Non-profits aren’t second-class businesses
Treating them that way limits their ability to deliver value to their team and the people they serve.
Much of what we believe about non-profits doesn’t serve the organizations, the teams that run them, or the people they serve. And despite a lot of people pointing that out, these beliefs persist.
Underpinning these beliefs is the assumption that non-profit businesses aren’t real businesses. They’re a subset of softer, less professional, less sophisticated entities staffed by people who need real business people to help them find their way out of a paper bag.
In the value economy, both for-profit and non-profit businesses exist to deliver value to the people they serve. They both need to deliver value to their team members and secure the resources required to do what they do. They both need to assess if their actions deliver value effectively and make choices to adjust accordingly.
Non-profit businesses will never be treated as real businesses until we stop saying certain things.
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Sentences about non-profit businesses we need to eliminate
We perpetuate this idea of non-profit businesses as junior businesses because we continue to believe what we say about them, in many cases without realizing what we’re saying. Here are eight sentences we need to stop saying and my suggestions for what to say instead.
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1. “Donations aren’t the only way you can help a non-profit.”
Sigh. I’ve worked with non-profit businesses that genuinely had a need that had nothing to do with writing a check and couldn't get their supporters to help. However, in most cases, write the damn check. And write it with no strings attached. Most of the other ways you can help only exist because the organization doesn’t have the resources it needs, nor does its staff have the respect they deserve. Let’s rewrite this sentence to read:
“Invest in the organization so that the team has the resources they need to deliver the value the organization exists to deliver.”1
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2. “Every dollar that goes to overhead is a dollar that doesn't go to the people the organization serves.”
So, who exactly do you think is doing the work to serve those people? Oh, people who work because they’re passionate. Right. . . .
Passion doesn’t buy groceries, folks. The people who work at non-profits need resources to live. They also need resources to do their job and advance the organization. Sexy things like software, insurance, professional development, and supplies. Without these things, the organization can’t promote itself, protect itself, build relationships — or frankly do anything.
Working in an environment that believes this statement is a perpetual cycle of bobbing for apples with your arms tied behind your back while your board asks you to explain where that $100 went and why you aren’t achieving more in between gasps for air. I’d like to see this statement rewritten as:
“Non-profit businesses must pay well to attract and retain the best people and provide those people with the right tools to get the job done.”
3. “Volunteers make everything possible.”
Hogwash. This statement is often made to help volunteers feel special and like they make a difference. Sometimes they help. But in many cases, volunteers add to the staff's workload instead of reducing it because what needs to be done is more than a volunteer can do. That said, yes, you should always thank people for their contributions. No, you should not keep making this statement because it's simply not true.2 We need to amend it to reflect reality:
“Volunteers, with much support, direction, and management by our staff, help us to do what we do.”
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4. “The board members run the organization.”
The people who sit on boards are often corporate executives confident in their superior expertise. Since they’re aware of how much (*cough* how little) they’re paying people, they consciously or unconsciously assume that the people they hire aren’t the best or brightest. That’s okay because they can provide direction to the staff, so they tell the staff how to do their jobs. Or they spend a lot of money on a consultant to tell them what their staff has already told them (no joke) because, for whatever reason, when a consultant says it, it’s gold. Staff members get frustrated because they aren’t valued and often can’t do the job as well as they want. Any slip in performance is seen as the staff members’ fault, which causes the board to jump in and scrutinize even further until their behavior causes staff to leave. And the cycle begins again.
The funny thing is, there are a lot of brilliant people working in non-profit businesses despite the lack of proper pay and the difficult people dynamics involved. If nothing else, actually working in a non-profit gives one experience that many people serving on boards simply don’t have.3 Let’s revise this one to read:
“We hire people we trust to advance the organization and empower them to do their best work.”
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5. “I started volunteering because I don’t feel fulfilled by my job.”
Non-profit businesses don’t exist to entertain you or fill your empty spaces. They exist to deliver value to the people they serve. Here’s the thing: For-profit businesses exist for the same reason. This sentence needs to read:
“I left my old job to take one at a value-driven business (of the for-profit or non-profit flavor) because I wanted my time to deliver value to others while simultaneously delivering value to me.”
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6. “I made it a non-profit because then we can get grant money.”
I’ve heard this more times than I can count: Someone has an idea. Selling that idea as a for-profit business isn’t of interest, so they fix that problem by becoming a non-profit, giving them access to all that easy grant money.
These people have never applied for a grant, gotten a grant, or managed a grant. Ever. It’s labor intensive, often backassed, and always takes time away from doing the work the grant was meant to fund. If you even get the grant. Non-profit professionals know this. Newbie founders and volunteer board members often don’t. Moving forward, when you hear the word grant, raise your hand and ask, “Are you sure we want to take on that work?” It’s the first step that gets us to the revision:
“I determined that the only route to funding is grants and have set expectations accordingly for the staff time required to properly win and manage those grants, as well as for the limits they may place on our autonomy.”
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7. “We should hold a gala!”
For some non-profit businesses, big events like galas provide a legitimate source of revenue. For most, they are a revenue and energy black hole. This sentence gets repeated often enough that it’s one of the first suggestions people (volunteers) grab onto.4 Let’s revise it to say:
“Let’s think outside the box when it comes to our revenue streams and compare the income to the costs to ensure it will be worth our time.”
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8. “I have a separate rate for non-profits.”
On the surface, this sounds lovely. How nice of you, dear business owner, to offer your services for less. Unless the work required to do the same job for a for-profit business is somehow different when you do it for a non-profit business, you need to charge the same. You’re undercutting your own people and perpetuating the idea that non-profit businesses need handouts.5 Instead, this should read:
“We make in-kind donations to non-profit businesses.”
Non-profit businesses are hard businesses we’re making harder
The truth is that non-profit businesses are the hardest to run strategically. As I’ve written before, the difference between what we currently call a non-profit and a for-profit lies in the gap between their source of revenue and the people they serve.
Non-profit businesses have the largest gap. They must deliver value to the people they serve, but they must also invest time securing money from a completely different group (or groups) of people so they have the resources they need to do what they do.
The value donors or other supporters seek likely has nothing to do with the value the people the organization serves seek. In fact, giving donors what they want often distracts the team from delivering the value the people they serve need. That says nothing about grant requirements or the time it takes to identify, engage, and retain this completely different group (or groups) of people.
In short, everything a for-profit business does, a non-profit business must do. A non-profit business must also navigate a split focus on top of it all.
It is amazing that this type of business is the one we consider inferior and starve of the resources required to deliver value the world needs.6
Let’s stop.
➔ I run a strategy and business design firm. I help teams develop a focused strategy that answers the question, “What’s the point?” (Surprised? I hope not). But I don’t stop there. I help you ask that question throughout your business so everything drives in one direction. If you’re intrigued, let’s jump on a call.
Or honestly, “Write the damn check” has a nice ring to it.
In fairness, some small non-profits are entirely run by volunteers.
I’ve been on so many calls with frustrated staff members stuck doing things they know aren’t effective because some board member decided they should do it. In many cases, the board member has no background in the area.
It doesn’t hurt that galas (read: big parties) are more fun to plan and attend than soliciting donors.
Yes, you’re right. Non-profit businesses require donations. Isn’t that the same thing? No. If you’re committed to helping a non-profit business by charging less, declare the amount of money you lost by reducing your fee as a donation. Because that’s what it is. You donated money and time to that organization.
I’m acutely aware that just as there are for-profit businesses not delivering a whole lot of value, there are non-profit businesses not delivering a whole lot of value either.
Brilliant, no BS, and to the point, Katie! This is a worthwhile read that changes the value narrative around non-profits.
Have you worked with charities in the UK? Are these the same as US non-profits? I assume the legal status of 'charity' and stakeholder management increase complexity. I have huge respect for Carers UK navigating their fine line.