Running a non-profit or a charity is not unlike managing a business – albeit with a different primary goal. Where businesses focus on profits, non-profits and charities focus on societal impact. However, the principles of sound business management remain pertinent to both.
In this article, we delve into the fundamental business management principles that non-profit and charity leaders should adopt, and highlight renowned businesses that have employed these principles successfully.
Bonus: We will also recommend some noteworthy books for those seeking to enhance their management acumen in the non-profit sector.
Principle 1: Strategic Planning
Strategic planning is the process of defining an organisation’s direction and making decisions on allocating its resources to pursue this direction. This includes its capital and people. The purpose of strategic planning is to set overall goals for your non-profit or charity and to develop a plan to achieve them.
How it Works and How to Set it Up
Strategic planning involves understanding what the organisation’s current status is, where it would like to be, and how to get there. A typical strategic planning process has three main steps: strategy formulation, strategy execution, and strategy evaluation.
How to Get Buy-in from Stakeholders for a Non-Profit or Charity
In a non-profit context, getting buy-in from all stakeholders is crucial to the success of strategic planning. This can be achieved by ensuring all stakeholders are involved in the planning process, their input is valued, and the plan is communicated clearly to everyone. Regular meetings, brainstorming sessions, and open discussions can be part of the strategy formulation process.
Businesses that Used Strategic Planning Successfully
Strategic planning has been the bedrock of many successful enterprises, including non-profits and charities. Microsoft, under the leadership of Satya Nadella, is a prime example of successful strategic planning. Nadella’s clear vision and strategic planning have transformed Microsoft, repositioning it as a leader in cloud computing.
Principle 2: Financial Management
Financial management is the efficient and effective management of money in such a manner as to accomplish the objectives of the organisation. For a non-profit or charity, sound financial management is essential to ensure that funds are appropriately sourced, allocated, and utilised to achieve the organisation’s mission.
How it Works and How to Set it Up
Financial management involves financial planning, financial control, and financial decision-making. Financial planning includes budgeting and forecasting; financial control involves monitoring organisational cash flow and expenses to ensure they align with budgeted amounts, and financial decision-making relates to investment and financing decisions.
How to Get Buy-in from Stakeholders for a Non-Profit or Charity
To get stakeholders’ buy-in, the financial management process should be transparent and inclusive. Regular financial reports should be shared with all stakeholders. It is also important to involve them in financial decision-making processes whenever possible.
Businesses that Used Financial Management Successfully
Apple Inc., under the stewardship of Tim Cook, demonstrated excellent financial management over the last decade. Despite the challenges faced by the business after Steve Jobs, Cook’s meticulous financial planning helped Apple become the first US company to reach a $2 trillion market cap.
Principle 3: Marketing and Public Relations
Marketing and public relations (PR) are crucial for non-profits and charities. Marketing helps promote the organisation’s mission to the public, attract donors, and raise funds. PR helps manage the organisation’s reputation and relationships with its various publics.
How it Works and How to Set it Up
Marketing involves identifying the needs of the organisation’s target audience and developing strategies to meet these needs. PR involves communicating with the organisation’s various publics to create and maintain a positive image.
How to Get Buy-in from Stakeholders for a Non-Profit or Charity
To get stakeholders’ buy-in, involve them in the marketing and PR planning process. Share marketing and PR plans with them, and solicit their input. Show them how these plans will benefit the organisation and further its mission.
Businesses that Used Marketing and Public Relations Successfully
Nike is an exemplar of marketing prowess in the business world. From their tagline: ‘Just Do It’ to their famous Nike Air series and their campaigns over the years, their campaigns have consistently resonated with their target audience. No wonder there are movies made on them.
Principle 4: Human Resource Management
Human resource management (HRM) involves recruiting, selecting, training, and managing the people who work in an organisation. In a non-profit or charity, HRM is crucial to ensure the organisation has the right people with the right skills to carry out its mission.
How it Works and How to Set it Up
HRM involves several activities, including job design and analysis, workforce planning, recruitment and selection, training and development, performance management, and compensation management. In a non-profit, volunteers often form a significant part of the workforce, so volunteer management is also an important part of HRM.
How to Get Buy-in from Stakeholders for a Non-Profit or Charity
To get stakeholders’ buy-in, communicate the importance of HRM to the organisation’s success. Involve stakeholders in HR decisions and processes where appropriate. Provide regular updates on HR activities and their outcomes. Let them see how past actions have helped the charity utilise its limited resource pool much better than what was possible earlier to taking those steps.
Businesses that Used Human Resource Management Successfully
In the business world, Google is known for its innovative HR practices. It has consistently ranked among the best companies to work for across different surveys. This has led to higher employee satisfaction, lower turnover and greater productivity.
Principle 5: Performance Measurement
Performance measurement involves tracking an organisation’s effectiveness in achieving its mission. For a non-profit or charity, this can include measures related to the number of people served, the outcomes of the organisation’s programs or services, and the organisation’s financial health.
How it Works and How to Set it Up
Performance measurement involves identifying key performance indicators (KPIs), collecting data related to these KPIs, analysing this data, and using the analysis to inform decision-making. KPIs should be linked to the organisation’s strategic objectives.
How to Get Buy-in from Stakeholders for a Non-Profit or Charity
To get stakeholders’ buy-in, involve them in identifying KPIs and setting performance targets. Provide regular updates on the organisation’s performance against these targets. Use clear and simple language to communicate performance information, and explain what this information means for the organisation.
Businesses that Used Performance Measurement Successfully
Toyota’s performance measurement principles are legendary. From leading the field with innovative and empowering practices to its adoption of Kaizen, the Japanese philosophy of continuous improvement, the company has shown that the Toyota Way is an exceptional path to follow for any organisation including non-profits and charities.
Recommended Books for Non-Profit Leaders
- Good to Great and the Social Sectors: A Monograph to Accompany Good to Great by Jim Collins
- Forces for Good: The Six Practices of High-Impact Nonprofits by Leslie R. Crutchfield and Heather McLeod Grant
- The Non Nonprofit: For-Profit Thinking for Nonprofit Success by Steve Rothschild
- Nonprofit Management 101: A Complete and Practical Guide for Leaders and Professionals by Darian Rodriguez Heyman
- Managing the Non-Profit Organization: Principles and Practices by Peter F. Drucker
- The Networked Nonprofit: Connecting with Social Media to Drive Change by Beth Kanter and Allison Fine
To Sum Up
Adopting these principles of business management can significantly enhance the effectiveness and impact of non-profit and charity organisations. By integrating these principles into their operations, non-profit leaders can ensure that their organisations thrive and continue to make a positive societal impact.
References:
- Sinek, S. (2009). Start with why: How great leaders inspire everyone to take action. Penguin.
- Collins, J. (2005). Good to great and the social sectors: Why business thinking is not the answer: A monograph to accompany Good to great. Random House.
- Rothschild, S. (2012). The non-nonprofit: For-profit thinking for nonprofit success. John Wiley & Sons.
- Crutchfield, L. R., & Grant, H. M. (2008). Forces for good: The six practices of high-impact nonprofits. John Wiley & Sons.
- Liker, J. K., & Hoseus, M. (2008). Toyota culture: The heart and soul of the Toyota way. McGraw Hill Professional.
- Microsoft Corporation. (2021). Microsoft Annual Report 2021. Retrieved from https://www.microsoft.com/en-us/Investor/annual-reports.aspx.
- Apple Inc. (2021). Apple Annual Report 2021. Retrieved from https://investor.apple.com/investor-relations/default.aspx.
- Google LLC. (2021). Google Annual Report 2021. Retrieved from https://abc.xyz/investor/.
- Toyota Motor Corporation. (2021). Toyota Annual Report 2021. Retrieved from https://global.toyota/en/ir/library/annual/.
- Nike, Inc. (2021). Nike Annual Report 2021. Retrieved from https://s1.q4cdn.com/806093406/files/doc_financials/2021/ar/Nike-2021-Annual-Report.pdf.
