Nonprofit November: An Introduction
Leading To Win was created to serve the needs of small business and not-for-profit owners, boards, CEOs, executive and managing directors, freelancers, independent operators and more. It’s designed to share practical, experience-based Leading To Win leadership tools and concepts with those that need it.
Nonprofits are a large part of the small business sector and the overall US economy - and need to know how to lead and manage effectively.
There are more than 1.5 million tax-exempt nonprofits in the US and these nonprofits make up around 10% of businesses and employment. This 10% share has stayed relatively constant over the last decade. Similar to for-profit small businesses, the vast majority of nonprofits are small - with the average organization having about four employees.
Interestingly, and perhaps surprisingly, the average pay for managers and employees of nonprofits is about the same as for-profit companies. Like for-profit small businesses, the failure rate of nonprofits is relatively high. In fact, thirty percent of nonprofits cease to exist after 10 years. According to Forbes, over half of all nonprofits are destined to fail or stall within a few years due to leadership issues and the lack of a strategic plan. However, nonprofits can affect these rates. Research shows that nonprofit organizations with effective leadership, viable business strategies, sufficient funding, and essential resources (such as capable talent, experience, technology and training) greatly improve their odds of success.
[ Check out the LTW article about best practices of non-profit boards here. ]
There are a number of plausible reasons for why nonprofits fail. In a recent Statista survey, the biggest nonprofit organizational challenges were mostly internal: a small staff with too much turnover, a lack of alignment between the board and staff — resulting in unclear priorities.
I have decades of nonprofit board and management experience. I have seen the challenges described in the Forbes article and Statista report. I chaired Center City Development Corporation (3CDC) in Cincinnati, chaired the Hamilton College Board of Trustees, served on the Harvard Business School Advisory Board and the United Negro College Fund Board. I also chaired the Cincinnati United Way and Fine Arts Fund annual campaigns, served on the Boards of the Cincinnati Symphony Orchestra and Cincinnati Playhouse in the Park, chaired the Sarasota Bayfront Planning Organization, and currently serve as Founding CEO of the Bay Park Conservancy (BPC).
What I’ve learned in my extensive experience is that the biggest problem for nonprofits is weak, inexperienced and dysfunctional boards that are too big, have the wrong composition, and are poorly governed and led.
The second biggest problem is weak leadership. Nonprofit leaders need to be effective with a range of stakeholders. They need to have a real sense for strategy, a head for business and plenty of EQ to go with sufficient IQ.
These fatal flaws lead to a whole host of governance, leadership, strategy, planning, management, execution, fundraising, cost, communications and stakeholder problems — all of which compromise performance, get in the way of delivering results, and all too often result in failure.
