No, Why Don't YOU Run Your Business Like a Nonprofit?!

I just read one of those ever-popular articles exhorting nonprofits to operate like businesses. If you Google "nonprofit like a business", you’ll get 78,000 results.  Of course, nonprofits are, in fact, businesses, but that doesn’t seem to slow down the advice from the for-profit sector.  At the risk of offending every pure-hearted but clueless MBA offering this kind of advice, let me turn the question around. Why don't YOU operate your business like a nonprofit?

You would think the MBAs would be a little more humble these days.  Bear Stearns didn’t disappear because of feckless social workers.  Homeless shelters didn’t get bailed out because they were too big to fail.  You didn’t see nonprofit organizations buying and selling bogus mortgage-backed securities.  The Sierra Club didn’t spill oil in the Gulf of Mexico.

But, please, Mr. Businessman, tell us how for-profit businesses are the gold standard we should be striving for. 

Would you like to tell us about how important it is for us to be as efficient as the mighty profit-driven machines? Like much widely accepted "wisdom", the delusion that private industry is somehow more efficient than nonprofits or even governmental agencies wilts under real-world scrutiny. How are those for-profit hospitals comparing to their nonprofit competitors when it comes to efficiency? Studies say there’s no real difference.  Does anybody care to compare the results of for-profit universities to nonprofits or the local state university? It’s not a pretty picture.  The truth is that for-profit superiority in efficiency is often a fallacy.

While we’re talking about running your business like a nonprofit, how about showing me your paycheck? How about the tax return of your business? Of course, I should mind my own business.  Nonprofits, though, publish their highest paid employees and their tax forms are public.  Go poke around Guidestar and snoop to your heart’s content.  It’s transparency, and it’s a way that nonprofits are miles ahead of their for-profit friends.

Another feature of the for-profit world that doesn't come over to the nonprofit world is nepotism.  Family businesses get handed down, and so do massive corporations, but you don’t see Clara Barton’s granddaughter running the Red Cross, or Juliet Gordon Lowe’s running the Girl Scouts.  Nonprofit CEOs get chosen by merit, not genetics.  And that means that the hard-working, brilliant Executive Director of the local Women’s Shelter builds a business that she just gives away when she leaves instead of handing it off to the next generation. 

Now, don’t get me wrong.  For-profit business people offer tremendous wisdom and guidance – along with tremendous donations and volunteer support – when they help nonprofits.  And many have experience that can hugely improve the results of a nonprofit; if any great copywriters or graphics design people want to help me with my year-end mailing, I will jump at the chance to work with them.  Good business skills are good business skills, whether in a for- or non-profit organization, and nonprofit is only a tax status.

I have worked for small businesses, multi-national corporations, and for nonprofits of various sizes.  My personal experience is that nonprofits tend to run more efficiently than the for-profit corporations, but I will happily agree that the multi-national corporation I worked with was not necessarily representative of the best.  But I will point out that the writers of Dilbert and The Office chose to target the for-profit world . . .

Obligatory Tangentially Related Joke: A hot air balloonist realizes that he has gone way off course.  He sees a guy in a field below, and he shouts down,"Excuse me, can you tell me where I am?"
The man below says, "Yes, you're in a hot air balloon, about 30 feet above this field."

"You must be an engineer," says the balloonist.
"Yes, I am. How did you guess?"
"Everything you told me is technically correct, but it's of no use to anyone."
The man below says, "I'm guessing that you're in senior management."
"You're right. But how did you know?"
"You don't know where you are, or where you're going, but you expect me to know everything you ought to know. You're in the same position you were before we met, but now you're criticizing me!"