Episode 138 | Why Business Advice Doesn’t Work for Nonprofits

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I recently had a conversation with a friend of mine who was feeling so defeated because she was in a group of business leaders and felt she was letting down the group and her business coach because she wasn’t living up to their expectations.  I had to remind her that she is not a for profit business leader.   On today’s episode, I am focusing on 3 areas.  First, you need to stay clear on your messaging.  You are not a business leader; you are a nonprofit leader.  These are very different, so let’s clarify:  business = profit, nonprofit = no profit.  What each group claims to be success is very different.  We’re not playing the same game. As a nonprofit leader, you are playing by a whole new set of rules.  As a business leader, success means you’ve gotten money in the bank.  If you are running a nonprofit, success means you’ve spent all your money on impacting the lives of others.  When the need is great, the funds are low.  If the need wasn’t great, you wouldn’t need to work full time.  You could just volunteer your time. 

Second, the transaction is completely different.  Think about how your nonprofit makes a transaction.  A successful transaction needs three parties – you, the individuals you serve, and the donors who fund you.  For a for profit, you only need two parties – the person buying and the person selling.  In essence, you are doing double the work as a for profit leader.  Remember, if you put too much emphasis on the mission and not enough focus on your fundraising, you’ll struggle.  If you’re not talking about your funding, you’ll never be able to serve all those who need it.  Likewise, if you put all your eggs in the fundraising basket, then you’ll end up with a lot of money and not enough services to help your constituents.  In the end, it’s all about balance.

The third area where business advice doesn’t work for a nonprofit is that you cannot motivate people with money.  Business advice tells you, “you can just go pay people.”  However, as a nonprofit, many operate with a limited number of staff people and a lot of volunteers.  Most likely, those volunteers are giving their time and money to your cause because they care about it.  You can see the business advice is not going to work here because you have to motivate people to donate their time and money to your cause without any compensation back. 

I want to encourage you to be clear about what it is you do and why it is you need donors to support your cause. This is where clarity is so critical because you want your donors to see how you need them.  But I also want you to see how differently a for profit organization runs compared to a nonprofit.  If you’ve been caught in the in-between of functioning as a business, but you are a nonprofit, I encourage you to seek advice from other nonprofit thought leaders who understand how nonprofits run. 

For more information about Mary Valloni, visit maryvalloni.com and to download our free Fundraising Freedom Roadmap, go to maryvalloni.com/roadmap

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