization, the donor, and the beneficiaries of the nonprofit. The organization is able to retain quality personnel, and it can allocate the donations to the beneficiaries of its programs.
Do you agree that a nonprofit organization needs to function like a business?
What do you look for when deciding to donate to an organization?
