Five Ways in Which Your Nonprofit Can or Should Act Like a For-Profit

Business practices that are useful for any nonprofit to adopt.

There’s a tendency for nonprofit leaders to shy away from running their organization like a business. It’s probably because people who start nonprofits are philanthropic at heart and find the business side of things unpleasant. If you wanted to be a money machine, you would have started a for-profit business, right?

But regardless of why you started a nonprofit and what your cause is, you have to bring in money. And in order to do so, you have to. at least in certain respects, run your nonprofit like a business--especially because in both legal and practical terms, that’s what it is. Looking to for-profit businesses for guidance on best practices will help you establish credibility in the community and maximize the funds coming in.

Here are five ways your nonprofit can and should act like a for-profit business:

  1. Draft a business plan. This outlines what stage of its development your nonprofit has already reached, where your nonprofit wants to be, and how your nonprofit intends to get there. It helps your nonprofit define its mission, break down goals on a monthly, quarterly, and yearly basis, and stay accountable to its board, members, volunteers, employees, and donors. It will also help your nonprofit stay focused on the big picture. How many times have you had numerous great ideas but not known how to execute them? The common result is that you wind up getting overwhelmed and not executing anything. This happens to everyone and every business! Developing a business plan helps avoid such burnout. And don’t worry, business plans can and should change as your nonprofit grows, so that you won’t get locked into anything you planned on day one.
  2. Develop a marketing plan, and put it into action. Marketing is essential to growing any business, and your nonprofit is no exception. For-profit businesses budget for marketing each year. Depending on the type of business, this can be a huge part of the yearly budget. In today’s online world, you don’t always need to spend a lot of money on marketing, but you do need to make it a priority if you want your nonprofit to grow. Marketing will allow you to stay in front of your donors and allow you to reach new donors. The problem with marketing is there are so many choices as to where to spend your funds that it’s easy to wind up spending funds in the wrong areas and failing to reach the target people and businesses. That’s where a marketing plan comes into play. It will help your nonprofit focus on who your ideal (or at least typical) donor is and the best way to reach a person like this. If your ideal donor is online, then you won’t want to spend funds on print advertising. If your ideal donor is on Facebook, then you want to market there, not LinkedIn. The great thing about a marketing plan is that when a shiny new marketing gimmick comes along, you can consult the plan and decide whether it fits. If it does, great! Now you have a new way to reach donors and bring in funds for your cause. If it doesn’t fit, then you haven’t wasted any time and money trying to generate funds that may never arrive.
  3. Focus on customer service. Customer service is incredibly valuable to any type of business. For-profit businesses know this (at least the good ones do) and some have even arranged for customer service training for their employees or hired customer service specialists whose only job is to focus on providing great customer service. If your nonprofit wants to be successful, then it needs to focus on providing an exceptional customer service experience for its customers, clients, community contacts, and donors. You want donors to keep coming back every year, attend your fundraising events, and invite friends to get involved. You want donors to share your messages on social media. Donors are more likely to do all of that if they believe in your nonprofit’s cause and feel a sense of loyalty to your nonprofit. Send thank you notes after a donation. Ask how the donor’s experience was at your recent fundraiser. Ask about the donor’s kids and whether they won the last soccer game. Make sure donors know they matter to your nonprofit--and not just for their money--and they will continue coming back year after year.
  4. Charge fees for services your nonprofit offers. Nonprofits can get a little uneasy when they have to ask for money. But how else will they sustain their organization and support the cause they believe in? For-profit businesses don’t bat an eye when quoting fees. They charge for their services, their products, their presentations, and anything else they can reasonably charge for. For-profits know their worth and aren’t afraid to share that with the public. Nonprofits needn’t be any different, particularly in situations where the person being served is not in financial need—for example, if you rent out your building to the public for events on weekends. There are many things a nonprofit can charge for, and many people are willing to pay for those, especially when they know where their fees are going. (Learn more about the types of things your nonprofit can charge for.) If you feel uneasy charging, just remember, those fees will bring you closer to making your vision a reality.
  5. Make decisions without delay. Businesses that have a board of directors are notorious for being slow at decision-making. This goes for for-profits and nonprofits alike. But many for-profit businesses streamline and speed up their decision-making process, often by forming committees and subcommittees. Your nonprofit can do these things as well. Consider the following as options: form committees for certain tasks, such as fundraising, and give that committee limited final say on certain matters; don’t involve the full board until the issue is ready for a final vote, and involve the full board only when it has to be involved; send a meeting agenda out prior to any full board meeting with enough time to generate comments via email prior to the meeting, so as to spend less time debating in the actual meeting and hopefully end the meeting with a resolution; and make sure every person on the board and/or a committee has specifically defined roles and responsibilities so that more than one person is not completing the same task. These are just a few ideas to streamline your nonprofit’s decision-making process.

While nonprofits require more oversight than for-profit businesses, that doesn’t mean you can’t take some pointers from for-profit businesses and incorporate them into your nonprofit’s mode of operating. Instituting just one of these ideas can help maximize your nonprofit’s effectiveness, bring in more donations, and take your nonprofit one step closer to realizing its mission.

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