Challenging Not-for-Profit Perceptions

I’ve been involved in a couple not-for-profit (aka non-profit) organisations in my career in some form or another. What I have noticed is that many of this not-for-profit organisations (let’s just refer to them as “NPOs”) suffer from a debilitating perception held by their various stakeholders. This perception is that a NPO should not make much money and everyone involved in it should either be volunteers or work for very little money. Only for-profit businesses are entitled to generate substantial revenue and pay their staff decent to high salaries.

This perception cripples NPOs because it undermines their fundraising activities and their staff and contributors have this notion that their NPOs should be operated as whatever the opposite of how a commercial enterprise is run. That is, as a business.

Fortunately there are NPOs which are operated as true social businesses . They employ skilled professionals and pay them pretty decent salaries. They operate as businesses with effective management and controls and the primary difference between their work and a commercial counterpart’s is that the NPO works to benefit a cause and doesn’t distribute profits to its members and directors.

Unfortunately, this business-like approach does not seem to be the norm and many NPOs with important objectives are run inefficiently and ineffectively which, in tough economic times when contributions to NPOs take a dive, can be disastrous. Fortunately there is some innovative work being done to change this perception. I particularly like Dan Pallotta’s recent TED Talk on this topic which is very much worth watching:

Funding and operating smart marketing campaigns to support and attract funding for NPOs is essential. Both supporters and contributors simply have to shift their expectations and perceptions of NPOs and start running them like a commercial enterprise, except with the purpose of having an impact on important social and environmental challenges. It is the only way to make sustainable progress where it is needed most.