It often seems that when otherwise business-savvy individuals become involved in a nonprofit organization, they set aside all they ever learned in business and proceed to operate their nonprofit as if business rules do not matter. As most soon find out, they matter a lot. In this post, let’s take a look (in no particular order) at 10 business basics that nonprofits ignore at their own peril.
Money. This may come as a shock to some, but being “nonprofit” does not, cannot, mean NO PROFIT. With the notable exception of GM, AIG and a few others, a business must make a profit to survive. Your organization was probably not on Tim Geithner’s list for TARP funding, so red ink should be regarded as impending doom. With the uncertainty of this economy, you simply must be solvent. You and your board may have to make some tough decisions. Some programs may have to be scaled back or eliminated. Fundraising must become even more focused and intentional. I won’t repeat a lot of what we’ve discussed recently concerning funding…suffice it to say you must keep a lid on overhead…now more than ever.