What Business Execs Don’t Know -- but Should -- About Nonprofits

A lot of social entrepreneurs out there are getting tired of being constantly lectured on how they need to operate more like businesses. Their spirits were buoyed by a recent Jim Collins piece saying in effect "Please don't operate your social ventures more like businesses, because the vast majority of businesses are mediocre."

Thanks to my friend Greg Kats at CapitalE, for sending me this excellent related article from the Stanford SocialInnovation Review.

In it, Les Silverman and Lyn Taliento argue that being a non-profit leader is much harder and more complex than running a business. An excerpt follows:

Business leaders play vital roles in the nonprofit sector -- as board members, donors, partners, and even executives. Yet all too often they underestimate the unique challenges of managing nonprofit organizations. In this article, 11 executives who have played leadership roles in both for-profits and nonprofits reveal the critical differences between the two, and suggest ways that business and nonprofit leaders can use this information to create a more effective social sector.

By Les Silverman & Lynn Taliento Summer 2006

Ask William Novelli, the CEO of AARP, if business executives underestimate the complexities of running a nonprofit organization, and his head starts nodding. The former Unilever marketer built Porter Novelli into a public relations powerhouse before embarking on his current career. Twelve years deep into the nonprofit sector, Novelli can attest that navigating Washington, D.C.’s land mines while running his sprawling $800 million operation is hardly the laid-back retirement farm that many businesspeople imagine.

Too many business CEOs just don’t get it, says Novelli. “It goes beyond underappreciated. CEOs are often disdainful of not-for-profit management. They think it’s undisciplined, nonquantified." But in fact, “it’s harder to succeed in the nonprofit world. For starters, nonprofits’ goals are both more complex and more intangible. “It may be hard to compete in the field of consumer packaged goods or electronics or high finance," he says, “but it’s harder to achieve goals in the nonprofit world because these goals tend to be behavioral. If you set out to do something about breast cancer in this country, or about Social Security solvency, it’s a hell of a lot harder to pull that off." And “it’s also harder to measure," he adds.

[GlobalGiving]