Management in the Not for Profit Organization

Dedicated to Exploring the Philosophies and Techniques of Management in the Non-Profit Sector



For years the leadership of a private not-for-profit agency heard people tell them that they should behave “more like a business”.  They heard this from their friends, who thought they were “giving away the store” when they provided service above and beyond that required by contract.  They heard it from potential donors and grantors who wanted them to “tighten things up” and increase their accounting requirements, and they heard it from candidates for MIS and financial positions when they offered them “non-profit type” salaries.  Then, they heard it from their own staff when the for-profit organization down the street used its large marketing budget to promote itself to clientele whom the non-profit had previously worked with on a fee-for-service basis.


They heard that they should expand and compete vigorously, give away less, and maintain a large and formal bureaucracy.  And they did it.


Soon they had an accounting department to whom each and every expense was reported three separate times with varying forms of substantiation.  Their outside accountants, and those of the relevant government agencies were very happy.


Not long thereafter, they established a Legal and Contracts department.  They no longer “gave away the store”.  Payers could be sure to get exactly what they paid for.  The in-house accounting department was pleased and everyone knew exactly what was expected of them.  And that’s what they did.  Just what was expected of them.


They shifted some of their budget from product to marketing and expansion, better enabling them to combat the efforts of the competition.  After all, who would utilize their great product if people never heard about it or couldn’t reach it?


Then something funny happened, the pendulum swung back.  The front line staff began expressing resentment about the dollars going to marketing and expansion instead of their salaries, or other direct service costs.


They heard from their own middle management personnel who objected to the time being drained from their staff as they completed accounting paperwork, and waited for decisions from Contracts.  These managers also found the paradigm of following the “letter of the law” trickling to their front line staff who would do exactly what they were paid and told to do—and no more.


Finally, they heard it from those who donated money, issued grants, and signed purchase of service agreements when they said “You’re too greedy.  When are you going to start acting like a non-profit?”