Non-profit vs for-profit industries

There are two bottom lines.

images-49The financial bottom line and the social bottom line. There are two triggers that non-profit employees respond to. Some employees are persuaded by suggestions that will improve the financial efficiency of the non profit. Some employees will be motivated by the impact on the cause, ie the social bottom line. Before making suggestions, be prepared to stress the benefits to the bottom line the listener is attracted to.

Strategic differences

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Conflicting measures of success

images-48In the for profit sector, profitability is a cohesive target for employees and shareholders. In the nonprofit sector, the same metrics are not necessarily shared by board members, staff, volunteers and community. Is success measured by winning or having everyone play? Amount of money raised or number of hours being useful? Meals served or lives changed? The absence of a common metric can be a major source of difficulties in planning and operations.

Overlapping responsibilities

In the for profit sector, who sets the direction and who does the work is clear. In non profits, that clarity is lacking because of the many roles that exist. For example, a volunteer can be on the Board of Directors supervising the Executive Director and simultaneously working on program delivery under the watchful eye of the ED. Life gets complicated, especially when that volunteer may be a big donor or a member.

Unclear qualifications

Some positions are filled by people who are willing to do it, not necessarily because they are qualified. What may be considered conventional wisdom can often by thwarted by a Board member who enjoys the prestige of being on a Board, but has little understanding of their role. As well, volunteers may self select to do a job for which they are not qualified or are ill-suited by temperament, and who need to be delicately handled.

The vocabulary is different

Many concepts in the for-profit and non-profit industries are similar. The language used to discuss those concepts is different. Different languages in different industries is common and is appreciated because of the new ideas it can generate. But in the non-profit industry, business terminology can trigger unexpected emotion.

If you encounter an emotional reaction to a comment you make, check whether the reaction is to the concept or whether you inadvertently used business terminology. Or a more common reaction is the listener will quietly tune you out, avoid you and you will never understand what happened. Switching between for-profit and non-profit languages may well be the hardest part of your assignment and confounds volunteers who have been in the non-profit industry for years.
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Hierarchy vs consensus building

Expect non-profits to desire buy-in from a wide range of employees. The Board of Directors may be involved in operations. This slows down the speed of decision making.

Partners vs competitors

Other non-profits within the same cause will be considered partners with differing mandates or territories.   They will not be considered a competitor, despite the fact that they are all approaching the same donors.  They don’t compete over clients, they do compete over donors.  Here is an analogy: in a for-profit corporation, internal departments have the same goals but they actually compete with each other over a finite budget.  Similarly, nonprofits think of each other as internal departments within the same cause competing with each other for a finite pool of donations. Avoid using the term “competitors”, instead use the term “alternate providers”.

Sales vs Fundraising

 

A for-profit sales department and a nonprofit fundraising department will be structured similarly.  The personalities of employees are similar.  The type of work is similar (e.g. closing deals, managing clients, long lead times).

What is different?  The payer is not typically the recipient.  Donors (eg. individuals, corporations, foundations) pay for the service to fill their own emotional needs.  Funders (e.g. government) pay to fulfill a social goal.   Service recipients receive the service either for free or at cost and have no connection to donors.   The exception to this is arts organizations who sell performance tickets — the people who are paying are also receiving the service.

By Graham Boyce and Lelia MacDonald

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