Though many differences exist between for-profit and nonprofit ventures, some operational strategies prove effective for both.
Photos courtesy of the individual members.
Ensuring your organization meets its yearly revenue goals is a must. It can be easy to get caught up in the minutia of the day-to-day operations without giving a second thought to what your profits are year to year. But, you owe your donors more.
As a nonprofit, you have a responsibility to your community, as well as your donors, to be successful and operate in a way that is, ideally, fiscally independent of donations. Choosing to run your nonprofit like a for-profit business can ensure you meet your revenue goals each year, as well as operate on the lean side without making unnecessary expenditures that could cost the livelihood of your organization.
Twelve members of Forbes Nonprofit Council share some of the ways they run their nonprofits like for-profit businesses. Here's what they had to say:
1. Raise Funds And Save Money
Nonprofit is a tax status, not a financial situation. The nonprofit's mission is the focus. Fundraising and meeting budget, along with staff, marketing, communications, technology and program delivery, are tools to accomplish the mission. In other words, fundraising and meeting budget are tactics tied to an organization's effective operation goals and will help achieve the organization's mission. -Carlotta Ungaro,Fayette Chamber of Commerce
2. Speak The Same Language
Unfortunately, many nonprofits mistakenly think business exists to be a fountain for funds for nonprofit projects and operations. Most businesses are in business to make money. If your approach is 'hat in hand,' you may miss an opportunity. Acting, speaking and performing like a business will help cultivate 'win-win' approaches to collaborations and stewardship of donor dollars. -Aaron Alejandro,Texas FFA Foundation
3. Focus On ROI
We want the greatest return on investment so, what proceeds we have, we want to make sure we spend the least and maintain expenditures within a specific budget like a for-profit business would use. We track and analyze our strategy and tactics based on the return on investment we get, even if it involves in-kind products or services. -Gloria Horsley,Open to Hope
4. Build Models Of Earned Income
Our annual budget is 85-90% earned income each year. We're a nonprofit with laser focus on mission and vision, and we have designed revenue generating programs and services that form the core of our work. That enables our organization to remain autonomous and focused on delivering strong and stable programs that aren't dependent on donor dollars. -Kristine Sloan,StartingBloc
5. Run Your Nonprofit Like A Startup
Nonprofits should treat their organization like a startup. First, NPOs should conduct research to understand their clients' problems. Second, they should develop an MVP, and test and iterate it until they find product-market fit. Once they achieve product-market fit, NPOs should then pitch their programming to foundations and corporations interested in the problem they are solving. - Jason William Johnson,Chicago Urban League
6. Generate Revenue Through Corporations
As a nonprofit, you have a unique opportunity. You can not only provide a free service to the public, but also sell into companies. Find something of value that the world needs; provide part of it for free and sell other parts to companies. Give back to the community, and also generate revenue. Any social enterprise must drive toward helping the community and becoming financially sustainable. -Pamela Hawley,UniversalGiving
7. Don't Ignore Expenses
Raising more money doesn't necessarily equal more impact if the funds aren't being used efficiently. Looking at program expenses to evaluate what could be procured through gift-in-kind campaigns not only helps eliminate entire expense line items, it also gains new community supporters that want to help in practical ways. -Lindsay Crossland,The Salvation Army
Forbes Nonprofit Council is an invitation-only organization for chief executives in successful nonprofit organizations. Do I qualify?
8. Match Costs And Benefits
Great for-profit businesses match the costs and benefits of various decisions within the right internal part of the organization. A nonprofit can and should operate the same way -- each area should have as much alignment between revenue (whether earner or raised) and associated costs. That way, decisions can be made by individuals other than the CEO, and often, better decisions will be made. -Doug Shipman,Woodruff Arts Center
9. Make The Mission Itself Profitable
We've taken the existing financial model of a temporary staffing agency and made it work for our mission, using our position as employer to give opportunities to those with barriers to employment (i.e. homelessness, criminal background, veterans, etc.). By making the mission itself profitable, we ensure its long-term sustainability and reduce our dependence on philanthropy. -Naomi Maisel,First Step Staffing
10. Make Investments In Member Needs
To flourish as an organization, we must think like a for-profit business -- identifying and responding to competition, adopting powerful business standards, positioning for transparency and comparison, and optimizing opportunities. The difference? Our bottom line is not just about producing income, it’s about generating more resources so that we can continue to make investments in member needs. -Peggy Smith,Worldwide ERC
11. Use Data To Make Decisions
Our nonprofit is a social business, and as such, we depend on data for decision-making. We incorporate metrics into all areas of work -- from measuring social impact to performance management to financials. Data provides guidance for decision-making, so if you want to increase efficiency, consider adopting real-time analytics and lean data into the core of your organization's strategy. -Ana Pantelic,Fundación Capital
12. Be An Ecosystem Warrior
We partner with as many organizations as possible to build off their strengths and address our relative areas of weakness, and vice versa. We utilize win-win partnerships to share or avoid costs, while contributing to the vibrancy of the social ecosystem. This can lead to cost-saving resource-sharing around marketing and communications, talent pipelines and even physical office space. -George Tsiatis,The Resolution Project
