Although we rarely like to acknowledge it, there is a divide between the nonprofit and for-profit sectors. With rare exceptions, the respective leaders largely come from different worlds, where they’ve been shaped by different experiences.
Even among business leaders who are very supportive of charitable causes, I often hear frustration about the way they perceive nonprofits to be operated. They complain of an entitlement mentality and a lack of business discipline by nonprofits. They perceive their corporate financial support is taken for granted.
Likewise, I have observed frustration on the part of nonprofit leaders who perceive a lack of appreciation for their missions. They complain of a cynical overemphasis on financial matters in areas where outcomes cannot reasonably be measured in monetary terms.
In my experience as a nonprofit manager, I commonly participated in meetings where the two sides heard the same information and came away with entirely different understandings, each colored by a different mindset.
Why is this a concern?
Because these differing perceptions lead to resentment on both sides, reduced levels of commitment, and barriers to good works.
The nonprofit community is dependent upon the generosity of the corporate community in the funding of mission-driven activities. At the same time, the business community depends on the community-building activities of nonprofits to create a better place for employees to live and work.
With a shared interest in mission-driven outcomes, it is incumbent on both business and nonprofit leaders to overcome the divide.
How can it be improved?
Both board members and managers should be expected to support the delicate balance between a nonprofit’s mission and financial stability. In an ideal world, leaders in both camps would have a broad range of experiences, both for-profit and nonprofit, that have shaped their outlooks and leadership styles. Compassion and discipline are not mutually exclusive traits, and a shortage of either one will eventually prove to be a weakness in any field.
The most successful nonprofits are run by managers who balance their passion with a strong business background and financial acumen. This requires a commitment by the board to pay nonprofit managers for skills and experience consistent with the for-profit sector.
It’s time to stop rationalizing divide between the nonprofit and for-profit sectors. Smart business practices can enhance revenues and reduce expenses in both types of organizations. In the greater scheme of things, the similarities between these two worlds are staggering, while the differences become more trivial every day. Like it or not, a nonprofit is a business, and it must be run like one.
Dan Weiss, founder and President of Counterpart CFO, leads a team of flexible, part-time CFOs specializing in nonprofits. To read more from Dan, follow him on LinkedIn or subscribe to his blog at www.counterpartCFO.com.