Nonprofit Strategies: Nonprofit board has different priorities

barry@sloccf.orgMarch 8, 2012 

A new board member who owns a business needs to know the following three things before joining a nonprofit board:

• Your business measures success differently than does the nonprofit. In your business, profit is the key metric. In a nonprofit, the deliverable is public benefit.

Determining how to measure success in a nonprofit isn’t easy. Imagine that the nonprofit provides afterschool activities for atrisk youth. How do you define success? How do you measure the impact the programs are having on the participants? If your business sells luggage and totes, how motivated are you to learn about after-school activities and youth development stages?

• In your business, adequate capitalization is crucial, even if you must borrow money. In nonprofits, donors don’t like to see debt on the balance sheet.

Also, business publications regularly praise the nonprofits that have the lowest overhead. Therefore, too many nonprofits are undercapitalized. Staff is expected to do more with less and make personal sacrifices of time and energy in order to keep the budget in balance. Would you tolerate those working conditions in your business?

• In your business, you make the decisions. In a nonprofit, many people make the decisions. Because nonprofits are accountable to their community, stakeholders, such as funders, politicians, and clients, expect to have some say in what the nonprofit is doing.

It takes a lot longer to make a decision in a nonprofit than in your business. Put another way, if you don’t like committees, don’t get on a nonprofit board.

You have been recruited because of your success. Please be generous with your hard-earned wisdom. Keep an open mind, though. Pay attention to how the organization creates donor loyalty, builds stakeholder commitment, and stretches resources. You may want to apply some of these lessons in your business.

Barry VanderKelen is executive director of the San Luis Obispo County Community Foundation.

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