How to Run Your Non-Profit Like a Business

Mar. 27, 2024

Businesses are in the business of making money while non-profits are in the business of raising money. On the surface, it appears the two worlds couldn’t be more different, but if you look at how profitable businesses are structured, you can see that aspects can be applied to non-profits to drive success.

Every organization setup is nuanced, but you can find inspiration in these tangible ideas from the business world to keep your organization running smoothly, effectively, and positioned for future growth.

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Establish clear roles and expectations

An organization that is set up with the proper infrastructure has the ability to run like a well-oiled machine. Lay the foundation with detailed written policies, procedures, and processes that will structure your non-profit. These become your playbook and guides for decision-making.

Go a step further and create structure with clearly defined roles. Smaller organizations that don’t have the funds to employ a large staff can run into the problem of having only a few people who take on many different jobs. It can be overwhelming when you wear too many hats. Eliminate confusion and encourage efficiency by empowering staff to stay focused within their defined role. For roles that require staff to spearhead multiple facets, create project plans and workflows to structure their day according to the current initiative or top priority.

Create additional focus and boundaries by defining your organization’s mission – and stay narrow in that mission. Your organization does shouldn’t take on more until you have fulfilled what you have originally set out to do. You can cover more ground by establishing relationships with other non-profits that are doing different but similar work or by partnering with businesses that have something your organization can utilize.

Institute a succession plan

Turnover is inevitable in any business. And is especially common in the non-profit world. Because of this, it is critical that your organization is prepared with a succession plan. Like many businesses, your board will play an essential role in carrying out the succession plan. They are responsible for communicating any changes while remaining fully transparent to donors and corporate sponsors.

While only 27% of organizations report they have written an executive succession plan, it’s not less important or too late to get started, and having the proper documentation will eliminate headaches and ultimately set your board up for success. A thorough plan should address the following:

  1. Indicate who is going to be involved in the search for the replacement member. Is there a specific search committee that the board has designated?
  2. List what should be communicated at each step of the process and who should be notified (funders, community leaders, donors, etc.).
  3. Be specific in what skills and experience the new leader should possess.
  4. Make sure the salary is competitive with other executive leaders of similar- sized organizations.
  5. Include ways to attract a diverse set of candidates.
  6. Specify what will occur in the onboarding process and who will be responsible for facilitating. Make sure to include what resources are available to the new executive.
  7. Name who will lead the organization if your search is abrupt.

Having the right plan in place can alleviate tension, help the board select the right fit for your organization, and minimize disruption to your organization’s mission and strategic vision.

Conduct regular performance reviews

Performance reviews are paramount in the business world to foster continuous growth. Utilizing them in the non-profit world will help ensure that your staff stays motivated and aligned with your organization’s mission. Performance reviews should be conducted at least once a year, but could also be conducted semi- annually or quarterly to further ensure that you are keeping the dialogue open with your staff.

A good performance review should provide employees with direct feedback on how to improve and develop in their role at your organization. It’s also important to provide them with insight into how they are directly impacting your organization. For an impactful conversation include the following areas in your review:

  • Employee self-review
  • Assessment of how well the employee met their goals
  • Evaluation of how the employee worked throughout the year

While they aren’t directly your employees, surveying your repeat volunteers is another great way to solicit honest feedback about your organization. They are very familiar with your mission and have insight as to what is working well (or not well) from an operational standpoint.

Get SMART about goal setting

Businesses set goals to measure their success, and your organization should too! While the mission of many non-profit organizations is heavily tied to a feeling or a passion, it’s important to base your goals and decisions on data, rather than on emotion. Be SMART about it - each goal should be strategic, measurable, achievable, relevant, and timely. At the end of each year, revisit each goal and reflect on what you were able to achieve and where you fell short (if anywhere). This activity will help shape new goals as your organization continues to grow and evolve.

A good CEO leverages the knowledge and insight of their team, so remember, you don’t have to be the sole decision-maker when it comes to goal setting. Crowdsource ideas from your staff, senior volunteers, and board members. They know your organization very well and will bring a diverse set of solutions and opinions to the table. Plus, if they’re involved from the beginning, they’ll be more motivated to help achieve the outcome.

Treat your donors like investors

Donors are the lifeblood of your organization. They have a vested interest in your success, just like shareholders back businesses they believe in. To grow your non-profit, you must treat your donors as if they are investors. To start, you should clearly communicate your organization’s goals, campaigns, and results. Being transparent and forthcoming with this information will keep donors engaged and “invested.”

In the business world when investors or customers run into an issue, they are met with customer service to help solve the problem. Your donors should be provided with the same experience. Donors don’t always let you know when an issue arises, so keep the feedback loop open by surveying them at least once a year. This will give donors a chance to express any issues or concerns and will give you a chance to make it right and continue to foster a relationship with them.

Borrowing these ideas and tactics from the business world are just a few ways you can enhance the functionality of your organization. At Manning & Napier, we are here to collaborate with you every step of the way by providing investment advice, policy creation, board and staff education, fundraising support, and more.

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The information in this paper is not intended as legal or tax advice. Consult with an attorney or a tax or financial advisor regarding your specific legal, tax, estate planning, or financial situation.

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