Your Nonprofit Should Mean Business

In my time walking with one foot in the business world and the other in the nonprofit environment, I’ve seen a few things. My experience and education in business and nonprofit leadership has shown me some repeated problems in many nonprofits I’ve studied. While nothing is ever as simple as a black and white list of principles (I’m looking at you, business world) I’ve noticed some trends over the years that cause nonprofits, in particular, small ones, to struggle. This is hardly an exhaustive list, but I’ve put together what I’ve seen as the primary offenders if you will.

Lack of Understanding

A common thread through many nonprofit organizations is lack of comprehension regarding the fact that while their mission and methods may differ from the business world, they are indeed a business. Too many times, those who lead, operate, and volunteer for a nonprofit organization get so caught up in either the idea of “nonprofitness,” or so mission-focused, they either lack the ability or refuse to understand the fact they are also a business. This mindset sets up many of the other problems on this list – not realizing that operating not for profit does not mean working outside of core business principles. Without a grasp on this concept, nonprofit boards and executive leadership teams look for and hire the wrong people for the job.

This is especially true for Christian nonprofit organizations. These types of organizations many times not only lack the understanding to see the business side of the industry, but they also latch onto this idea that they are a “church.” Many Christian nonprofit organizations are founded either from within a church or by well-meaning, mission-minded Christians. They then set out to run the organization as if it is a church. While churches also need a business focus (that is another discussion) running a church is not the same as running a business. To be successful, nonprofit organizations have to run themselves in much the same manner as any other for-profit business.

Lack of a Strong Leader

The lack of business understanding often, but not always, leads to this problem. Too often, when nonprofit organizations on are the search for a leader, they are looking in the wrong places. Most of the time, the primary concern centers around fundraising. Organization boards and leadership are looking for the person who can bring in the most money. There are many problems with this, but we will only look at a few.

First, let’s address the rebuttal. Yes, a nonprofit organization needs to hire a leader that can get in front of individuals and groups and convince them to give money. That is a vital component of the job. However, the problem I’ve seen in my time within the nonprofit environment is not money, its leadership. Too many nonprofit organizations are worried about hiring someone who can fundraise when fundraising is not their problem. I’ve seen nonprofit organizations that have full-time, professional fundraisers on staff bringing in more than enough money. However, the inner workings of the organization are all over the place. The organization is not growing, there is too much drama between the staff/volunteers, the programs are outdated or ineffective, or the mission just needs to be more focused.

In these cases, fundraising is not the problem. I personally know of nonprofit organizations bringing in plenty of money, but their use of that money is anything but efficient. The problem is not cash flow. The problem is the person at the top. Too often, nonprofit boards and leadership look over people who have not worked in the nonprofit field or lacks “adequate” fundraising experience because they’ve spent their careers in for-profit businesses. Often, this is the exact person those organizations need. They need someone who can come in and straighten out messes, put out fires, balance budgets, better allocate funding, and exercise strong leadership.

This situation is many times exponentially worse, again, in a Christian nonprofit organization. These organizations often take and even further step. I’ve seen too many times Christian nonprofit organizations looking for an Executive Director and INSIST this person must be a pastor. Required qualifications often look like, “a seminary degree and fifteen years in the pulpit.” I am not here to speak ill of pastors. However, pastors are called to do one thing, pastor. I try not to stereotype anyone, but few full-time pastors make excellent businessmen. That is not to say there are none, but they are rare. If you look at any thriving large church, you will almost always find an executive of some type running the operations side of the church.

Pastors are called to shepherd. I can give you real-life examples of nonprofit organizations that have gone under almost solely on the fact that they refused to hire someone who was not a pastor. There are more than enough Christian business people in the world who can lead businesses. In my retail days, I knew a lot of managers who would only hire people with retail experience. They did not want to add the extra work of training people on cash registers and such. This was a mistake. When I hired, I looked for someone who was a good fit on our team, could fill the role I had vacant and could move the mission of the organization. I could train a monkey to run the cash register (from the systems I often had it would seem as they were designed by monkeys so getting them to run them didn’t seem too much of a stretch) Secular and religious organizations alike need to get out of this cookie-cutter leadership mindset.

Lack of a Strong Foundation

Most nonprofit organizations start off small – it’s the nature, and the beauty, of the beast. An individual or small group of people see a wrong in the world, and they set out to right it. Many times, none of them have any experience in the nonprofit, or even business, environments. Sometimes, none of them even  possess any business experience. However, they get together and decide, “You’re going to be the Executive Director, you can be the Business Manager, you can handle communications,” so forth and so on. You have a group of friends on fire to change the world and its awesome.

However, this strange thing happens – the organization takes off. Before you know it, this ragtag group of friends has a significantly sized and thriving organization on their hands. However, that same group of friends who were having fun and figuring things out, now find themselves working for an up and coming business in roles they are not qualified to hold. They don’t know anything about finance, or budgeting, or planning, or implementation of strategic goals. This is a big problem. But the more significant issue is they don’t know that they don’t know. So, instead of hiring people with experience in these areas, they trudge along. When they do need to hire someone, they look for individuals who will meet friendship goals instead of those that can help develop and push the mission to the next level. There is not a clear understanding as to what is required in the roles, and qualified business-minded people are passed over. This becomes particularly problematic when new leadership is needed due to people moving on.

Lack of Accountability

All of the above issues lead into this one and, again, Christian nonprofits are the main offenders. Let me start off by saying holding people accountable is tough, especially firing people, and that’s what I am talking about here. While they are so many levels of accountability or should be, before firing, for brevity’s sake, I am cutting to the chase. That being said, most people I know, including myself, who have spent time in the business world hate doing it. Sure, people like to act all tough and tell horror stories about making people cry and kicking people out, but inside, they hate it (or they should). I get more worked up inside waiting for that person coming to the office to be fired than they do, I promise you. However, it has to be, must be, done.

Do any sort of Google search on the topic, and you will find article after article on the necessity of firing people. I don’t need to rehash that here. However, too many nonprofit organizations, and for-profits ones also if we are going to be completely honest, fail in this area. It flows from what we’ve looked at above – weak leadership, the “friendship factor,” and just a general lack of business principles within the organization, particularly the leadership.

Now, I’ve always said that I have never fired anyone. Individuals have decided to terminate their tenure with the organization due to their actions or inactions. However, when push comes to shove, someone has to have the gumption to pull the trigger. That is not to say one needs to be cold, or mean, or rude. I’ve always tried to send someone out the door as gracefully and respectfully as I would want to be sent walking. But the fact is, too many nonprofit organizations, by their nature of heart and help, don’t believe in letting people go.

Again, when you get into the Christian nonprofit world, it’s worse. Not only do you have that caring and loving nature of the nonprofit environment in general, but you also have the issues of grace and forgiveness. Don’t get me wrong, I am all for grace, mercy, and forgiveness. No one on earth needs both more than me. However, Jesus was also all about accountability, tough love, and flipping tables when they needed to be flipped. When looking for leadership, nonprofits need someone who can fundraise, but also internally handle the best interest of the organization and the team when that time comes.

It is necessary for the leadership, the Executive Director in particular, of a nonprofit to understand that while it is crucial to have a passion for the heart and mission of the organization, it is just as vital to operate under the leadership and principals that drive successful for-profit businesses. Missing this will cost you at the least growth and at the most your organization as a whole. These two are not opposed to each other, but like a good marriage, bring the best of each to a successful and organic unit.