THE PROFIT IN THE NONPROFIT

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Every organization functions with a purpose and a plan. The goal is to earn a profit. However, that profit might look different to different organizations. A for-profit company generates sufficient revenue so that the business remains profitable and that profit pays out to the shareholders and owners.

A nonprofit organization essentially does the same thing. In the nonprofit’s case however, the organization generates sufficient revenue so that after all the operating expenses, bills, overhead, and salaries are paid, enough money is left over to fund the nonprofit’s mission. It is in the accomplishment of that mission that the shareholders, owners, and others reap the rewards.

We could say that “profit” looks different to the for-profit organization versus the nonprofit organization. Anyone involved in a nonprofit organization would definitely take issue with the statement that nonprofit means no profit. A nonprofit organization does generate a “profit” but it is just defined somewhat differently.

The nonprofit world is comprised of consumer-advocacy groups, charitable organizations, social causes, religious institutions, educational groups, medical clinics, and many others. These organizations earn an intangible profit, but it is profit nonetheless. Without these organizations, our world would be a very different place than it is, and it would not be for the better. When society is improved, lives are changed, and sadness is replaced by gladness, we see that “profit.” That is the kind of profit that we cannot afford to lose.


NONPROFIT DOES NOT MEAN NONSTRATEGIC

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Every organization must balance the checkbook. This is true regardless of that organization’s mission, vision, status, and location. One interesting nuance to this truth is the distinction between for-profit and nonprofit organizations.

A for-profit company creates a strategy that ensures sufficient revenue so that the business remains profitable. An unprofitable company will not remain solvent. A nonprofit organization essentially does the same thing. In the nonprofit’s case however, the organization creates a strategy that ensures sufficient revenue so that after all the salaries, bills, and operating expenses are paid, enough money is left over to fund the mission of that organization. That’s the point; instead of generating a profit for shareholders and owners, the organization wants to generate sufficient revenue to accomplish its original purpose.

Given these scenarios, the question arises, do both types of organizations need to create the same kinds of strategies, and is that particular challenge equal for both? Historically, many nonprofits have been slow to adopt some of the same strategies that for-profit businesses have been using for a long time. However, once those same nonprofits adopt (or adapt) those strategies, most wonder why they didn’t make that decision sooner. The bottom line is that the bottom line is essential.

Diana Aviv is the CEO of the nonprofit, Feeding America. I like how she addresses the implications of these truths for the nonprofits. Most nonprofits must depend on some combination of grants, endowments, and donations. Precisely because of that coupled with the intrinsic nature of nonprofits, nonprofits often must be even more effective in how they strategize (“How Did I Get Here?: Diana Aviv.” Bloomberg Businessweek, 7/4/16–7/10/16, p. 72):

Nonprofits have to be more agile and innovative, because they’re doing everything with less resources.

Let’s face it: most nonprofits are not flush with cash and other resources. This is why it becomes even more important that nonprofits strategize with excellence. They literally cannot afford to miss the potential payoffs.

For this to happen, key officers in nonprofits as well as bench-level employees and members must be willing to assume a bold stance. They must be willing to take some risk, attempt some unorthodox approaches, and consider what the demographics and trends of their context reveal.

Your strategy is always driven by your goals, context, and circumstances. Therein lies the secrets to success for the nonprofit. That bold action must come one way or another. Failing to plan is planning to fail. And no organization wants to do that.


UNKNOWN ACTS OF GRACIOUSNESS

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Business is business is business and it can be tough. That’s why we all need those little and often unknown acts of graciousness from one another. Most of the time we very likely never know the ones that helped us the most. Occasionally, we might gain direct knowledge of them or even a humorous and delayed knowledge of them. Such was the case for IBM CEO Ginni Rometty, as she shares an experience from her first job interview with IBM 35 years earlier (Max Chafkin. Bloomberg Businessweek. Special Double Issue 8/8/16–8/21/16, pp. 58–60):

When I went for my interview, I didn’t have a blue suit. In my mind, I needed one—so I went out and bought one. I had a great interview, and when I came home and took my jacket off, I realized the price and size were still on it. I thought, That was gracious. No one told me.” (p. 58)

No one among us has not experienced a situation such as Rometty’s, or even one much more embarrassing. Thankfully, our basic humanity enables us to extend kindness to each other. My advice is that we never lose that capability.

Oh, and remember to check the mirror before going out the door!


KEEPING YOUR MARBLES IN THE GAME—CONCLUSION

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Keeping your marbles in the game of a global economy is crucial for both companies and customers (see my Part One and Part Two posts). Business globalization is here to stay. Earth is a big world that has gotten much smaller much faster. The sooner organizations and people realize that truth, the better off everyone will be.

Companies that realize how best to capitalize on this reality will infuse every business decision with cultural realities. This means that we don’t just “do business.” Instead, it means that we do business with a good heart and a good attitude. Companies have to think about the “who” and the “where” of their business. As Jeff Immelt (GE CEO) explains, companies absolutely must analyze all aspects of exactly how business will happen in another country and give full consideration and respect to that culture (“After Brexit, Global Is Local” Fortune. August 1, 2016, pp. 71–72):

We tend to think of globalization as a philosophy, but it is much more about what you do on the ground. Success requires hundreds of little things, and decisions made with a local context. Good global leaders have an appreciation for how people do their work in a local culture. They try to make a team’s work meaningful to their country.” (p. 72)

Just as surely as this is true for companies, it is true for individuals. Each of us as individual workers must reassess everything we do in our career planning, education, training, and professional growth in the light of this new reality. We must be willing to change when change is required. We must be flexible. We must carry a good heart and a good attitude into every moment of our workday.

The world of spitting widgets out of a machine the same way every day for a career is gone forever. The new world is much more exciting and demanding because it is always changing. The people that are willing to embrace that excitement and those demands will flourish. Immelt summarizes:

The future will be created by leaders who see the world as it is and are willing to drive change. Change will also require simpler organizations and new business models that are leaner, faster, more decentralized.

Let’s make the changes wherever they are needed—corporately and individually. That is how we will all keep our marbles in the game.


KEEPING YOUR MARBLES IN THE GAME—PART TWO

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Smart companies want to keep their marbles in the game. They want to expand into the global economy rather than hide from it. Smart companies have realized that some genies are never going to be put back in the bottle but not all genies are bad. Business globalization is ultimately a good thing when it is managed wisely.

Of course, companies can only do so much. Equally important is what individuals choose to do. A person might choose not to participate. We can’t help that person. It is up to that individual and we have no control over that outcome. As Thomas L. Friedman writes, business globalization’s irreversibility has radically changed everything about employment and this means that individuals must recognize the individual requirements of this new world:

To be in the middle class, just working hard and playing by the rules doesn’t cut it any more. To have a lifelong job, you need to be a lifelong learner, constantly raising your game.

Lifetime job security is dead. What will always remain alive however is lifetime employability. And those that want lifetime employability will do what is necessary to make themselves employable . . . every single day.