Is there a significant difference in managing a for-profit vs. a nonprofit organization?
I am investigating theories within managing nonprofit organization and are here curious, if anyone find it more challenging managing a nonprofit organization vs. a for-profit one? And in such case, what that challenges with be?
The answer(s) depends on an organization's understanding of why it exists, its raison d'etre. There are massive psychological differences (at least there should be), between non-profits and for-profits. I've raised money across the country from the inside of 501(c)3 orgs and consulted multinationals with tens of millions of customers. One of these things is not like the other and that difference is not a bad thing.
Both bear significant responsibilities to advance the greater good and take care of staffers and partners. Both are up a creek if they veer into just clawing after revenue to feed the beast. But one should never operate a non-profit like a business (except for efficiencies and other obvious best practices). And businesses should not emulate non-profits inasmuch as the honest goal of a company is to generate revenue, though a business should maintain heart as the fuel for every endeavor.
Ultimately, the organization is the people. From that perspective, the same leadership principles apply. As President, I founded an all volunteer non-profit organization. It was actually a start-up mountain bike organization. www.camp-sorba.org
Our product was designing, constructing, and maintaining trails to ride off-road in a local state park that was not doing well financially. Before we started in 2012, annual gate revenue was $80,000-$90,000. This year the park is projecting $200,000 and are already at $126,000 in 2014. The park has been revitalized with additional development still planned. We aren't through yet!
We formed from scratch and started with 150 members. Most were supporting financially not physically. However, we constructed 14 miles of new trails by hand in just under 6 months with a small team of 10-20 people that all had full-time jobs too.
The key is to get the people to buy-in to you. Then, if they value and seek what you value and seek, they will buy-in to your vision. But, they must buy-in to you first.
To grow the organization, you must grow the people in the organization. To grow the people in the organization, you must first grow yourself.
Hope this has helped you ma'am.
I dont see much difference. In for-profit, you are managing Your money to run projects and in No-for-Profit you are managing DONOR's money to run projects. Replace the DONOR with INVESTOR and everything becomes same
They both have their own unique needs.
Nonprofits are more goal oriented (feed 1,000 hungry with X dollars). Boards really do have the authority to fire the executive director as no one owns the business which means hiring people who are committed. Reporting and financial tracking requirements are different.
For profits aim for profits as goal but the board of Apple couldn't fire Steve "Bad Boy" Jobs (because he owned the company). Reporting is about measuring profit. I don't see McDonalds saying we want to reduce the number of employees on social welfare programs because we won't order our franchises to pay living wages.
My belief is that non-profit is a tax status, not a business model. As such, both need to be managed in a way that revenues exceed costs and resources support the purpose, vision, product, and/or services of the organization. The challenge with managing non-profits can sometimes be the mind-set and beliefs about non-profit meaning no profit or paying/spending less. Managing the mind set is the most difficult part in any organization.
Yes, the only significant change in managing a for-profit vs a nonprofit organization is "Money Earned and Money Saved".
Profit making organization is mainly towards Economy Generation and based on Market, whereas non-profit organization is towards social development and social justice based on cost-effective execution of project.
Your aim should be playing to win? It doesn't matter what industry- you are there to succeed and make it happen, beneficial to all, including job creation and job satisfaction. You should utilize your skills without thinking about the charitable vs non charitable. Managing skills should not be compromised and each assignment is a challenge, which should be done with full passion and love. You must like, what you are doing. Pradeep Berry
Its the same when compared comparing with professional companies.
The difference is not so significant except in for profit there is major emphasis on profitability while focus in the case of non-profit is managing funds, donations, some profit and their effective deployment.
The big challenge in case of non-profit is how to raise funds and create maximum impact from their application. The priority is to make significant impact and create sustainability. They also need profit for ongoing operations and retain the interest of donors and contributors. I am commenting from my understanding of such entities and having worked as a service provider to certain UN organzations and Red Cross entities.Haven't worked in any nonprofit insitution as such.
I've been in both and until you get into the publicly-traded level, the answer is "not really". The main difference is that in for-profits excess revenues get paid out quickly and only after the revenue is realized. In non-profits the excess has to be farmed back into the company expenses (including higher salaries for sales people and execs) and with timing issues often it has to estimated up front. Other than a select few, not many people actually gain any substantial bonuses any more anyway, so after that you are still left with the delights of managing people. Maybe the only difference I have noticed is that in the really social-oriented non-profits they are very slow to fire people who need it.