Just because its focus is NOT profit doesn’t mean it lacks “business competency”….!
The non-profit industry is trending and there are no signs that the train is going to stop, however there’s an unwarranted perception about this servant industry that often rears its ugly head…..“BUSINESS”. Yes, that mostly misunderstood yet indispensable word that paralyzes most of our natural senses when it comes to survival….we value business almost as much as water. While the official definition of business is somewhat clear: “The activity of making, buying, or selling goods or providing services in exchange for money”, I find the definition to be erroneous. True, in its most tangible way business can be a commerce activity based on the exchange of goods for profit however that doesn’t mean that that same activity should be considered “non-business” if exchanging goods/services don’t result in obtaining a profit. In the last 6 years or so I have been heavily involved in the non-profit space and as of recently been named board chair for one of them, and honestly I do not see any difference between a profit & non-profit based on business principles. As a matter fact I’ve seen more “business” taken place in my non-profit experience than 30+ years’ experience in the profit space. Unlike the definition of business I personally place just as much value on “Business Process” as I do on financial return.
Now that I have confused you let me explain:
Business in my opinion is a series of decisions based on processes from research, experiences and yes failures. Those processes based on quantified research, developed experiences, and lessons learned (failures) help us to carve out “STRATEGY”. Business doesn’t exist without some form of strategy and this doesn’t have to include making a profit in order for the process to be established as “business”. Any activity that requires strategy, planning, and execution in my estimation can be classified as “business”, and that’s why I’m a firm believer that it’s “The Process” that determines what’s considered a “business” or not.
Non-Profit verses Profit
One of my best authors on management & leadership is Peter Drucker who in 1989 wrote a nice piece in the Harvard Business Review (“What Business Can Learn from Nonprofits”), below is part of that post:
“As a rule, nonprofits are more money-conscious than business enterprises are. They talk and worry about money much of the time because it is so hard to raise and because they always have so much less of it than they need. But nonprofits do not base their strategy on money, nor do they make it the center of their plans, as so many corporate executives do. “The businesses I work with start their planning with financial returns,” says one well-known CEO who sits on both business and nonprofit boards. “The nonprofits start with the performance of their mission.” Starting with the mission and its requirements may be the first lesson business can learn from successful nonprofits. It focuses the organization on action. It defines the specific strategies needed to attain the crucial goals. It creates a disciplined organization. It alone can prevent the most common degenerative disease of organizations, especially large ones: splintering their always limited resources on things that are “interesting” or look “profitable” rather than concentrating them on a very small number of productive efforts.”
It can be argued that there’s very little difference between the profit and non-profit organization with the exception that one is more preoccupied with money than the other. However, from Mr. Drucker’s perspective and I agree wholeheartedly it doesn’t mean non-profits don’t focus on obtaining income when that’s ironically how they stay in “Business”….it’s “The Process” that joins them at the hip. Because non-profit organizations devote a great deal of time to defining vision/mission statements they avoid the “corporate cliché statements” chocked full of good intentions and focus, instead, on objectives that have clear-cut implications for the work their members perform—staff and volunteers alike. Examples like the Salvation Army’s whose goal is to turn society’s fallen—alcoholics, criminals, derelicts—into citizens, the Girl Scouts who help youngsters become confident, capable young women who respect themselves and other people, both organization’s business strategy are steadfast focused on the community. Non-profits business strategy may focus on the environment, the community, the “customers” to be; they do not, as profit businesses tend to do, start with the inside, that is, with the organization or with financial returns.
The Non-Profit Industry is a business and that is not to diminish or remove the great work that is being done in our communities from the leadership of non-profits. My objective of this short post was to place the non-profit on the same level playing field as the profit organization, and drive the premise that everything in “business” (and “Life”) doesn’t have to include a financial objective focus….sometimes it’s just “The Process” that brings about the return.
The Non-Profit Industry…is about “BUSINESS”!
Thank you so much!
AH2 & Beyond Consulting