Dear business community: Please remember these 10 things about nonprofits


apple-orangeMy friends from the business community:

As an Executive Director of a nonprofit, I want to say that I love you guys. Almost as much as we all love the Seahawks (Go Hawks!). You do so much to sustain our work—volunteering countless hours, donating funds to programs, and telling your friends about us so they can help too. We rely on you. The work is not possible without you. Whenever we get one of you on our board or development committee, it’s like Christmas.

However, there are a few things I’d love to remind you of, stuff like fundamental differences between nonprofits and for-profits and the challenges we face. I know, you probably have heard some of this already. But it’ll be really good for us to go over them again, so we can more effectively work together to make the world better:

  • Nonprofit funding is restricted. That is something we repeat over and over, but I’m not sure you actually understand how restricted it is. Imagine that you have a business selling software for $100 a pop. I buy a copy, and I give you $100, but then I say “You can’t spend any of this money I’m paying you on your salary, or on your rent or heating for your business. It can only be used to for you to buy copy paper and no more than 80 binder clips.” Now have all your customers say stuff like that to you each time they buy your software. That’s how it works in nonprofit, but replace “customers” with “funders.” It is not fun trying to figure out who is paying for what and how to work within this structure, but luckily it only takes up 60% of our time.
  • (Hilarious side story: Speaking of copy paper and binder clips, one of my ED friends sometimes “dumpster dives” for office supplies. On her last dive, she scored a roll of masking tape and an unopened container of poster paint (woohoo!)—and her board still complains that her organization spent over $1200 in supplies in 2013).
  • No one wants to pay for unsexy “admin” things. These are things like HR, marketing, fundraising, the ED or Development Director’s salary, etc. This is why we don’t have an HR department, or an IT person, or a marketing person, why our database (if we have one) may not be as cool as you want and why some of our marketing materials look like they were designed by bonobos. You’re frustrated that our infrastructure sucks sometimes. Well, we are too! Unfortunately, because of our funding restrictions, we can’t do much about it except to beg for free services from you and your friends.
  • (Hilarious side story: One time I was at a conference, and a business was leading a workshop on building a website. “We asked our bosses for $25,000 to develop the website,” said the presenter, “and they said, ‘Hey, we actually have extra funding.’ So they gave us $50,000!” Back then, 50K was half my organization’s operating budget and about four times my Americorps yearly wages, so I left the workshop and cried silently in a bathroom stall).
  • Our funding is unstable, and it’s not our fault. It fluctuates depending on factors such as funder priorities, the situation in Iran, the value of the Yen, and the alignment of celestial bodies. Grants are usually only for one year. So year-over-year budget comparisons are often useless, and predictions on future funding sources are educated guesses at best. Please try not to be upset when you ask us questions like “What are your budget projections for next fiscal year” and we give you seemingly wishy-washy answers like, “Well…will Mercury be in retrograde at the end of this fiscal year…?”
  • The better a job we do, the more costs we incur. That’s right; it’s weird, but it’s true. If our after-school program, for example, is awesome, more kids will attend, which means more costs. But the funding does not also increase automatically, meaning we have to serve more people with fewer resources. So then we have to spend more staff time on fundraising, which, remember, is not sexy, so people hate paying for that. If your product is awesome, your business can become stable and continue as long as demands remain stable. Not so for us nonprofits! This is why we live in a constant state of stress and fear. And why we need you on the development committee!
  • Our community members (the people we serve) are not economic units. As one of my ED friends says, “You can’t run a cost/benefit analysis on the worth of a human life, and every human being is a miracle worthy of respect and kindness and compassion.” That sounds very sappy, but we genuinely believe in crap like that, and it very frustrating when people forget this stuff and reduce human beings to numbers and statistics.
  • Success is difficult to measure. We throw around terms like “outcomes” and “metrics,” but things are so much more complex. When we’re working with people who are homeless, or mentally ill, or kids at-risk for failure, it is challenging to define success and what part we play in it. So it gets very annoying when you come in trying to impose a business framework on our programs, or get upset when we can’t give you clear answers to questions like “What’s the impact of your programs?” We’re trying to figure all this out.
  • Things can’t be “scaled” as easily as you think. Some of you are really impatient about scaling up our work. You see a great program, and you want it to be bigger, to help more people. We do too. But the clients we serve and their challenges are complex, and we work within structures that severely limit what we can do. We are constantly thinking of ways to help more people, while trying to keep our organizations from collapsing, all the while hoarding supplies for a potential zombie apocalypse (That last part–it may just be my organization that does that).
  • If you want to help, roll up your sleeves. We get plenty of advice. If you want to be helpful, roll up your sleeves and actually do something. It’s frustrating when business leaders or consultants come in and provide a report of recommendations of things we should do. These reports are often left on shelves to gather dust, since we often have no time or resources to tackle them. If you want to help, take lead on a few of these things you recommend.
  • We chose to do this work. That’s right, we chose jobs that are unstable, under-appreciated, challenging, low-paying, and high-stress. That does not mean we’re not as smart as people in other sectors. Once a while we meet young professionals in other professions, and their smugness and condescension are palpable, and we want to grab them by the collar and shake them. But we think of our clients and swallow our pride. Our society places much higher value on jobs like doctors, lawyers, movie stars, business owners, etc. However, most of us did not go into the nonprofit field because we failed at other professions. We do this work because we want to kick inequity’s butt, no matter how difficult it is.
  • (Hilarious side story: At my organization, which serves low-income immigrant and refugee youth and families, the clients are often amazed that I do this full time. One woman at an event asked when I will find a real job; her son was studying to be a pharmacist, she said.)
  • Finally, just because you’re really successful in one area, it doesn’t mean you are automatically great in another area. If you’re an amazing heart surgeon, it doesn’t mean you’re automatically a great singer. If you’re an awesome dancer, it doesn’t mean you’re now a really kickass chef. And yet we meet so many of you who are successful in the business sector who now think that you automatically know how to run a nonprofit, or lead an education reform movement, or counsel us nonprofit folks on how to do our work. One of the most irksome things we experience is when business people, after a limited time trying to understand the organization, start giving advice. We’ll try to be thankful, since you’re a potential donor and volunteer, but seriously, the you-guys-should-do-this and you-guys-should-do-that are often irritating and not helpful at all. We don’t go to your business and tell you how to…run…quarterly reports…or, uh…improve assembly line efficiency…

At a meeting a month ago, a bunch of people and I were providing input and advice to Seattle’s new mayor as he starts his administration. A community leader stood up and said, “You have to remember that poor people are not just rich people who don’t have money. And black people are not just really dark white people.” Ahaha, that’s so true, everyone thought. They laughed. (Each of those profound statements deserves to be discussed in its own post later). I want to use the same line of thinking to remind you all that nonprofits are not just chaotic businesses with really nice employees. Until we have the same flexibility and stability of essential resources that successful businesses have, comparing one with the other is like comparing an apple with a porcupine.

Thank you for reading, and for all that you do.

Go Hawks!


Related Posts:

Nonprofit’s ultimate outcome: Bringing unicorns back to our world.

The sustainability question: Why it is so annoying.

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65 thoughts on “Dear business community: Please remember these 10 things about nonprofits

  1. Karyn Curro

    Great points! I have shared some similar observations with board, staff, community leaders, porcupines from time to time. I think the porcupines were the most receptive. At least they looked like they cared.
    Differences do not necessarily make things better or worse — just different. And without knowing, acknowledging and valuing those differences, we get nowhere together fast.

    1. Vu Le

      Karyn, I completely agree. Nonprofits and for-profits are definitely different. The frustration comes from one being unfairly compared to the other, which is what many well-intentioned people do.

  2. Tammy L

    Funny. But sometime small nonprofits DO need to act more like a business in terms of managing expenses. I attended a public meeting for a local Friends of the Library group. Sadly, they were barely making money on their book sales after paying fees for storing the books and nonprofit insurance.

    1. jrdixey

      So many Friends are locked into the 50-cent library book sale mentality! There are some that have figured out selling the good stuff online and saving the stuff with less potential for the 50-cent sale, but not many.

    2. Vu Le

      Tammy, we try to–we have no choice!–but it can be challenging since people don’t like paying for things like finance software or staff time to crunch numbers.

  3. DWileyOne

    One other thing that the for-profit folks need to know is that funders/foundations are not ATMs. It is disappointing (and occasionally devastating) when grants don’t get funded; however, preparing and submitting a stellar grant proposal does not guarantee funding. I have experienced Boards who blame staff and grant consultants when, in fact, there is a veritable cornucopia of reasons a proposal was declined, none of which are under our control. Some other points: 1) We don’t control the foundations’ timelines, process, and schedule; 2) If they indicate “no calls”, they mean it; 3) We can’t force them to change their mission/geographic focus just to accommodate our program, as worthy as it is; and 4) There truly is a finite pool of foundations and there is such a thing as funder burn-out.

    1. Vu Le

      Good reminders, DWileyOne. I completely agree. Boards often mean well but sometimes do not understand the restrictions we staff operate under.

  4. Lisa Scheff

    Great, great post! As the ED of a small nonprofit I really appreciate the truth delivered with humor here. Hilarious side story: I’ve had several people (including a former board member!) ask me what I do for my “real job.” Lucky for them I’m already working 55-60 hrs per week in THIS job so I didn’t have time to stop and smack them.

    1. Vu Le

      Lisa, we endure a lot in this work. Since you’re an ED, let me know if you want to be on the exclusive ED Happy hour mailing list. We talk a lot about smacking people during our monthly gatherings.

  5. Mona T. Han

    Wonderful post, and such great observations! Coming from a for-profit (software) industry, it sure is a humbling experience for me to find out how hard, complicated, stressful, and (at times) frustrating it is to keep the organization afloat, while still being inspired to help those in need. I’ve worked in both large, small, and start-up for-profits, but this is *way* harder, and if not for the challenge and (most importantly) the people who desperately need help, I would have given up a long time ago. The journey is truly amazing, though, when you can look into someone’s eyes and know you’ve helped them in a small way for a better life. In comparison to my past occupation, where most cared only about their (publicly traded) stock price at the end of the day, and you only talk to clients when they’re really pissed off about your product not meeting their needs.
    I’m really inspired by Dan Pallotta’s “Uncharitable: How Restraints on Nonprofits Undermine their Potential”. The author argues that society’s nonprofit ethic acts as a strict regulatory mechanism on the natural economic law and creates an economic apartheid that denies the nonprofit sector critical tools and permissions that the for-profit sector allowed to use without restraint. We should really think of starting a revolution for social justice and equal rights for nonprofits, in our *spare* time! 😉

    1. Vu Le

      Thanks, Mona. It’s really great to have your perspective, since you have experience in both sectors. I think Dan Pallotta is definitely on to something. We can do so much more if more trust were invested in nonprofits.

  6. Andy_geek

    A friend introduced me to your blog today to get a taste of what a non-profit’s life is like. This is a good post and great way to educate me in some of the basics so that i have the right attitude, thank you. Where’s the tip jar? 🙂

    1. wordsonfire

      Thank you so much for asking where the tip jar was! That’s another thing we suffer from in our sector. The desire that those of us who serve in these capacities must provide expertise for free. Few ask if they can contribute! You rock!

  7. Christine Soto

    Well, Vu, as usual, right on target and amusing, too. This is not just info that the business community needs, a lot of foundations don’t get it either, and a whole bunch of people who write checks to their favorite charities would benefit from reading this as well. When I worked as an ED, I was asked more than once, “Do you get paid for this?” Smack, smack, smack….

    1. Vu Le

      Thanks, Christine. I usually respond to questions like that with “Absolutely. Your check goes straight into my pocket. Yeeha, Applebees, here I come!”

    1. Vu Le

      Thank you, sir. A lot of this was refined from our fun and amazing talk at the Gates Foundation last week. (Again, you and I should take this on the road)

  8. girardinl

    Yes, having worked at a couple of nonprofits that work closely with business folks, this is accurate!

    I would also add “Don’t expect nonprofits to have receptionists, admins, or executive assistants.” and “Not all nonprofits are 24/7 cultures—and it helps if you don’t behave like they should be.”

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  10. Beth Ann Locke

    Love your post! So true! and you hail from “home” so even better. Wish I’d met you before I left! Keep inspiring and understanding our world.

  11. Dan

    I’d like to share a resource with my fellow EDs.

    I’m an ED of a not-for-profit but we are closer to an industry association than a more typical social cause driven organization. I have a big board and they are CEOs of successful tech companies so I have heard a lot of comments about how it’s done in the private sector.

    Many business leaders have read, or at least heard of, Jim Collins’ book Good To Great. It is held in high regard and he published an accompanying monograph on Good to Great for the Social Sectors. This short little 60 page booklet gave me a remarkable tool for educating business leaders about the difference between their business and a not-for-profit. I highly recommend it.

    It discusses the difference between the Executive Power of a CEO that can set bold visions and require her team to implement them compared to the Legislative Power of not-for-profit leader that has many stakeholders and must find ways to create the conditions for good decisions to be made but can not demand that they are.

    It also highlights that the premise that businesses “in the real world” are somehow better run than not-for-profits is misguided. Most businesses are quite poorly run, very few are good let alone great. As such, saying anything like “what we do in the private sector” should not be considered a magic elixir that is actually effective and private sector leaders need to recognize how few companies are actually well run. As such, the accepted practices of the private sector are typically mediocre at best.

    That said, the more we can articulate our impact (value proposition) and highlight our improvements (metrics), it is easier for supporters, funders an donors to understand.

    Keep on rockin in the free world,

    1. Vu Le

      Dan, thanks for reminding us that businesses aren’t perfect either. I did read Good to Great and highly recommend it and the accompanying addendum for us nonprofit folks. Fascinating point about the Executive Power of a CEO vs the Legislative Power of an ED.

  12. Liahann Bannerman

    Nicely done and reminds me of a topic for another day – how nonprofits are portrayed on TV! Next time I see you will share some examples!

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  14. lisaarnoldconsulting

    As a recovering ED, I thoroughly enjoyed your post. Should be part of an orientation packet for all new board members of all nonprofits everywhere!

  15. wordsonfire

    Thank you. I run a non-profit, Your post literally made me weep. I didn’t realize how isolated I’ve been feeling lately. Thank you for knowing my world and exposing it a little.

    1. Vu Le

      Thanks, wordsonfire. I checked out Marnita’s Table and it looks like you’re doing some wonderful things. I read a few blog posts too. They were very thought-provoking. Let me know next time you’re back “home” and we can go get coffee or a drink 🙂

  16. wordsonfire

    I’m in Minneapolis now. But I was born in Providence Hospital, Everett, WA and came out of the Snohomish County foster care system.

    I’m proud that this is written by someone from “home!”

  17. Hope Smith

    Love, love, love this post. You are so spot on. I’ve been a non-profit ED since 2004 and everything you said speaks to me. Thank you for putting it so eloquently.

    1. Vu Le

      Thanks, Hope! I’m glad you’re sticking around as an ED. Let me know if you want to join the exclusive ED Happy Hour mailing list.

  18. Jason E Camis

    Interesting post and some great observations! I’ve been an ED for 10+ years. In addition, at one point during that time I owned my own business and now I’m an ED of a chamber of commerce, so I get an interesting perspective floating between the for-profit and NFP worlds. I’d love to see a post from the for-profit side (either yours or a guest), because there are some assumptions that NFPs make about for-profits that show a lack of understanding as well.

    1. Vu Le

      Thanks, Jason. And good reminder that we also should keep in mind that for-profits run differently also. I’d love to hear from the businesses.

  19. Megan

    “However, most of us did not go into the nonprofit field because we failed at other profession.” I’d actually argue working at a non-profit is MORE competitive than the business sector and no one I work with has failed in the business sector and gone nonprofit. If anything its the other way around. Entry level jobs or business internships at big organizations like Kelloggs or Enterprise are a dime a dozen…. Not everyone can work for WWF or Amnesty International. It’s a highly competitive world in nonprofits and only the top candidates survive.

    1. Vu Le

      Megan, that’s a good point. When I got out of grad school, it was impossible to break into many of the big nonprofits that I admired. The international ones are almost impossible to enter. I haven’t been trying to do international work these past few years, so it might have changed, but when I just got out, I was told I needed to go through the Peace Corps, then USAID, then get a Ph. D, then apply as a janitor for one of these orgs.

  20. MamouToYou

    One of my staff sent me this article — thank you for saying what I’ve been thinking! She also suggested a #11 for those who receive government grants:

    #!1 We love floating the government! Every time it takes you 4 months to pay us for work that we were required to do on time (and pay the staff who did the work) we are giving you a no-interest loan. Sometimes we had to borrow on our line of credit (and pay the bank interest) so we could carry you. (Not so hilarious story: Lots of victim service providers have nearly closed their doors or couldn’t make payroll because you didn’t pay on time).
    Don’t forget the fact that we are required to have special A-133 audits — which for-profit businesses never have to deal with — yet no one wants to pay the admin/finance cost of preparing for and undergoing these exercises in torture.

    1. Vu Le

      MamouToYou, your #11 definitely belongs on this list. I feel your pain. One time we were waiting for over 50,000 in reimbursement funds (two cycles, both late, so they added up). It was FOUR months late, despite begging and pleading and crying on the phone. We had to take out a line of credit. Each year we spend over $3,000 to do review of financial statements, and you’re right, no one who requires these ever offer to pay for them.

      1. jaebre

        Funder: “You can’t use any of this money for admin expenses.”

        Me: “Great. Who is going to pay for preparing these audited financial statements you require for the grant?”

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  23. Hawkeye

    I would also add another to this list: just because we work in the community sector doesn’t mean we shouldn’t be paid. It’s so frustrating to hear people say that organizations should be completely volunteer-run or that staff members don’t deserve the salaries they have (or a salary at all).

  24. Tisha Frank

    Having been an ED or consulted with ED’s throughout my career, I could SO relate to all your points! Now that I’m retired ( but experiencing withdrawal) I’ve been thinking that just this kind of education should be part of every MBA program. None of those folks at the UW School of Business, who will someday be board members or corporate funders should graduate without a better understanding of the third sector. Maybe the Gates Foundation could underwrite the program.

    1. Vu Le

      Thanks, Tisha! I agree, we need to have a reality check for business professionals. They do contribute a lot to our field, but some basic orientation before they join nonprofit boards would be great.

  25. Amina

    It reminds me of my recent conversation with former cooperate world employee who took on Non Profit work and yet could not differentiate between the cooperate world and Non profit clientele. Unfortunately our conversation turn to argument due to ignorance of working many years at private sector and not paying attention or willing to learn the people served by non profit while at the same time the person argues that they did serve on non profit board for years. To make the matter more worse in the person resume and Bio it reads ” I have 20 plus years experience in non profit work”
    I guess warming the Non profit chairs while attending for 20 plus years board meeting and comparing Non profit with private sector or questioning the ED why do clients are clients not self sufficient and why do you need grant to subsidies their rent or utility. At private sector we don’t subsidies our customers rent and utilities.

    1. Vu Le

      That sounds very frustrating. I’ve had my fair share of annoying conversations with people who don’t understand the nonprofit world.

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  27. Shelly Drymon

    So glad I found you guys! Your stuff is awesome! I agree with everything you say in this article. I feel non-profits have a larger say in this topic then they think. I am a Director of Development, a new position at my non-profit and one of the items of work I want to accomplish this year is an argument to local businesses and corporations why we need their unrestricted money! Our therapists are our program – yet they don’t want to pay for salaries???? Thanks and keep up the good work!

  28. Steph Tanner

    Great post. It’s kind of sad that so many organizations in the nonprofit sector have to deal with ridiculous restrictions! I have some tips and advice for nonprofit organizations that are just starting out on my website

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