In lean economic times, it’s said that needs for social services spike while financial support for them plummets. Ask any development team across the country, contributions are down and demand is up. Now, more than ever before, is the time for non-profits to innovate.
Over my decade of experience in non-profit administration, I have seen countless leaders put their mission first and the financial solvency of their program second. In a bull market, this is not a bad way to look at things. In a bear market, it’s a whole different ballgame.
There are many tips businesses can learn from the non-profit sector such as a drastically lower threshold for what is considered “waste” and a dedication to mission driven activities. However in times like these, there are a few things non-profits can learn from the business world.
Think Lean. Non-profits are good at over-working employees and doing more with less while the private sector is good at seeking efficiencies. Non-profits are often too relationship focused to hold their workforce accountable to results. We value our human assets above all else. In part because we are consistently surprised our employees come back to work for less money and more stress. But also because we are people-people. Businesses hold employees accountable to their outcomes and cut loose those who cannot deliver.
Everything should be paid for. This is perhaps the most important tip that non-profits can learn from businesses. Fiscal martyrs may be praised within the ranks of social workers, but this model is unsustainable. I challenge anyone to find a business that budgets a permanent loss. Non-profits do this all the time. Large organizations can often float the money losers for an indefinite amount of time, but this is a losing strategy. When developing new programs and budget planning, non-profits should identify funding streams for absolutely every service delivered. This may sound absurd to the seasoned leader, but it’s time to think in a different way.
Market. Non-profits are chronically bad at marketing their services. This is in part because they don’t have resources to invest behind a marketing team. But also because non-profits don’t consider their activities a marketable service. A commitment to mission is not enough to spread the word. Unlike the private sector, consumers of social services do not often run to their friends and praise their experience. Non-profits should develop a service array that attracts paying clients and then market the results.
Invest in outcomes. The global paradigm is shifting toward outcomes-based initiatives. Non-profits that can prove their effectiveness will rise above the rest. Historically, feel good anecdotes were enough to keep funders happy. Those days are over. Non-profit leaders without legitimate numbers behind their work have nothing to stand on. Larger non profits have employees dedicated to the collection, analysis and presentation of results. Can your organization backup its work with numbers?
Be self-critical. Using the outcomes measures mentioned above, non-profits should evaluate their programs and discontinue those without measured positive results. Although it may feel good to provide a service to a client in need, if an organization cannot prove the program works it should not be continued. The definition of a positive outcome is often loosely defined by non-profits and may be as simple as providing an acute harm reduction. Many a bad program have been run under the banner of harm reduction.
Get creative. During tough economic times, businesses find new customers or create new products. Non-profits tend to “hunker down” and ride out the economic storms. This is exactly the wrong response. Grants are still available, insurance is still paying and donors are still giving. Non-profits that thrive are those that get creative and start new programs. Seek out unmet needs and untapped resources and pull the trigger while others are waiting out the storm.
Get efficient. Businesses downsize and reorganize constantly to meet changing demands. Because non-profits are people-focused, they dismiss reorganizing as an option. Attrition and program changes offer perfect opportunities to streamline administration expenses. Just like for-profit businesses, personnel is often the largest line in the non-profit budget.
Adopting these principles from the business world need not obstruct the mission of the organization. On the contrary, improving the financial position of the organization will only strengthen and spread the impact of the activities. Organizations of all sizes can take these tips and implement them where possible, they are not mutually inclusive.