Mindset. Yep. A proper mindset is exactly what your nonprofit needs. I’m sure that wasn’t what you wanted to hear or were scouring the edges of the internet for because it’s not an easy fix. The most important thing every nonprofit needs is to shift their mindset to thinking of themselves as a business instead of a nonprofit.
Ok, I know what you’re thinking, ‘WHAT?! How dare you! My nonprofit is nothing like those for-profit, Mr. Krabs scoundrels out to pickpocket for the sake of a dollar. We have a mission to serve, to help, to heal!’ But before you burn down the Krusty Krab, let me explain…
The very name nonprofit is deceptively simple—it almost sounds like you’re not actually meant to profit, right? The social impact is all a nonprofit should ever worry about, right? While your heart is in the right place, this mindset is limiting in how far it can take your efforts for long-standing change.
“Nonprofits SHOULD be focused on raising as much money as they can,” says Sara Kahmann, a nonprofit professional with a decade of experience. “The difference is that at the end of the year when you look at income minus expenses, that profit doesn’t go into anyone’s pockets, it goes right back into programs for the next year. That’s how you grow your business and it’s how you further your mission.”
Far too often, nonprofits overemphasize the emotional buy-in with every email, campaign, and donation ask—both internally with their own staff and externally to donors and partners.
Here are four reasons why your nonprofit should think like a business:
- Too much emphasis on cost means not enough on investment
Every good business owner weighs in on the pros and cons of purchases big and small to determine how it’ll affect the business over time. However, nonprofits typically over emphasize the price tag and if it’s not directly contributing to the social impact it’s just a line-item, not an investment. This overshadows a lot of potential for growth if costs are only seen at face value. If your website is confusing to possible donors or if your branding is missing the mark, an investment to resolve a major obstacle to connect with your audience could mean a significant return on investment. As our client, Stand Up Nashville, saw a 66% increase in revenue within 6 months of their rebrand and website launch.
“Better Business Bureau and Charity Navigator have benchmarks for your expense ratio,” advises Kahmann. “These benchmarks can help you see where you need to make adjustments, and if you’ve been afraid to invest in your nonprofit, the same benchmarks might give you some peace of mind that you can (and maybe should) be spending more in certain areas in pursuit of your mission. Donors look at these numbers when deciding whether it’s wise to invest in your organization, to see if you will be responsible with their money.”
- Your time is valuable
A business owner delegates and distributes tasks accordingly.
When the time comes, a for-profit will evaluate the cost of bringing on another staff member based on the long-term potential of sustainable support. How much time will hiring Sally to help with the books save me? Rather than, how will hiring Sally look to donors? Unfortunately, nonprofits are often judged based on how low (or high) administrative costs are. A more accurate evaluation would be to compare these costs to the delivery of the mission, or results-based evidence. The key takeaways are to prioritize what you can accomplish on your own and know when you can’t, maintain transparency with regular reporting, and evaluate your return on investment rather than a bottom-line cost.
- Being a jack of all trades means you’re a master of none
On a similar note, wearing too many hats—aka you’re the E.D, graphic designer, social media manager, and bookkeeper and Ryan is the development director, personal assistant, and copywriter—means your efforts are stretched thin and decisions likely aren’t data-driven. You barely have time to sleep let alone think strategically! This setup permits ‘little things’ to slip through the cracks. It’s often framed as prioritizing but there’s nothing professional about sending thank you letters 3 months late because you’re too overwhelmed with more time-sensitive tasks to be bothered with more tedious, yet meaningful ones.
It’s obvious how this affects your mission but it also devalues your staff members by throwing things on their plate they have little interest in. It’s important to ensure your staff and volunteers understand the impact they’re making and how their position supports the mission with their unique set of skills, not because they can fulfill 13 different roles.
- Passion isn’t enough
Ok, it’s a lot and arguably the most important piece! BUT for long-term success, knowing your market and identifying what makes your organization different (aka you’re unique selling proposition or USP) sets you apart from others within the market that are vying for the same time, donation, and attention as you. It’s easy for us to think about what makes businesses unique, because they do an excellent job at communicating it. For Amazon, one-click and you’ve spent $600 on bouncy balls that will be here before buyer’s remorse even sets in.
That same quick recall should be accessible for nonprofits too rather than homogeneous missions with nondescript branding and imagery. Understanding your key differentiators and getting to know your audience are the first steps to moving beyond relying solely on your passion as a superpower and begin connecting with your true potential.
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