A chief difference between a non-profit organization and a for-profit business is non-profits have a primary focus to provide a charitable benefit to a given community, whereas for-profits have the primary goal of earning income and profit for its founders, leaders and employees. This surface-level difference leads to a variety of other less apparent and nuanced differences. The most poignant of those distinctions is that non-profit organizations (especially houses of worship) lean toward homeostasis.
Indeed, there is a measure of comfort knowing that organizational structure, programming and tactics will remain the same year after year; however, we no longer live in a world where such homeostasis is sustainable. For years we have been referring to the current period as the era of transition, but the recent pandemic has led to the era of what we call hyper-transition. And central to remaining relevant during this hyper-transition is innovation – in goal, in strategy and in tactics.
For-profit businesses are often well equipped to innovate. Non-profits – even when they realize it’s an imperative – rarely do or are willing to innovate. This is true for three reasons.
First, non-profit board presidents usually have a two-year term. Though a longer term would have both its advantages and disadvantages, a two-year term rarely leaves room for change or innovation with a lifecycle greater than 12-18 months. In many cases these presidents accept the mantle of leadership because others are unwilling to step forward – and further, long-term succession planning is a rarity in these institutions. Innovation should be the hallmark of a president’s legacy; instead, it is often the president who stymies it.
Second, often non-profits believe they have little to no resources. This scarcity mindset impedes on a non-profit’s capacity to comprehend unrecognized assets. For example, which businesses in geographic proximity have never been approached as potential partners? What leadership and social connections does the nonprofit’s constituency have that has not been leveraged? What can be viewed as an investment instead of a loss leader? Non-profits should operate out of an abundance mindset and take stock of and leverage those underutilized (or even un-utilized) resources.
Third, non-profit decision-making is sometimes predicated on the emotions of leadership. These emotions could be tied to organizational history or relationships. They may exacerbate (or catalyze) an organization’s risk aversion. They may even simply be based on a “hunch,” or being overwhelmed as a volunteer. Most important, these emotion-based decisions regularly cancel out the business- and data-driven decisions, not only preventing innovation, but causing organizational decline.
Non-profit organizations should not engage in change agency for the sake of change. Instead, they should accept that innovation is necessary because everything in an organization’s orbit today is rapidly changing. If the organization does not change, it will become increasingly irrelevant to the point of closure.
The biggest indicator of such irrelevance is when non-profit organizations find themselves in the business of being in business, instead of the business of serving their mission and goal. That is: “Let’s hold a fundraiser so we can keep the lights on. We need to keep the lights on so we can host our next fundraiser.”
The time is now for non-profits to buck the trend and engage in allostasis, innovating toward their next chapter. Be aware of the pitfalls of leadership, of an upside-down institutional mindset, and wayward and illogical decision-making.
Avi S. Olitzky, formerly a congregational rabbi, is president and principal consultant of Olitzky Consulting Group based in St. Louis Park, Minnesota.