6 Myths about Non-Profit Management: Why You Should Manage Your Non-Profit Like a For-Profit Business

6 Myths about Non-Profit Management: Why You Should Manage Your Non-Profit Like a For-Profit Business

For much of much of my career, I’ve worked in the non-profit setting, but I’ve also spent a great deal of time in the for-profit sector, including having the privilege to run my own business.This makes some suggest that I’m quite versatile. I am…but the real truth is, the most successful non-profit organizations and the most successful for-profit businesses are run with the same basic business principles and should be managed in exactly the same way with some obvious revenue/tax exceptions.

I raise this issue because I often run into people who have misconceptions about the inner workings of a non-profit. Somewhere along the line they’ve come to believe that the administration, the oversight, the day to day operations, is run a little less tight than its for-profit counterpart. Now they could be making mention of these things as merely something they’ve seen, but sometimes it’s the case that boards and committees have a lax view of how a non-profit organization needs to be managed.

Here’s the problem. When non-profit leadership takes on the attitude that we can cut corners, we don’t need to run a tight ship, that the quality of our work can be the bare minimum, we can be guaranteed that this non-profit will not be around for very long. Every non-profit should be managed with the mindset of a for-profit business….as if its your money to lose, not someone else’s. So, there are some myths about non-profit management that really need to be addressed:

Myth #1: Overhead should be avoided or kept at a bare minimum.
Of course there isn’t a non-profit or for-profit business anywhere that should practice the use of excessive overhead or spending. For all practical purposes….why? But where the non-profit struggles a bit differently than their for-profit counterpart is the belief that they should do without or with antiquated equipment so that all of their dollars can be poured back into their mission. The problem with this way of thinking is the belief that the mission is even achievable without working computers, usable phone lines, or adequate office space. The more effective an organization is, the easier it is to persuade donors to invest more. But effectiveness is dependent on efficiency, and having the right equipment and the right people is how things are going to happen.

Myth #2: Non-profits can’t have money in the bank at the end of the year.
I almost spit out my drink when someone told me that an experienced non-profit executive actually believes this. There is no IRS rule stating that at the end of the fiscal year, they have to start with a zero balance in their bank accounts. This isn’t the first time I’ve heard this sentiment in all honesty. It comes out in a variety of forms such as “we can’t have a savings account with a lot of money in it because we are a nonprofit.”  Please have money in the bank at the end of the year so you have something to work with. So sad that this even has to be addressed as a serious myth….but I’ll move on…

Myth #3: Non-profits cannot make a profit.
Another widely believed myth. So let’s set the record straight on this. If your organization that supports, for example, suicide prevention, and wants to sell t-shirts to create more awareness for the cause, your organization can do that.

Non-profits can earn a profit on activities not related to their stated goals, but any profits of this kind are subject to taxation. In order for a nonprofit to make tax-exempt income, it must fall within the scope of their mission and those profits must be reinvested into its expenses.This income typically comes in the form of donations and grants. Of course, this is not financial advice, please give your financial adviser a call to get more information on this matter.

Myth #4: Non-profit executives should be paid less.
After all, its charitable work, right? Think again. It takes talent to run any business, including a non-profit entity. In the same way you shouldn’t keep the computers around with the Windows 98 operating system (its a security risk!), don’t hire staff who are inadequate for the task. If you plan to be working for your cause in the next 10, 15 or 20 years, you need to invest in the leadership that can take you there. If you underpay, you won’t find the talent you need because they will find a way to go where they can get the salary they deserve. Invest early and reap the benefits later.

Myth #5: Big donors are more important than small donors.
Seems like that $5000 donor who dropped off a check last week should be more important than the guy that dropped $10 in the donation jar this morning. Common sense, right? But you know what they say about making assumptions. There is no donor more important than another donor. Of course, you can’t go to lunch with ALL of them, but don’t assume you know everything there is to know about the man who donated ten dollars. Do you know that he doesn’t have another ten thousand to contribute? The best way to think about donors is to not make value judgments about anyone who contributes less than you expect. Even if the ten dollar contributor could never give another cent again, that ten dollars was given from the heart. We don’t want to lose our small donors because they often make up more of the giving than do the large donors. According to Charity Navigator, “donations from individuals account for over two-thirds of all donations.” Big or small, every donation adds up.

Myth #6: Donor Acquisition is more important than donor retention.
Whether you’re a for-profit or a non-profit entity, you need to always be thinking about how to draw in more customers while retaining your existing customers. Implementation of different marketing strategies will allow you to focus on both types differently. Loyalty programs will help you with retention, including in the non-profit setting, and special deals will make an impact on both existing and potential customers. You need to resist comparing the two and give energy to both.

There are many more crazy myths out there about non-profits and how they should be managed differently from a for-profit business. The bottom line is in order for either to run efficiently and effectively, they both need to be governed by basic business principles that allow for future growth. So don’t buy into the myths and be smart about running your non-profit…like the business that it is.

Selling Ideas Before Selling Lemonade [Branding Basics Series]

Selling Ideas Before Selling Lemonade [Branding Basics Series]

You remember your first business endeavor. You were probably around the age of 10. It was a lemonade stand and the reason you started it is because you wanted to buy something that either your parents couldn’t afford to buy for you or you needed earn the money to do it yourself. So without regard for any cost-benefit analysis, you asked your parents for the sugar, the lemons, and the markers and tag board for your marketing materials and you set up on the front sidewalk in front of your house with your plan to make all the money you needed all before dinner.

You didn’t know at the time that you needed a business plan and a marketing strategy. All you knew was that 1) you needed the cash fast and 2) people get thirsty. There was a definitive need for what you were selling.

But you were selling more than lemonade. You were selling a dream. Every child who got a nickel from their parents to buy your product was thirsty. Every adult who told you to keep the change was sold on your dream—whatever it was. They didn’t care to know.

It gets a little harder to sell anything as a budding entrepreneur. People don’t buy because they think you’re adorable and want to play a role in helping you buy your next toy. They want to buy because you’ve sold them on the notion that your product or service fills a need or solves a problem. That connection has been made in their mind, at least a few moments before they have presented you with payment.

Moving product is as much about selling ideas as much as it is the transaction at the cash register. Successful businesses know this. Many fast food establishments have sold you their product before you even get in the car. If having it “your way” is more important than “fresh never frozen,”  then your lunch-time path is predetermined and the work of sales has been reduced to “may I take your order?”

Its never been more important that you know who you are and what you’re selling. Differentiating yourself and your product is one of the clearest ways consumers can answer the question of need or desire. You need to be willing to make your personality, your store, your product and your service look different from the 20 other similar establishments in your community. Standing out is how people begin to make product considerations. You can’t be seen among the competition if you look exactly like them.

Starting a business and having any long-term success is well beyond the anecdote of the lemonade stand. You’re just not cute enough anymore to start a business venture that inspires people much older than you to buy things because it will make you feel good. Before you can move any product or service or persuade people to give to your cause, you have to convince them of the need it fills in their life. Eventually you’ll create a brand reputation that stands out among the competition and that people have learned to trust.

“Personal branding” Doesn’t Sound Gross

“Personal branding” Doesn’t Sound Gross

It’s said by so many people, including me, that knowledge is power. So if you have an idea about how your customers and acquaintances think about you, then you have a starting point for knowing what to fix and why (or to know what isn’t broken!). Your brand is the experience others have with your business, product, service, or relationship. As Jeff Bezos is widely quoted as saying, “Your brand is what other people say about you when you’re not in the room.”

Your personal brand can and should be both passive and active. It’s how people know you and what you know about yourself and want to refine. A recent article at Fast Company made some interesting claims about the concept of brand.

Brands shape themselves to what others want to hear. A brand is a politician in a cheap suit with over-whitened teeth that calculates relationships in ROI. A personal brand lives in constant fear of discovery, that others will see them for who they aren’t or what they don’t know.

Whatever the answer is to the question, “How do you want to be known?”, the answer is a goal which may or may not be actually achievable. That I might want to be known as a recording artist with at least one top 40 hit is totally not achievable….it’s an unrealistic fantasy. But that I want to be known as a marketing and leadership coach is not outside the bounds of my skills and experience. Brands can always start off as a lie, but brands that attempt to perpetuate that lie have a high mortality rate.

Where a ‘brand is artificial and phony, ethos is an authentic expression of your values and identity as a leader. Ethos includes your accomplishments, mastery, reputation, knowledge, and credibility. A professional ethos is an incomplete expression of your entire self.

Though I love the fact that a leader in the marketing arena is espousing the teachings of Aristotle in their work, I think the logical fallacy here is that brand and ethos must be contradictory terms. I would suggest that a “brand” is incredibly difficult to fake because you can’t alter a person’s experience with your product or service. You can’t lie to consumers and suggest that they can “have it your way” and not let them have it their way. The market doesn’t allow for false advertising for very long or with brands that don’t deliver the experience they’re attempting to convey through their marketing strategy. Of course, ethos is a great way to understand the depths of an individual or business culture, but a brand is simply reminiscent of the experience a customer has with your product or service—and your logo and entire brand identity serves as a reminder of that experience.

Challenges and Advice for Entrepreneurs

Challenges and Advice for Entrepreneurs

Typically, my business is not focused on what differentiates men and women in the workplace or any other societal space we share. In fact, I quite enjoy what I learn from other leaders–predominately men–in the online community on coaching, marketing and web technology. Duct Tape Marketing, WP Elevation, Marketing Over Coffee and The Tim Ferriss Show are some of my go-to’s for insight, (more…)

Business Basics: 5 Ethical Practices to Implement into Your Business

Business Basics: 5 Ethical Practices to Implement into Your Business

Ethics play a major role in business today and can impact everything from brand reputation to employee relations and overall profitability. The relationship between the disciplines of marketing/communications and ethics is one that is often overlooked, but your best marketing professionals can help you in both arenas. (more…)