Nonprofits are a positive part of many people’s lives, whether they are clients in need of services, donors giving to organizations, or volunteers participating in the mission. Unfortunately, most people can also cite frustrations in the way non-profits that they deal with run. Comments like, “if only they ran more efficiently” or “why can’t they manage their money better?” or “why do they have such high turnover?” must be addressed at the core of an organization’s infrastructure. Organizational leadership is fundamental to a non-profit agency’s achievements; a lot of people in our communities are affected by the success or failure of our not for profit service providers.
There has long been a sentiment in the nonprofit arena that nonprofits are not, or do not need to be, run as successful businesses by business professionals. This concept is described succinctly in Why Nonprofits Fail, “Historically, nonprofit organizations were not concerned with management proficiency and did not evaluate their progress or their capacity to ensure that they had top-notch managers running programs and effectively directing day-to-day operations.” (Block, 2004, p. 14)
The idea that nonprofits do not have to run well to “do good” may have pervaded for decades, but demands by regulators and funders since the 1980s have become much stricter and have increased the level of knowledge that is required of a nonprofit executive in order to successfully and ethically run an organization. To stay in business, nonprofits are realizing they need to run like a business.
Because of the relatively new necessity for nonprofits to be efficient and accountable, it has become apparent that a different type of professional is needed to lead in the nonprofit sector. This, in turn, has prompted many nonprofits to reconsider how they recruit and hire CEOs and Executive Directors. “A new emphasis of accountability forced nonprofit boards to question whether their management staff could meet the expectations…” (Block, 2004, p. 15)
In addition to new regulations, the need for fiscal responsibility and sound management also stems from competition. Nonprofits are in close competition with each other for: government and foundation grants, private donations, board members, volunteers, media coverage, legislative and other political support, and qualified employees. (Grobman, 2005)
This phenomenon is being examined on a global level. In 2013, the University of South Australia published a study that described well the current stage upon which the worldwide nonprofit industry operates:
“A recurrent observation appearing in the nonprofit literature is that the lines dividing for-profit and nonprofit organizations are becoming increasingly blurred. Nonprofit organizations now operate in an environment in which they compete for resources and are required to prove as well as to improve their effectiveness. This has resulted in a greater perceived need for them to determine their ‘best’ strategic direction and control their efforts in pursuing this direction. In response, strategizing in nonprofit organizations has become more sophisticated, and control practices to improve efficiency and productivity in supporting strategy have been increasingly adopted within this sector.” (Tucker, Parker, 2013, p. 88)
This need within the nonprofit industry is beginning to be addressed, at least on an educational level, by neoteric advanced degrees in nonprofit management and leadership. Such degrees can be a way to “even out” practical experience in some areas of organizations with broader educational knowledge of operational best practices, resulting in more well-balanced leaders.
It is up to us as nonprofit leaders to educate ourselves, through all types of continuing education, about the regulations and best business practices that will help us run nonprofit organizations effectively and efficiently. Delivering on the mission is the reason a nonprofit charity organizations exists. But in order to continue existing, we must operate effectively, manage our money well, and be accountable to the communities in which we operate.
Block, S. R. (2004). The Need for Alternative Tools. In Why nonprofits fail: Overcoming
founder's syndrome, fundphobia, and other obstacles to success (pp. 14, 15). San
Grobman, G. M. (2005). The Future of the Nonprofit Sector. In The nonprofit handbook:
Everything you need to know to start and run your nonprofit organization
(4th ed.). Harrisburg, PA: White Hat Communications.
Tucker, B., & Parker, L. (2013). Managerial Control and Strategy in Nonprofit
Organizations. The Nonprofit Management & Leadership, 24(1). (p. 88)
nonprofits must run well in order to "do good" by Phil-Com, LLC is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.