Best Practices from the For-Profit World Yield Benefits for Nonprofits
By Lisa Fiorentino
While nonprofits differ fundamentally from for-profit businesses, there are a number of ways that nonprofits can and should act like a business, especially when executing a growth plan, be it generating more revenue, serving more patrons, or enhancing program or service offerings.
Consider some of the following differences between nonprofits and for-profits:
Make a difference
Return on investment
Often a critical role
No significant role
But also consider important similarities: Both frequently rely on multiple revenue sources. Both are shaped by and serve defined audiences. Both need to make money. Both are governed by boards and guided by industry standards. Both are accountable to funding sources, and both depend on their internal culture to drive success.
By instituting the following key practices from my background in for-profit business management and finance, Indian Hill Music has grown dramatically and has deepened our impact on the community we serve.
Analyzing data, both quantitatively and qualitatively, is critical when making decisions about what is most valuable to the community you serve and what is sustainable over the long term. For example:
Which programs have the most impact in terms of number of people served and service outcomes?
What is the cost to provide each program?
What does your constituency think about the program?
Are there ways to achieve efficiencies to maintain a high quality program at a lower cost?
In addition to direct costs, what are the programs indirect human resource costs?
Prepare to Make Trade-Offs
While it is likely that every program you consider will add some value to your community, trying to do everything can likely lead to the organization being spread too thin. This may lead to a decline in quality of existing programs, as well as a lack of appropriate financial resources to achieve your mission.
Using analyses, consider which programs offer the highest community impact at an acceptable cost. Consider whether high-cost, low-impact programs are the best places to focus your resources. Rather than undertaking multiple programs of average quality at acceptable cost, perhaps try fewer programs at a higher quality for the same cost.
The key is that there are many aspects to considerimpact, quality, human resources, dollars, etc. and you need to look at each program separately as well as at the organization as a whole.
Constantly Evaluate in Order to Improve
There are always ways to improve #147; even with programs that are extremely successful and well received. Keeping this top of mind is critical in order to grow your programs, offer the highest quality experience, and continue to adapt to a constantly changing environment.
After every program, celebrate the wins and then discuss what could have gone better. In addition to internal evaluation by management, survey patrons and get their thoughts and ideas. Maintain high organizational standards and constantly look to raise the bar.
Keeping accurate records of after-event analysis will create a more thorough institutional memory and provide the data for identifying trends, which can lead to further changes that will improve programs and services.
Value the Experience
Successful cultural organizations offer exceptional experiences to their patrons #147; consistently.
No matter what service you provide, it is critical to consider the patron experience from beginning to end. Patrons will provide answers to critical questions, such as: How does your organization welcome patrons? How are patrons treated? How are patron concerns addressed? Is the experience high quality and does it meet patrons needs and expectations?
Considering the entire experience from the patrons point of view and making adjustments as necessary will help you provide the best possible experience to your community.
Be Fiscally Responsible
Nonprofit organizations rely on charitable contributions to carry out their missions. Organizations that show solid financial management skills will gain the confidence of their donor base.
While donors need an affinity for your mission, they are more likely to give to well-managed organizations. When donors have confidence that an institution employs solid financial and organizational management practices, donors are much more likely to increase the size of their gift, which allows an organization to further its mission.
Lisa Fiorentino became chief executive officer at Indian Hill Music in Littleton this year after serving as chief operating officer since 2014, and is now overseeing significant growth, including creating a world-class facility in central Massachusetts. Email her at firstname.lastname@example.org.
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