Bridgers At The Gap: How Executives Can Share Best Practices Across Sectors
Mar 25, 2021 by Eric D. Reicin, President & CEO, BBB National Programs
Nonprofit organizations are often viewed as fundamentally different than for-profit enterprises, but those of us known as “bridgers” see striking similarities, albeit through a professional bifocal lens.
We bridgers have transitioned in our careers from publicly traded or privately owned for-profit enterprises to nonprofit organizations, often with a goal to grow these nonprofits in pursuit of their missions. Our insights from both sides of “the bridge” provide us a dual perspective, where we can see that the needs, limitations and goals of for-profits and nonprofits are closer than they may seem at first glance.
Beyond the bridge of our individual experiences, work in the private sector writ large is increasingly seen as valued. According to the recently issued 2021 Edelman Trust Barometer, business, in particular, has ascended to a perch of unusually high credibility, with 61% of individuals trusting for-profit enterprises to lead on a range of vexing issues, more than that assigned to any other sector.
There are numerous ways in which knowledge-sharing between the for-profit and nonprofit sectors can take place. To start to create the most meaningful and lasting impact, I suggest that nonprofit leaders can and should learn from these three key best practices in the for-profit world.
According to a recent survey of nonprofit board members, almost 50% said their average board member was only “generally” connected to the nonprofit’s mission and not familiar at all with day-to-day outcomes or programming. Assuming this survey is accurate, that is both a challenge and an opportunity for nonprofit leaders.
While nonprofits operate under unusual constraints and in complex environments, their boards face many challenges familiar to corporate boards. With the right approach to recruitment and engagement, nonprofit boards have the potential to be meaningful strategic partners to nonprofit organizations in ways that help generate revenue and awareness, help the organization identify appropriate risk tolerance and risk appetite, adopt leading business practices and ultimately further their missions.
It is very important for any large-scale entity — for-profit or nonprofit — to work with its board to have an intentional multiyear plan, as well as the skill and willingness to experiment in the context of that plan. Such a plan must start by defining strategic imperatives and actions that center the organization and provide enough flexibility to iterate when circumstances dictate.
Each new board member represents the opportunity to build on the skills and experience of existing board members. Our organization added three new distinguished board members this year who came from three different industries and brought three unique types of expertise. This diversity creates very helpful discussions, which in turn helps us ensure that we are making smart decisions.
In a TED Talk on what nonprofits can learn from private-sector successes like Coca-Cola, Melinda Gates said, “If we understand what makes something like Coca-Cola ubiquitous, we can apply those lessons for public good. Coke’s success is relevant because if we can analyze it, learn from it, then we can save lives.” Not every brand has the history of Coca-Cola, and there is no nonprofit that can approach the scale of the Bill and Melinda Gates Foundation. But the lessons can still apply, no matter the brand or scale.
Enhancing The Employee Experience
Large organizations are constantly experimenting with — and learning from — the best ways to engage employees and enhance their experience. Part of that engagement includes the deployment of technology tools.
Tapping the full power of your organization’s people often depends in part on applying the right technology. In the past, many tools were primarily designed for enterprise accounts, while small businesses and some nonprofits were priced out. Thankfully, that is no longer the case. Many vendors now offer their tools and services to smaller organizations on a more cost-effective basis, allowing you to pick and choose the tools that best meet your organization’s needs to enhance employee engagement and the employee experience.
Financial Transformation In A Digital Environment
In the for-profit world, there is typically a high degree of clarity on financial matters, particularly when it comes to understanding how businesses operate and public company disclosure requirements. Business leaders know they need a multiyear financial model and an accounting/finance department that works for their business. If a financial model is not working, they are quick to correct it.
"Many nonprofits start with passion but do not have a sustainable financial model that results in long-term momentum," Jay Desko explains. It is important for nonprofit leaders to have not just a fundraising plan but a financing plan.
Achieving that plan requires financial transformation. Instead of merely “balancing the books,” nonprofits should look to the example of my former employer MorganFranklin Consulting, where I served in senior roles for several years. MorganFranklin emphasizes the need to "maximize the use of resources, be a more effective partner with the business, and effect business decision-making driven by KPIs [key performance indicators], performance and core metrics." Although those points are made in a business-to-business context, they also apply in a nonprofit environment, as does another important point: Make the move from analog to digital and never look back.
While it may seem a heavy lift, working toward a financial transformation is worth the effort. Redesigning the organizational finance strategy and its processes while installing supporting technology can deliver immediate and lasting value. Financial transformation engages virtually every aspect of the organization, creating a KPI mindset that is key to the short- and long-term success of any nonprofit.
A successful nonprofit organization begins with a meaningful mission and vision, embraced by an engaged board. Then, for the organization to weather storms and attract new allies, its leaders must stay focused on enhancing the employee experience and creating a strong and diversified financial model — all in the context of a growth mindset.
Originally published on Forbes.