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Entrepreneurship in Nonprofits

As their name suggests, nonprofit organizations are not supposed to reel in profit for their founders, but rather serve the cause they stand by obtaining help in the form of grants, donations, fundraising and so on. In practice, regardless of the profitability factor, leaders of nonprofits need to think, strategize and operate very much like everyday entrepreneurs in order to achieve success for their organizations. Dr. Emad Rahim, in his insightful article on Forbes.com, breaks this idea down into a few essential ways in which a nonprofit leader is often not very different from a young entrepreneur of a startup.

It is important to remember that nonprofits are companies and must be run as such with a proper organizational approach towards staff, operations, expenses, contracts and everything else under the business umbrella. A philanthropic institution operating with a business-driven mindset is an approach that is not merely recommended by experts for nonprofits, but is fast becoming essential for their survival. With a clear vision and a systematic approach, nonprofits of all sizes and types can protect the structure of their organization without losing sight of their philanthropic niche.

For a nonprofit to operate like any other profit-making company, it is instrumental that it distributes its resources wisely so that the revenue they make, albeit intended to be used for non-profitable causes, does not exceed the expenses of the company. This is not merely a prudent approach, but rather a necessary one for the survival of the nonprofit. From hiring decisions to publicity budget to petty cash expenses, a nonprofit has to be as cost-efficient as startups, sometimes even more.

From an entrepreneurial perspective, donors are basically customers. The organization has to coax and cajole them to obtain their donations before any other organization becomes the recipient from their generosity. Considering the number of causes and the staggering number of organizations dedicated to each cause, it is unsurprising that nonprofits have to jump into this process of attracting and retaining donors like businesses attempt to attract clients.

Social media engagement is one of the many strategies nonprofits employ to reach out to a wider community of customer-base and it falls under the classification of promotional strategy. No business, especially in today’s well-connected world, is free from the burden of spending massive time and and resources on promoting their business and nonprofits are no different. Unfortunately, working for a good cause is not enough to draw in donors. Each philanthropic cause has its fair share of nonprofit backing and each non-profit, via promotion, attempts to convince the donors that they are absolutely the best choice for their philanthropic needs, unlike the fifty other organizations who are hauntingly similar.

This tug-of-war with donors indicates that the nonprofit industry is pretty wrought with competition for an industry that does not thrive on profits. All these organizations are targeting the same set of donors, resulting in intense competition. This does little to bring changes in the philanthropic principles of an organization; every cause has enough advocates. What is truly reshaped is the operational structure of these nonprofits, who learn to adopt business-like dynamics to stay afloat while their leaders learn to think like entrepreneurs, aiming to prosper, not merely survive.