The Difference Between Corporate and Nonprofit Management

nonprofit management

What does the founder of Facebook have to do with running a nonprofit?

So I started this LinkedIn discussion in a philanthropy group a week or so back and posed this simple question:

Corporate and nonprofit management are very different. There are lessons to share. Wanna share?”

Well, share they did. 47 comments and counting. Evolving into a discussion of how nonprofits and for-profits differ. Or don’t.

The comments were smart and thoughtful. Very much so.

But amazingly to me, the general feeling was that there really isn’t much difference at all!

“Similarities outweigh the differences.”

“Very similar.”

“They are so much alike that it’s easier to just list the few areas where they’re different.”

A good many were focused on metrics and “the bottom line.” I think the one that really stood out for me was, “For nonprofits, the purpose is to efficiently distribute the profits that others have generated and entrusted to the nonprofit.”

Really?

I ran a nonprofit for eight years and not once would I have described the purpose of my endeavor in this way.

Clearly we’re looking at this differently. And Mark Zuckerberg (the founder of Facebook) has something to teach us here as well.

WHAT MATTERS TO BOTH

  • They are well managed and fiscally healthy
  • Each department has clear plans and goals and is held accountable to them
  • They can articulate clear results to donors / investors
  • They are willing to take some risks, try something new
  • It’s a clear priority to make the very best hires and not hire the best of a mediocre lot in the interest of expediency
  • Employees are treated with real respect
  • Performance (# of meals served, # of clients who utilize services) grows as the revenue does

So this is what I brought from corporate America to the nonprofit sector when I made the leap. It served my organization well.

But I learned quickly that there were also substantive differences. And these differences are critical and were largely missed in the LinkedIn group.

WHERE NONPROFIT MANAGEMENT IS DIFFERENT

  • Mission Passion: If the Executive Director or a critical mass of your staff do not have an overwhelming personal drive to fulfill your organization’s mission, you can’t succeed. Unlike, say, my career at Showtime. I loved working there but I had no passion for either boxing or Don King Productions (note: Mr. King appears in paragraph 3.)
  • Urgency: In the for-profit world, of course decisions matter. In the nonprofit sector, on a scale of 1 to 10, every decision feels like a 10 on the urgency scale. This leads to a different pace, a different energy, and demands different management skills.
  • 3 dimensional management: I wrote about this before, but the bottom line? If people come to work for something other than a paycheck, you better ask them how their weekend was. And you should know the names of their spouses and kids. It matters.
  • Some difficulty in measuring results: This is especially true with policy and advocacy organizations. Less so with direct service. This business of metrics can be a tricky one for some nonprofits. Doesn’t let you off the hook but demands thought, attention, and five star storytelling.
  • Value of Volunteers: Sometimes you can’t live with them but you sure can’t live without them. Corporate interns have different incentives than nonprofit volunteers.
  • Value of leadership: You can still hit your projected EBITDA (I learned this big girl word in corporate America) and have a CEO who is not a good public speaker, who is not someone people are inclined to “follow.” But as a wise woman commented on LinkedIn, in the nonprofit world, “management is ministry.” Has a nice ring to it.

WHAT DOES MARK ZUCKERBERG HAVE TO DO WITH ANY OF THIS?

There’s a for-profit environment that closely mirrors nonprofit work.

Start-ups.

Have a look at my list above and you’ll see how easily those attributes apply to start-ups. A compelling vision, typically of a charismatic entrepreneur. Funding, but not enough. Urgency to make headway so that more funds can be raised and that your product can get to market ahead of any competition. Staff working crazy hours.

So Mark Zuckerberg. Sure he’s made billions. But he has a vision. “To make the world more open and connected.” Now that is a mission to rally behind, to feel passionate about, to work until all hours to fulfill.

So, last piece of advice. If you are considering a move from for-profit to nonprofit management, some start-up experience on your resume will help to ensure a smoother transition.

You will bring both badly needed management skills and you will have had the experience of living in a similar professional land. Could be mighty useful. For the organization and for you.

NOW DON’T FORGET…

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2. Do you think nonprofit and for-profit are more similar or different? Leave a comment below.