It is easy to conclude that the main difference between non-profit and for-profit corporations is how the word ‘profit’ figures into their set goals and overall operation. The most common terms used to describe the difference between the two, however, have much to do with their reason for existence. The differentiating line between them tends to blur as each increasingly operates more like the other.
Many for-profit organizations are now including a social dimension into their operations. A lot of non-profit organizations, on the other hand, are starting to see the advantage of using more corporate methods of handling day-to-day operations. At first glance, the challenges that are inherent in running a non-profit organization may not be readily seen. The main challenge is staying true to the mission and vision, while ensuring that the organization remains ‘profitable’ enough to remain alive to accomplish its goals.
The Non-Profit Organization
A non-profit organization is created and established to serve a specific purpose, typically bringing people with similar interests and motivations together. Though it does not primarily exist to generate profit, it ultimately needs a way to continue operating. It’s run by volunteers who render their services, typically for free.
Non-profits generate income from membership fees and through operating a business related to the main purpose of the organization. They also accept grants and donations. Although non-profit organizations are entitled to specific privileges, including possible tax exemption, they are not completely free of operational costs like renting an office or paying for services that volunteers cannot provide. They are also very limited as to where their profits can be used. This, and the need to have a semblance of internal accountability even while mainly guided by the spirit of volunteerism, has given rise to the question of whether or not non-profit organizations can actually do better by using a corporate leadership structure.
JDRF Dallas Young Leadership Committee – A Case in Point
The Young Leadership Committee of the Junior Diabetes Research Foundation (JDRF), Dallas Chapter, is a clear case in point. Drew Bagot, co-founder of the JDRF Dallas Young Leadership Committee, implemented a corporate leadership structure in a non-profit environment and established new records in fundraising revenue and volunteer involvement as a result. He showed how a personal cause – his younger brothers bout with childhood diabetes in this case – can be put to better use in serving more.
Regarding how he first became involved with JDRF, Drew Bagot explained, “My brother has been struggling with the disease since he was 2 years old, and so a handful of years ago when I moved back to Dallas, I aimed to create a structure whereby young professionals could work toward a very worthwhile cause while also developing their leadership abilities – myself included. It was really a win-win.”
I started the Young Leadership Committee here in Dallas to support the Dallas chapter of JDRF, and through everyone in group’s hard work, especially Haley Cole and Rich Scheurer, our chapter had the most successful first year Young Leadership Committee in the history of JDRF,” Bagot continued.
When asked why having a more corporate structure benefits a nonprofit of any size, Bagot noted, “One of the hardest parts about developing the organization was keeping people involved and motivated. I was surprised about how many people had some kind of connection to juvenile diabetes, but didn’t know how to get involved. What I did to remedy this problem was institute a kind of board structure.“
“We had a whole host of people who were involved,” he continued. “Once we tiered those individuals, defined their roles, and created that board structure, it went a long way. It helped people keep up, stay involved, and allowed them to really take ownership over what they were wanting to accomplish.”
Clearly, Bagot is not merely talking about possibilities here, as he has actually made the corporate set-up work in Young Leadership Committee. Non-profit organizations are created with a clear vision in mind. Those who are tasked to manage them, specifically the Board of Directors, have the responsibility of ensuring that this vision is upheld – and doing so requires sound management practices. As Drew Bagot has proven, for-profit corporations are not the only ones that can benefit from professional leadership practices.
Originally posted on August 12, 2014 @ 1:13 pm