The debate rages: the endless comments, insights, revelations and other remarks come down to one thing: what is the definition of the ‘nonprofit’ organization? My primary feeling is that the use of the word nonprofit needs to be reduced; it has been used far too much and reveals far too little. There are ongoing, mind-numbing discussions about nonprofit vs. for profit, what that means on a planning, management and administrative basis.
Nonprofit is a tax category, pure and simple
It means that the organization is allowed accept donations that give the donor a break on their tax burden ( at least for a while longer) so the organization can do work for the public that other cannot or will not do. This work can range from animal welfare to art to education to sports. The NFL is a nonprofit, and so is the animal shelter and the after school kid’s art program and the library, from the Library of Congress to the little one down the street.
Nonprofit does not describe the nature of the business, how big it is, who it may serve and who runs the firm. Nonprofit does not describe how the organization does its work, its size or industry. The IRS recognizes 28 different categories of nonprofits, and the current estimate is there are over 1.5 million nonprofits registered in the US.
Therefore, as I hear organizations describe themselves as mission-driven, I have to wonder what exactly they mean.
- That the organization cares about why it is exists?
- That the mission’s importance overrides all other operating concerns?
- That the focus is on mission delivery and other business functions are secondary?
If you get up in the morning, and commit to do your best at whatever job you have, you are mission -driven, regardless of what tax category you may be in.
But I am a For Profit
So is for-profit in direct opposition to mission-driven? I say no, but from the way descriptions of jobs are done, it may seem so. Many nonprofits, often at the behest of their boards and donors, focus on the mission and programs, leaving discussions about structure, sustainability, and the ever-popular administration, to staff and at the end of a meeting. Basic issues such as job descriptions, emergency policies, often matters as fundamental as board agreements, are overlooked in favor of larger and more nebulous conversations about the good work that is being done.
Then the Shit Hits the Fan
The social media blows up, a major donor backs out, there is a problem with the board, a big deal volunteer or a senior staff member leaves. Despite whatever the problem may be, now the organization has to face something more that purely its mission. Finding office space, hiring new staff, fixing a problem, providing the reports, follow up and filings now becomes the 600 lb. gorilla in the room. The lack of attention to these boring aspects of running a business are now squarely in the way of mission delivery.
I think the entire perception of many nonprofits must shift towards acceptance of the fact that while the mission is crucial being able to delivery it successfully is paramount. If the structure, systems, accountability for work are in place, then the mission can and will be, be the focus of activity. But if that back room is a mess, count on the fact something will rear its ugly head and force attention to it.
Mission driven and for-profit are not mutually exclusive; each can take a page from each other’s books. If a nonprofit plans thoughtfully, addresses what it knows are important considerations for managing the business work, it will be mission driven, and have a much better chance of mission delivery.
Clean up the back room, do your board agreements, create employment policies, have a backup plan, Need help? Get in touch by email here or by voice on 310 828 6979.
Cindy Lauren is the Principal of Lauren Associates – non profit consulting
As well as advising Executives and Boards on all aspects of nonprofit management, the firm specializes in developing fundraising solutions for all sizes of organizations.