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~ October 2002 ~ Topic
  • Are we business like or nonprofit like?


Are we business like or nonprofit like?

I'm always interested in people (usually board members who are business executives) who say, "A nonprofit must be run like a business," as if they have discovered a truth that will answer all questions and solve all problems. It also seems to imply, too often, that they think nonprofits have good hearts but their heads are a little fuzzy from thinking about good works.

Unfortunately, the concept of "run like a business' today can bring forth images of those businesses who have overpaid chief executive officers, uninformed or careless boards, disregard for employee pensions and a mission that is devoted to dollar signs.

Yes, nonprofits should be well managed, and there are those who have not lived up to this standard. They need to have responsible boards; they need objective audits; they need to have personnel policies, they need insurance; they need to manage their property sensibly; they need to understand the laws that apply to them; and they must have ethical practices. Is that being business like or nonprofit like? Whichever it is, it's a good way to be.

Nonprofits, however, are not exactly the same as a business. How much money they raise is not their criteria for success: meeting the needs of the people they serve is. And this mission needs to be paramount with them at all times: "how do we use our resources most effectively "and 'what are the most important things for us to do with our resources to fulfill our mission." Their obligation is to their mission and the public that supports them.

Yes, nonprofits can make money, but that money goes not to stockholders, it must go back into the services that the organization provides.

So businesses and nonprofits are not exactly the same, and the one-size fits all philosophy of management does not work completely for either one.

Nonprofits are told now that they may not pay their chief executive officer an unreasonable salary. Determining what is "reasonable" is not easy to define, but today's corporations are beginning to think about this too. Maybe this is an area where a management concept can be shared by both sectors.

Jeanne H. Bradner

Jeanne H. Bradner is an author, consultant, trainer and speaker on volunteerism, board development and leadership. She is the author of three publications, Passionate Volunteerism, The Board Member's Guide, A Beneficial Bestiary and Leading Volunteers for Results: Building Communities Today. She served as director of the Illinois Governor's Office of Voluntary Action, Midwest Regional Director of ACTION, and Executive Director of the Illinois Commission on Community Service. She is the volunteer program specialist for Illinois' Harper College Volunteer Management curriculum.

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