Should You Run Your Nonprofit More Like a Business?

corporate vs nonprofit leadership

Is Family Feud still on TV? Saturday Night Live does a regular spoof but otherwise I’m not sure.

You likely know how the show works. People are asked a question and they have to guess the top answer given in a survey of 100 people.

So for example: “Name something your parents still give you.” The #1 answer was “money.”

I would have answered, “A headache.”

But I digress. Let’s play Family Feud!

Here’s the question…

Name the #1 reason nonprofits are different from companies.

This is tougher than you might think. When I ask people this directly, I always get a different answer. There are so many differences, the #1 answer may not be clear.

But I feel very strongly about the answer. In a moment, I’ll let you know what I believe it is ­– and why. But first, let’s talk about how they are the same.

THE DEFINITION OF GREAT IS THE SAME FOR BOTH

 This was the big aha for me while reading Jim Collins’ From Good To Great in the Social Sectors. He talked to folks in corporate America who said, “If only nonprofits were more disciplined, if only they were more professional, if only they planned, if only….”

Blech.

Collins took emphatic umbrage at the characterization that nonprofits as an entire sector failed or scored poor marks in these arenas. And rightfully so.

I’m sorry, but there are plenty of nonprofits that are disciplined, professional, and great at planning. And plenty of for-profit ventures that don’t come even close to meeting these standards.

But you know what these characteristics actually are? They are what define organizational greatness.

Think about that for a moment before I get to Family Feud answer. There is a pretty nasty stereotype of nonprofits out there and it’s high time we bust that myth.

A myth-busting blog post will be forthcoming. But that’s for another day.

NONPROFIT VS CORPORATE – 3 BIG DIFFERENCES

If you were playing Family Feud you’d have unlimited choices. Here are three.

1) Nonprofits Are Mission Driven. This would probably be up on the Family Feud big board but truthfully, for-profit companies can also be mighty mission driven. Maybe you have heard these radio commercials for an anti-snoring product called “Zyppah?” The inventor does the voiceover and his passion and drive is palpable. This guy is clearly on a mission to ensure folks get a good night’s sleep.

2) Nonprofits Engage Volunteers. Limited resources lead nonprofits to invite folks to help because the mission matters. And volunteers are different from interns who have more personal motivation to build a resume. So that’s a good one.

3) Nonprofit Staff Gets Paid Less. Sadly this would show up on the big board. But it shouldn’t. When I hear folks say that nonprofit leaders should be paid less because either (a) the organization needs to keep overhead low or (b) nonprofit staff reap such rewards in the gratification they get from doing the work, it infuriates me. And I feel like I am beginning to see more and more board members that understand that this is another myth to be busted and that more often than not, you get what you pay for.

So you would score some points for any of these answers because they would no doubt have been mentioned by those surveyed.

But there is a bigger difference between companies and nonprofits.

Survey says?

THE #1 REASON NONPROFITS ARE DIFFERENT FROM COMPANIES

Shared leadership.

I am convinced that a thriving nonprofit is like a twin-engine jet. The board is one engine and the staff is the other. In order for the organization to offer passengers (clients, community, etc.) a terrific ride to an inspirational destination, these engines must work well independently and together.

And when you peer into the cockpit of this finely tuned organization, you will see the board chair and the Executive Director.

Working together. As partners. Co-pilots.

No, I am not living in an alternative universe. I know this is often not how it works.

I became a certified mediator precisely because this is not the kind of relationship most Executive Directors have with their boards. To resolve conflicts that arise from power struggles and a lack of role clarity.

Big waste of time and energy. There is a plane to fly.

THE 3 COMPONENTS OF SHARED LEADERSHIP

There are three key components to it. Nobody said they’re easy. But they sure are critical for a nonprofit to thrive.

1. Set aside the org chart.

While you can’t ignore it completely, it can constrain your nonprofit and paint an inaccurate picture of where the power is. You may report to the board chair or supervise the E.D. but that’s not how co-pilots work in the cockpit. They work together. They communicate constantly – with each other and of course with the ground.

Imagine you are the E.D. and you have your hands on the wheel. The co-pilot (board chair) might say, “You may want to have a look. I think I see an angry donor over there at 2 o’clock.” The pilot might feel like a certain route could save some time. He might turn to his co-pilot and say, “What do you think?”

That is what we are going for.

2. Have a dose of humility.

Any book on leadership worth its salt will speak to the challenges that come with ego.

My board has no idea what it takes to do this job. They are just volunteers. They don’t do this work every day. Can’t they just leave me alone? I know best.

OK, so maybe you are right. They probably don’t have any idea and they don’t do the work every day. OK, pat yourself on the back. You are right. Congratulations.

But so what?

If you have built a solid board and your ego is healthy but not oversized, you will engage them because they will enrich and inform your leadership.

3. Recognize that power comes from all around you.

Yet another piece of headline news from Jim Collins. It ties #1 and #2 together.

Sure, the staff reports to you (if you are lucky enough to have any) and you support them and hold them accountable. But they came to this work to have a voice. And they have something to say and you should be listening.

The same is true of donors, volunteers, clients and if you have a certain kind of nonprofit, even the voices of the opposition are important to listen to.

This doesn’t mean they get to decide. You’re the ED and the buck stops with you. But the best leader engages the voices of these important stakeholders to ensure that 1) folks feel heard and 2) because staff members have areas of expertise you don’t always have and important points of view that might further shape (or change) yours.

But to do this, guess what? You have to check your ego at the door.

I HAVE A LOT MORE TO SAY ABOUT THIS

But you’re a busy nonprofit person and I don’t want to make this blog post too long.

However, I do a deep-dive into this topic – including how to get your organization to become more of a “twin-engine jet” – in my upcoming free online workshop that starts on May 10 called “How To Build A Thriving Nonprofit.”

The workshop is for all board and staff leaders and if you want me to send you an announcement email when it launches or join our rapidly growing Facebook group (more on that below), please register here.

While the workshop will be valuable to nonprofit leaders of any sized organization, I really thought a lot about organizations that are smaller with more limited resources. Organizations with no coaching or consultant fees in the budget.

The small and the mighty.

You can watch on your own time (as I said, I know you’re very busy J). After you watch one or two, you might want to watch with your staff over bagels. You decide.

And as I mentioned above, those who register are invited to join a private Facebook group filled with awesome nonprofit leaders from all around the world. About 2,100 of them at the time I wrote this. There are AMAZING conversations going on there. I visit nearly every day and the board and staff leaders there are remarkable and inspiring.

Hope you’ll consider registering and maybe I’ll see you in the Facebook group?

Joan Garry
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Joan Garry

Widely known as the "Dear Abby" of nonprofit leadership, Joan works with board and staff as a strategic advisor, crisis manager, change agent and strategic planner. Joan also teaches at the University of Pennsylvania with a focus on nonprofit communications and leadership.
Joan Garry
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  • Michal Nortness

    YES! I love you, Joan! I have been so tired of the business person board member telling me variations of “… like a business” I could shriek! Worst ever is a new trustee who is also a newly minted MBA. Seriously, thanks so much for this – quotes from it are going in my new trustee orientation binder along with many from Good to Great and the Social Sector!

  • Paul Tebbel

    Hi Joan,
    I agree that the concept of shared leadership is one of the ways that non-profits are different from for profits but let me offer another one that I use with my board. Many of my board members came from conventional firms or held for profit jobs so their focus was on the number of programs we offered and what other actions we did that brought in revenue. I worked with them to understand that non-profits also raise money independent of our programs – certainly to fund those programs but it is possible to have a very successful program year and struggle to bring in enough support and vice versa – a great fundraising year (perhaps because of a bequest or an unexpected major gift) and a slow or building program year.
    Good stuff in your piece though – I will use it with my board.