Should Nonprofits Run Like a Business?

As a professor in a business school who is a former nonprofit CEO and consultant to nonprofits, I am often asked: “Should a nonprofit be run like a business?

Easy answer, “No.”

A nonprofit should be run like effective nonprofits are run.

However . . . . .

There is a lot we – in the nonprofit world – can learn from business best practices.  Far too many nonprofit executives dismiss many “business practices” because they think that nearly everything businesses do is “tainted” by the profit motive, and therefore “wrong.”

This is short-sighted thinking.  We can study business best practices and then figure out if and how they fit the nonprofit world.  Some may not fit.  But plenty practices fit perfectly.

How about the importance of making data driven decisions, or managing our finances effectively, or using sound human resources practices?  This is just a short list of business best practices – but they are also nonprofit best practices.

Dan Pallotta’s TED Talk, “The Way We Think About Charity is Dead Wrong,” (check out the link here) in which he encourages the use of business thinking for the nonprofit world, is going viral in the nonprofit world lately.  I don’t agree with everything he says, but he is rattling a lot of cages and getting people to rethink some key assumptions.

Don’t assume that all business practices are wrong for nonprofits.  The whole concept behind the Mission Impact book was to take business best practice in the area of strategy and retrofit it for nonprofits.  We can learn a lot from businesses and – as I frequently tell my business friends – they can learn a lot from us as well.