By John Eisenhauer, guest blogger
I passionately believe in the great worth of nonprofit organizations. These organizations trade in dreams. When they succeed, a voice is given to the voiceless, power to the powerless. This is accomplished when an organization has a mission statement concerned with improving the lot of everyday people. To my mind, a good nonprofit focuses in on a specific concern of The People—perhaps job training or providing safety to the abused—and zeros in on a working solution.
It is my personal experience—from working with various nonprofits, both in paid and volunteer positions, helping the executive staff, or grantwriting—that a nonprofit cannot function without an overriding sense of direction.
Without planning, the organization fails to hone in on that working solution. The promise of that group’s mission statement is not realized.
Clearly, I believe in—and champion—that promise.
A nonprofit holds the promise of collective action that can translate into allowing people to see improved lives. This collective action is defined by creative action: a level of originality and vision that for-profit companies rarely enjoy.
Such ingenuity, I feel, only takes flight when there is structure and focus. It has been my observation that a nonprofit cannot realize its creative potential—dexterity of spirit—without structure. By “structure,” I mean developing and following metrics established in a strategic plan. This means setting up clear standards that determine success or failure. Metrics are well-elucidated criterion for a single project or the underlying mission of the nonprofit: metrics are quantitative and qualitative standards to be adhered to. If the metrics are being realized, the nonprofit tends to continue in that direction. If not, a change needs to be made: either procedural change or the success measures (metrics) need to be modified.
Recently, when working as a volunteer grantwriter for a nonprofit that I respect, I observed grants being compiled at the last possible moment and turned in right before the foundation’s deadline. I’m talking moments before the end of business cut off. Were metrics being considered?
I worked with the executive staff of another worthy nonprofit, which adopted bold plans, only to drop them at the first hint of a challenge. And did so repeatedly. Were metrics in place (defining overall success)? As a new project was launched, did the staff create metrics?
I feel that wasted potential that is squandered by poor planning and lack of follow through is tragic.
A nonprofit is a business: the product is the realization of an ideal, not selling a product. Unlike a for-profit company, an organization that works to further an ideal is driven by creativity. This creativity is freeing, allowing a group to follow its muse.
While counterintuitive, structure and planning are required to allow that muse to be heard. By caring about society instead of profit, a nonprofit is ignoring the basic rule of business. But, that is not license to break all the rules. Nonprofits still need to plan.
The distinction between a business plan and a strategic plan need to be mentioned. A business plan can be the overarching plan (including metrics) for the entire operation when it is getting started or for a single social enterprise within the organization. A strategic plan is the plan (including metrics, which can’t be stressed enough) for the organization as a whole. JVA has adopted David LaPiana’s definition of strategy: A coordinated set of actions designed to create and sustain a competitive advantage in achieving a nonprofit’s vision. LaPiana’s book, Nonprofit Strategy Revolution, is a useful resource when engaging in strategic planning.
But back to nonprofits and their for-profit counterparts. In a blog posting by Pat Lencioni on the Business Week Web site, the author talks about why we need to make less of a distinction between nonprofits and for-profits. After comparing the focus that a nonprofit has on imagination and the production focus that for-profit companies have, Lencioni concludes that while both approaches have strengths, a business cannot fully serve two masters. He says:
Of course, this binary approach to management is ridiculous, and makes sense only if we see employees as either puppies or robots, incapable of simultaneously embracing two distinct motivations and outlooks. The fact is, all of us are part puppy and part robot. We want to be motivated by something meaningful, and we want ourselves, and others, to be held accountable for performance and the value created.
So perhaps leaders need to stop thinking of their organizations as FPs [for-profits] and NFPs [not-for-profits] and start using a more meaningful and actionable criteria for categorization.
This is sage advice, I think, and it gets to the heart of what I believe: Nonprofits must combine their creative license with the types of plans and metrics that business use if they want to succeed—they can do good work and be accountable. In fact, businesses would do well to follow this advice as well…
John Eisenhauer is an independent writer and consultant in Denver. To contact John directly, email him at firstname.lastname@example.org.
 Nonprofitfits vs. For-Profits: Mission and Performance (http://www.businessweek.com/managing/content/may2009/ca2009055_713892.htm)