THE BLOG

The Business of Nonprofits

09/03/2013 09:05 am ET | Updated Nov 03, 2013

This blog post has been the hardest I've ever had to write. The answer is so simple and trite; but, deserves a fuller explanation. The one thing that non-profits need most of all in regards to funding is a systemic change in the organization. The trend in non-profits today seems to be that more Executive Directors are coming from the for-profit sector. Therefore, they have the business acumen to lead and grow the organization. However, they still have a Board to contend with as well as a staff that has "traditional non-profit thinking". Now I know you are thinking: "This may be true in some non-profit organization; but, not in mine." Bear with me a bit longer as I dig deeper into this thought. I have spoken to people who consult with non-profit EDs on an almost daily basis; I have sat at round table discussions with consultants who travel the United States speaking, consulting, and training non-profit organizations. This is the norm; systemic change is necessary!

Nancy Lublin stated "Non-profits have huge inefficiencies and overlaps....This is wasteful and bad business." In Nancy's blog "The Foundations Four Biggest Faux Pas" she states: Stop mistaking marketing for overhead -- and stop hating on overhead. We're all running businesses, and we've all got more expenses than we want. But your constant refrain about us spending too much on communications staff, graphic design, and public relations is misguided. "Scaling up" means that people need to know about us. It also means that we'll have to spend money on expenses that you label with the most unfairly pejorative word in our business: overhead.

Non-profits are being seen by philanthropists more as a business; those in the non-profit sector need to think more like businessmen and women. Results are trumping the cause and the personal relationship as high net worth donors look at giving. They are looking at sustainable income, outcomes, ROIs, and a multi-year funding cycle. This is the mindset of an investor not a donor! Funders (investors) and donors think differently in five key areas: a need for funding, an approach to the problem, funding level, measuring success, and delivering results. (More information can be found in "ROI for Nonprofits and Asking Rights" by Tom Ralser.)

Systemic change and a forward-thinking leadership team may just be the keys to your success. Wishing you success!

Written by Royce Gomez, Program Coordinator for Social Entrepreneurship for Christian HELP. Royce can be contacted on Linkedin.