by Neel Hajra
Thanks to www.lumaxart.com
Did the absurd over-statement in the title capture your attention? Good, because it’s meant to counter the equally absurd paternalism of many for-profit managers 
Having spent a few formative years at Ford Motor Company providing legal support to business executives and teams, I’m acutely aware of the fantastic talent and capability of top for-profit leaders. There is so much the nonprofit sector can learn from best practices on the for-profit side. However, don’t think this means that for-profits managers are “better.” In fact, now that I’ve jumped the fence to the non-profit world, I appreciate that a good nonprofit manager often brings more to the table than a good for-profit manager. Why? There are many reasons, but I’ll focus on (and simplify) two important ones:
Success Costs Money (instead of making it)
One thing I miss about the for-profit world is that in most cases, if you offer a great product or service, people buy it and you make money. It’s simple, if not easy.
On the nonprofit side, in most cases, the better your service, the more money you LOSE. This bears repeating: great work = greater losses (with some obvious exceptions where the service recipients can actually afford to pay for the full cost and marginal profit of services, such as hospitals and universities and some social enterprises). Achieving success as a nonprofit manager requires overcoming an inherently negative financial model, in addition to all of the challenges of running a business in the first place.
At this point, some for-profit managers are probably objecting that nonprofits get “free money” in the form of donations and tax benefits and “free labor” through volunteers. Well, the cost of philanthropic capital (i.e., donations) is usually HIGHER than a for-profit’s cost of capital through loans and other financing vehicles. “Free labor” is a laughable concept… volunteers are far from free, and pose as many challenges as they solve. The tax benefits are a valid (if over-stated) point, but are easily outweighed by the basis for tax-exemption, namely: mission…
The “Mission” Bottom Line Is Much More Complex Than the Financial Bottom Line
Ah, sometimes I yearn for the days when I was a part of a global company of 350,000 employees that all had one common ultimate goal: make money! This single bottom line provided clarity and a common language.
Nonprofits add a second bottom line that takes precedence over everything else: mission. Mission adds all sorts of additional compexities. How do you measure mission? Well, that’s the trillion dollar question. Mission is interpreted differently by every single stakeholder group. Staff, board, volunteers, service recipients, funders, regulators, the public, etc., all have different interpretations on what mission means. Unlike the financial bottom line, there is NO common language or universal metric for achieving mission.
The result? Nonprofit leaders can’t take the usual ‘command and control‘ approach to running their organization – you can’t do that when the goal is an inherently fluid one that requires constant calibration and review. Rather, each nonprofit leader is a pied piper that has to cajole, sway, and garner loose internal and external support and alignment. This is a constant process that overlays the ever-demanding financial bottom line. I won’t even get into the lack of a rational capital market in the nonprofit world – that will have to wait for another day.
“Can’t We All Just Get Along?”
Unlike many of my nonprofit peers, I think that the for-profit world has a much deeper talent base (money has a way of attracting talent!). And of course, the for-profit sector faces a greater level of competition for a given service area – intense competition breeds AMAZING efficiencies and best practices that the nonprofit sector needs to adopt. My point is simply that each sector has something to learn from the other in terms of skills, practices, and strategies. Hey, I have a crazy idea: Let’s set aside the paternalism of the for-profit sector (and the holier-than-thou-ism of the nonprofit sector) and work together to make our world a better place!
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Excellent post, Neel. Thank you. I think we have finally gotten through the age where folks from the greater community felt like social sector managers were folks who couldn’t make it anywhere else or were just bleeding hearts. We are entrepreneurs, leaders, manager of business with a wildly different product and service model, but we have the same skill sets nonetheless. I could never go back to selling widgets or inventing a new flavor and feel of soap. This work is incredibly exciting, challenging, frustrating and exhilarating. And, I get to work with folks like you and your team at NEW. What’s better than that?