Should Nonprofits Be More Like Business? Asked the Week of the Bailout 10/1/08

The next time someone says to you for the umpteenth time, "Nonprofits should be run more like a business," say back to them: "Like which business?"

This month, with huge financial firms tanking and passing the pain to thousands of employees, shareholders, customers and taxpayers, it's a good time to remember that if Lehman Brothers or AIG had been run more like nonprofits, they might not be in the trouble they are in today. If these firms had been run like nonprofits, they would have placed community well-being above executive pay, profits, and competitiveness.

The spectacle of seeing these big firms floundering and failing should also remind us there is a right way and a wrong way to close down. This issue's Board Cafe column discusses how nonprofits, when they have to, can Close Down Gracefully without hurting their constituents.

Another reason to close down the right way, if the nonprofit has established a retirement program, is to protect employees' retirement plans. But even if your nonprofit is going strong, whether you have a lot, a little or no retirement savings at all, you may be in a minor state of panic in the face of all this financial upheaval. Even more reason toA breathe and take a hard look at your retirement options.

Our Three-Part Series on Nonprofit Retirement wraps up in this edition by looking at a tough question: what if you don't have time to save? And there's our signature "Take A 3-Minute Vacation Right Now." Thanks, everyone, for forwarding Blue Avocado to so many folks! -- Jan Masaoka

Comments (5)

  • You GO, Jan! The next time someone says to you for the umpteenth time, "Nonprofits should be run more like a business," say back to them: "Like which business?"YES!

    Oct 03, 2008
  • I am sooo tired of the "run your nonprofit like a businesss" mantra and the implication there of. Your timely words of wisdom on the matter are appreciated and will be echoed. Thank you!!

    Alberto Cortés, MBA

    Executive Director
    Mama's Kitchen

    Oct 03, 2008
  • Anonymous

    Kudos to your matter-of-fact rejoinder to the idea the oft heard chiding that "Nonprofits should be run more like a business." Verily (and regretfully), this is something that I have uttered and muttered personally in times of great frustration over the state that the nonprofits I have worked for have found themselves in but this reminds me that no industry or sector has the monopoly on mismanagement. The folly, as usual, is a human one, private or public.

    Gil Cho

    IT Manager

    Oct 12, 2008
  • Anonymous

    But there are good business out there too. A prime example is the American Red Cross which was in the red for decades. Then Elizabeth Dole took over (without any compensation for the first year) and turned it from being in the red to the black. There are many business practices that nonprofits should adhere to for the long haul. Investing funds, using funds to aid others who will in turn donate. Or from knowing that NPO is doing something productive others donate.

    Many NPOs rely heavily upon grants made to them by businesses, corporations and government.

    There has to be a happy medium there.

    Jan 27, 2009
  • Anonymous

    I work with non-profits and urge them to develop a business plan, so that they can understand the nuances of running their organization. Many times, the board of directors seems lost without both training and a guiding document that will help them to understand what they should do to jump start their organization. In these troubled times, this seems even more important to protect the board -- and the consumer.

    Linda McQuinn, President & CEO
    The McQuinn Companies, Inc.

    Mar 18, 2009

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