2 Myths That Suffocate Nonprofits

Busting these myths is key to overcoming a culture of complacency and achieving results that matter. 

The nonprofit sector is filled with dedicated people and amazing programs. But too many nonprofits are held back by cultural restraints that inhibit their function and ability to scale. Consider that only a handful of nonprofits in the last 50 years have grown past $50m in revenue, while tens of thousands of other companies have achieved this milestone.

Why do most nonprofits fail to achieve the lofty goals they set for themselves? From my experience working with hundreds of nonprofits over 20 years, I’ve found these failures are often rooted in two myths that permeate the sector: the myth of uniqueness and the overhead myth. Both are absolute wrecking balls for nonprofit growth and impact because they discourage the growth-oriented mindset and strategies required to solve big problems and have relevant impact. Let’s take a closer look at both — and what leaders can do to overcome them.

The Myth of Uniqueness   

Many nonprofit leaders hold the illusion that nonprofits are so unique that normal organizational rules and practices, such as those that guide the for-profit sector, don’t apply to them.

This myth often rears its head when organizations are struggling to perform. When board members, donors, or outside critics point out shortcomings, leaders adopt a defensive posture:  “We are a unique organizational type with unique challenges. People who tell us we need to run like a business have no idea,” they may argue.

This is the myth of uniqueness — an assertion that a nonprofit is a fundamentally different type of organization, a mysterious animal that outsiders, especially business types, cannot appreciate or understand. Effective planning is impossible because the nonprofit is at risk of things that are not in its control. It is hard to measure social impact because it is hard to measure how much it helps people. It is also hard to grow because nonprofits cannot control money from foundations, government agencies, and rich people who can change their minds.

This myth may be used as a smokescreen to confuse business-minded board members and deflect funders seeking transparency and accountability, and to cast aspersions on legitimate concerns of outside critics.

Nonprofit missions may be driven by unique values, but the economies in which they operate and compete for attention are the same as for any other organization. Normal organizational practices such as business planning, clear outcome measures, KPIs, and fundraising strategies are not only applicable to the nonprofit sector, but are powerful tools for creating ultra-successful social impact enterprises.

The Overhead Myth: This is the cultural assumption that all nonprofit costs other than direct program services are wasteful and should be minimized. The danger of this myth is that it discourages investments necessary to solve the problem the organization set out to tackle, let alone to scale for bigger impact. An organizational culture focussed on keeping costs low will likely achieve little impact, resulting in poor morale, high turnover and stagnant growth.

Whether it’s an NFL team, a for-profit corporation, or a nonprofit organization, competitive compensation is a must to hire and retain top talent. Successful fundraising teams build and maintain deep, long-term relationships with their prospects that are key to maintaining healthy community support.  Boards and executive leaders can look to the hospitals and universities in their region for compensation benchmarks.

Fear or ignorance on how to hire, train, manage, and support top fundraising teams is a primary reason why boards and executive directors never break free of their financial constraints. As soon as fundraisers become successful, their market value skyrockets. Unless their compensation packages reflect this, they will very likely follow the richer pay and benefit packages offered by larger organizations.

Refusing to reward top fundraisers or neglecting to compensate a successful fundraising team with incentives and reward packages will likely cost the organization much more down the road than the money you spend to adequately compensate them. Conversely, providing competitive compensation and reward packages can pay dividends far larger than the upfront costs.

Dispelling the myths of uniqueness and overhead can make a huge difference when it comes to the organizational culture. Nonprofits that fall victim to these two myths tend to set vague or lowball expectations for performance. Working long hours for low pay is the expected normal. When change is proposed, most conversations focus on the risks, not the benefits. The organization believes it deserves financial support because of the inherent virtue of its work, rather than measurable results. Worst of all, it breeds a fatalistic attitude both inside and outside the organization, one that says “It’s just a struggling nonprofit, so what can we really expect?”

But we can do better with a different set of cultural values — ones associated with the most effective organizations. Leading-edge nonprofits with bold, entrepreneurial leaders and gifted staff have a “go big or go home” attitude. They measure how much of the problem they are tackling with hard, simple numbers, and they push hard to solve all of it. They have a specific plan to solve the problem, with hard numbers, accountability, and an explanation of how they will pay for it all. They are biased toward action, experimentation, risk, and collaboration, with everyone working hard and supporting one another. Finally, they focus on the smartest ways to generate revenue so they can recruit and retain top people and grow their organizations.

You haven’t built a charitable organization to nibble around the edges of a problem. You’ve built a social impact enterprise to solve the whole problem. Start by dispelling the myths that hamstring growth and impact, and you will be surprised by the results.

Written by Donald Summers, Ed.M.
Have you read?
Best Countries to Hide Money.
100 most popular wedding song ever.
Countries in the world with the most female billionaires.
Countries ranked by the percentage of the workforce that is made up of women.