Leaders of any organization face challenges that range from big-picture to in-the-weeds. For those in nonprofit leadership roles, however, the job can come with additional factors that can affect the organization’s success.
Here are some of the key issues that leaders of nonprofits face vs. their for-profit counterparts, and how you, as one of those leaders, can avoid some common mistakes.
What Makes a Nonprofit Different?
A nonprofit organization, no matter its size, varies from a for-profit business in a number of important ways, including leadership structure, organizational culture, purpose, funding and taxes, among others.
While a nonprofit may employ a leadership staff, for example, the organization is often steered by a board of directors who don’t have a financial stake in the organization, but do help guide its future. As a leader within the company itself, you may report to a few — or more than 100 — board members.
Money is also handled a lot differently at a nonprofit, from how the business is funded to how it deals with taxes. To raise money, nonprofits often turn to private donations, corporate sponsorships, grants or, more recently, crowdsourcing. If federal funding is involved, they’re subject to more government oversight. And at tax time, a nonprofit is eligible for more tax deductions than a traditional for-profit.
Finally, the term “leader” doesn’t necessarily equal a corner office in the nonprofit C-suite. Especially at smaller organizations, leadership can mean wearing multiple hats and pitching in wherever help is needed.
In order to successfully lead an organization, it’s important to avoid these common nonprofit leadership mistakes.
1. Forgetting Your ‘Why’
No matter what happens in your organization’s day-to-day, it’s important to never lose sight of the big picture. Each nonprofit exists for a specific reason, so consider doing whatever best helps you keep the mission statement top of mind. And, if you enter a leadership role at a nonprofit that can’t clearly define its purpose, make it your purpose to write one.
Remaining focused can be easier said than done, especially when dealing with stakeholders who may be more interested in their own interests than the organization’s. When people lose sight of the endgame, “mission creep” can cause a shift in purpose that’s gradual, but can grow out of control. Here too, a well-defined mission statement can not only keep your stakeholders focused, but also give you the muscle you need to push back when necessary.
2. Ignoring the Social Forest for the Internal Trees
It’s easy to get mired in the daily operations of any business. But at a nonprofit, getting caught up in operational issues can cause the organization’s larger mission to stall. A leader who doesn’t spend more time looking outward than inward can find themselves stagnating, and at a nonprofit there is likely always someone who needs help today. Be cautious that you don’t end up managing instead of leading.
3. Succumbing to Fear
If you’re uncomfortable asking people to donate to your cause, or worried about what the public might say about your decisions, a nonprofit might not be right for you. Leadership roles can come with their own spotlight, and often require you to serve as the face of the organization, make tough calls that might displease the board, and embrace what can feel like insurmountable challenges.
When you get scared — of losing money, of bringing controversy, or of your own self-doubt — it can damage the entire organization. But you can counteract those fears with a clearly defined set of values that you will stand by, no matter the consequences. When decisions are made based on integrity instead of fear, nonprofit leaders shine.
4. Mismanaging Money
As we mentioned, the money matters of running a nonprofit are quite different from a for-profit organization. Especially if government funding or grants are involved, it’s extremely important for you, as a leader, to not only understand all the stipulations that accompany that funding, but remain transparent and disciplined about how it’s spent. Many negative headlines around nonprofits seem to focus on how leadership used federal funds inappropriately or failed to meet grant requirements. If an organization is already struggling, a scandal could scuttle the ship.
5. Thinking Small
As a leader, it’s your job to present a grand vision to not only your internal stakeholders, but the public who may help fund it. When you think small and confine yourself to limitations based on things like a lack of funding, volunteers or resources, you may enjoy some success but may never turn the Titanic around.
Instead of working with what you have, work for what you want. Present your 10-year plan to the public with passion in order to earn public support. Create an innovative and fun work atmosphere that draws more employee applications than you can handle. Make good use of social media and other affordable, grassroots marketing efforts to get your word out.
Because if you ask us, there’s no better place than a nonprofit to get a little scrappy.
At Corban OneSource, we understand the challenges of leading a nonprofit organization. We provide payroll outsourcing and other HR solutions so you can focus on furthering your mission without feeling burdened by paperwork and similar tasks.