Mission Can't Exist Without Business
Minnesota is home to over 37,000 nonprofits who work tirelessly on behalf of Minnesotans and beyond. Yet in my 30 years' experience working in and with nonprofits.
Mission Trumps Business, is the second of the insights resulting from my confidential interviews with 20 nonprofit professionals and board members. What I heard aligns with my observations over 30 years. While not research based, the insights are noteworthy and shed light on Three Pervasive Nonprofit Mindsets that have plagued the sector for decades.
The majority of interviews were clear, business shouldn't be a dirty word for nonprofits. The lack of foundational business operations is a contributing factor to nonprofit resource issues and affects an organizations’ ability to successfully meet their mission." Business processes create efficiency, alignment, and reveal where to leverage some resources for the benefit of your mission. Even running a personal household has elements of business operations in it. Without it, you wouldn't know where you could save, cut, and spend on leisure.
“At the center of every nonprofit organization is a business focused on a mission.” — Board Member
Several interviewees observed how nonprofits tend to prioritize allegiance to the mission over sound business practices in alignment with the mission.
This over-allegiance to mission prevents organizations from implementing processes which allow for efficiencies, and free-up time and resources for staffing and programming. If your strategic plan is designed around business processes and mission, it will all align, taking your organization full circle back to mission.
The absence of processes also makes it difficult to do meaningful measurement of the organizations’ work and return on investments. There is a long standing saying, “You can’t fix what you can’t see.” Without business processes and an aligned strategy, nonprofits are conducting their work with one eye closed. There are enough challenges they can’t control; this doesn’t have to be one of them.
“When I came on as ED for a 100-year-old organization, they didn’t have any systems and processes. No dates, vague information. no reporting, no policies. Now I’m also struggling with culture issues between new employees and long timers. — Executive Director
Challenges and Red Flags
“Many nonprofits are shortsighted and don’t take the time to invest in strategy or look upstream. Leaves them flatfooted when there is a disruption in the ecosphere around them.”
“If organizations had business practices in place, they would realize that putting all their eggs in a one-time gala is risky - weather could put you out of business. They would look for other strategies to complete their budget.”
"As a board member, I could go to galas for a living. Nonprofits have to consider other ways of rounding out their budgets. Business processes and operations would help them see new alternatives.”
"Don't know what they don't know. Many nonprofits are locked into what has worked for them but don't look for other ways to do things.“
Suggestions for the Sector By Seasoned Professionals
Recognize the need for strong strategic thinkers at the board and the leadership level.
Nonprofits can be as strong in their business practices as their mission.
Get more strategic about what skillsets are needed on their board. More strategic around selection of board members.
Hire a 3rd party vendor for a specific function, ex: attorney, bookkeeper, strategy sessions with boards. They really can't afford not to”
Nonprofits that plan, strategize and have business practices are more resilient when unexpected things comes their way.”
“There becomes more competition for dollars as the nonprofit market becomes more saturated. Could we partner around business practices more so more of our dollars could go towards service?”
“As a sector, we need to understand that a nonprofit is an enterprise and that it is OK to succeed.” —Executive Director