Monday, March 23, 2009

It IS a business!


For a long time I have heard people say they don't work in the corporate world, they work for a nonprofit. Nonprofits are actual corporations, they are simply nonprofit corporations. There is an everlasting misconception that nonprofit work is fundamentally different from the "corporate world" and therefore share little in common.


The truth is that nonprofits and for profits are fundamentally the same. There are the same issues with human resources, regulatory compliance, marketing, research and development, and sales. "Sales?", you say. Yes, sales!


For-profits sell widgets. Nonprofits sell units of service. Without making a value judgement on which is better - widgets or units of service, understanding that the mechanisms that allow for the consumption of widgets or units of service are nearly identical.


When a for-profit company decides to create a widget, they get the research and development department to come up with an idea. This idea is tested, modeled, and brought before potential investors. If the for-profit is successful, investors invest, the widget is made, the widget is sold, and enough revenue is generated to allow the widget to be produced indefinitely.


When a nonprofit decides to create a social service, they do research on the social problem and the best solution to come up with a program society can benefit from. The program is tested, modeled, and brought to potential investors such as individual donors, corporate sponsors, foundations, and government funders. If the nonprofit is successful, investors invest, the program is given enough money to start, units of service are delivered, and enough revenue is generated to allow the program to be operated indefinitely.


In nonprofits, like for-profits, there are quality control concerns, contractual obligations, and productivity quotas. In both, there are hirings, firings, 401k's, and medical insurance concerns. Aside from the difference between the unit of service and the widget, the differences are strikingly small.


The real difference comes in the perception of the nonprofit. Many who enter the nonprofit arena are dismayed to find out that the real service to the community lies in the ability to run a nonprofit successfully. The ability to do this lies in careful management of employees, the bottom line, and the Board of Directors. These responsibilities are a welcome challenge to the person who understands a nonprofit is not just like a business, it IS a business!

2 comments:

hrgottlieb said...

So many people belong to organizations that need to raise money. Non Profit Fundraising is becoming a way of life for many. If you need to raise money I would recommend you explore the different options at Easy Fundraising Ideas. They have lots of options for groups of any size. Many do not require any upfront money too.

hrgottlieb said...

So many people belong to organizations that need to raise money. Non Profit Fundraising is becoming a way of life for many. If you need to raise money I would recommend you explore the different options at Easy Fundraising Ideas. They have lots of options for groups of any size. Many do not require any upfront money too.