Why do people treat a non-profit differently than a profit?

imgresI have been involved in the non-profit area for years.  My first foray into the arena as a Chairperson was at Mouse.  I took the job seriously and treated the organization like a profit business.  I knew nothing else but that.  There were people on our board who would actually tell me when I made certain decisions that things are not done like that in the non-profit world and I would say why…and I don’t care because I am going to treat it as I would treat any business.  It was quite the learning experience.  I learned that people on non-profit boards don’t treat their role like they might have if the company was a profit center.  I also learned that everything must get done before the board meeting not at it.  BTW, that works in profit companies too but that is not what I want to write about.

I now chair Hot Bread Kitchen and Jessamyn Rodriguez who is the brain child behind this organization can tell you that I also talk to her about thinking like a profit center.  Although we are doing wonderful things at HBK including putting out a killer products we are a non-profit.  Thinking like a real business forces you to make decisions with a different head on your shoulders. It is not easy but in order to be a sustainable organization or close to it (when you do not have to rely on constant fundraising) you need to think this way.

I am amazed when I see board members on non-profit organizations make decisions based on politics not based on what is best for the company.  It is astounding to me.  I consider sitting on a non-profit board an honor.  I take that honor seriously.  I am there because they believe that I will help the organization to stick to their mission and that includes making tough decisions vs wimpy decisions because it is a non-profit organization.   There are so many influential talented successful people who sit on non-profit boards and when it comes to those boards they make decisions that they would never in a million years make in their own companies.  I wonder why they don’t ask themselves if is ok to have an organization that is not efficient in a profit company but why is it ok in a non-profit company?  It shouldn’t be.

I can only ask, why do people treat non-profit organizations different than profit ones?  I never have and I never will.

Comments (Archived):

  1. Rohan

    I don’t know but it’s one of those things that beats me. Maybe it is simply because they use not-for-profits as a way to pretend they’re doing good and hence don’t really care so much.As a result, I just co-founded with a bunch of like-minded family and friends 6 months ago! 🙂 It’s been a blast so far and it’s nice to be 100% involved. (we are on http://Help2Grow.org)

    1. Gotham Gal

      very cool. good for you!

  2. Anne Day

    It is interesting to read your article. I was in the non profit for most of my career and I ran the different agencies the same way as I run my business. People would say to me that must be a big adjustment, but to me it wasn’t. I was used to running on a tight budget, I watched my cash flow – all important aspects of running a small business – and I made the tough decisions.

  3. Susan Rubinsky

    I have been asking the same question for years. I have quit non-profit boards in the past because of this very issue. If you are the only voice in the room that thinks this way, it is almost impossible to help move the board or the non-profit in the right direction. Quitting is sometimes difficult to do because you believe in the mission. I now try to work only with non-profits who care about moving the needle in the right direction.

    1. Gotham Gal

      it is a tough one. you look around the room and sometimes just wonder

  4. Brandon Burns

    I was once on the Young Professionals board of a relatively large non-profit with tons of employees and initiatives. They needed to bring in buckets of money. My group’s main task was to help make that happen with fundraisers. I tried time and again to focus on big ideas that could bring in big money, while bringing some efficiency and rigor to the process. And I was usually told that “it’s not about that,” and that it’s more about the “experience” and that we should be happy with “whatever we can get.”Most people, when they go to the office, they want to feel good about what they’re doing. Entrepreneurs measure the “good” in results — money made, products sold, lives changed. Non-profit people measure it in the contribution of time and effort, and tend to be happy with any result, even if it’s small and really could and should be bigger.

    1. Gotham Gal

      non-profits should find other ways to measure their results. sticking with the mission statement is great but being fiscally responsible is even better.

  5. pointsnfigures

    I am on the board of trustees for the http://www.nationalww2museu…. I was shocked to find out in my first board meeting that they use a lot of business acumen to run the museum. They did it out of necessity. Museum started in 1999, financial crash, then Katrina, then 2008. Been a rough go but the staff makes it go. If you had someone in your family that fought in WW2, buy them a commemorative brick. Or better yet, go visit.

  6. Jessie Arora

    Not directly related to the board element, but do you think B-Corp status helps orgs that are socially minded but want to operate as a for-profit? As someone who works in the education space, my career has spanned both the non-profit and for-profit worlds and I constantly debate the pros/cons of both structures…

    1. Gotham Gal

      I am not sure what the answer is here but I do believe that socially minded operations can run at profit businesses committing a certain amount towards charitable giving.

    2. pixiedust8

      I’ve been wondering this myself, since I have a socially minded idea…

    3. Stephanie David

      Whether or not an organization has B-Corp status, I agree that for-profit businesses can be successful in incorporating charitable giving and social responsibility into their business models. Many people have said it best – the long-term benefits of social responsibility, in terms of community impact, customer trust, and employee engagement, far outweigh the cost of giving away a portion of profits. My business, PopNod, has been a testament to this.To the point about treating a non-profit differently than a for-profit – I work with a number of non-profit organizations as part of my business, and I have seen both sides of the coin when it comes to how smartly or efficiently they operate or make decisions. It doesn’t matter how big or small the non-profit organization, or how many years they have operated. I have found that it really depends on how engaged their board members and advisors are, and how committed they are to the long-term success of the organization.

  7. Diane Burnette

    I run a couple NFP Boards and would love to have more Directors like you, please keep spreading the word on taking the role seriously and keeping the doors open not the Directors resume builder!

    1. Gotham Gal

      Will do!

  8. Eric Woods

    I am always amazed by folks who treat being mission driven and operationally efficient as mutually exclusive. The mission is your product and should be handled like any other product you’re trying to promote. That being said, I think a large degree of the issue is when folks (Board members, staff, other stakeholders) don’t understand that being dubbed a non-profit is, at its core, as tax status, not a corporate structure.

    1. Gotham Gal


  9. LE

    Is it really the mission of the organization or of the typical person that either works in, or is on the board of that organization?And doesn’t that shape the thinking and mentality of what goes on?Many years ago I was in my dentists office and he had on the wall a poster supplied by Crest. It was essentially an advertisement for Crest but with some helpful dental advice on cavities, whatever.So I asked the my Dentist, “what does Crest pay you to put up that poster?”The dentist replied, sort of puzzled at the question, but also as if he had missed out on something, “gee I never really thought of it that way I just thought it would be good for patients.”. My brain …. “why would you do this and not at least think of making money from it”. Doesn’t mean I wouldn’t have put the poster up for patients if I was a Dentist. But I would have tried to make a dollar if I could or get more free Crest for my family to use!I once dated a girl that was a radiologist. She told me one day about how they didn’t do a scan for a patient that they felt didn’t need it because “it wasn’t medically necessary”. While there are for sure cases in the business world where you don’t sell people what they don’t need, I don’t think anyone would disagree that the line is much different in medicine than in business. [1]So my point is that the thinking process with the type of people that are involved in non-profits is at it’s base much different than perhaps the way business is done. In that business tends to driven by different values and the participants either know this or are surrounded by others that indoctrinate them.[1] I learned some time ago to stay away from Physicians (in general no absolute) that are good business people because I think it would cloud their medical judgement.