How embracing some principles of non-profit can make you more profitable
How does a non-profit get started? Somebody feels there is a gap in reaching out to certain groups of people or protecting our planet. Something needs to change. It is an action taken on a belief and a passion. Somebody cares enough to start an organization to reverse the facts of what he/she sees as wrong or needs change. There is a higher purpose than just that person’s life. It is for a bigger cause, it is to solve a problem this person sees, it is a way to make the world a better place.
When that person starts a non-profit, he/she has the fuel to make this happen no matter how hard it might be. That fuel is ignited by a feeling of passion, contribution, and compassion. The person who starts the non-profit speaks from the heart, tells WHY he/she is so interested in helping this cause, why it is important for others to join. He/she has to make people feel it in their hearts so that they want to be part of it too. The way to find donors is to tell loud and clear what this organization stands for.
We have over 1.5M non-profit choices to donate in the US. We choose the ones that are closest to our hearts. If we have MS patient in the family we may choose to donate to MS Society, if we care about the climate change we choose NRDC , and if we cannot even stand to hear the words “child” and “cancer” in the same sentence, we may choose to go with St.Jude. (These organizations are not chosen based on any criteria but just serve as examples.) We all make our choices based on our values. We also care about how they operate. We all have heard horror stories where nonprofit presidents took away a very high percentage of the donations as a salary. Most of us look into the admin costs of a nonprofit to make sure money goes to the right hands.
Let’s imagine for-profit organizations applying some of these principles.
The companies can also be started as purposeful entities. The owner has a vision of solving a problem for people, environment, or other organizations. The good leaders usually have an altruistic view; they have a clear purpose to start the business. They again have the passion, the contribution, and the compassion that fuels their drive to make this business a success. They want to make this world a better place, they care about making the right choices for everyone. They make sure business is good for all their stakeholders - employees, even the employees’ families, clients, vendors, suppliers, shareholders. Just like a non-profit attracting donors when there is a clear reason of their existence, these companies also attract the right people (all stakeholders) who care about the same purpose.
Companies need money just like non-profits do. They don’t go after donors but clients who will buy their products and services. Their clients also care about their purpose, how they treat their people, community, and environment. They have the choice to go with the businesses that are aligned with their values. I personally will never buy from a company who treats their people bad. I will not have my hard earned money be used for maximizing profit at the expense of people being miserable at work. My money will be spent only in companies where humanity exists. More and more consumers do this. People who do investments also care about these traits more than ever. They select socially responsible companies to buy their stocks.
When for-profit companies have the following principles of a decent non-profit, the results are better for everyone:
1. Have a clear purpose of why they exist (besides making profit) that is easy to understand for all its stakeholders (like the main cause of a nonprofit)
2. Attract clients based on how they treat stakeholders and the environment as well as the quality of their products and services (like donors looking for the distribution of money and how the non-profit operates)
3. Retain their existing client base by continuing to do the right thing (like the loyal donors who will keep on giving money to the same charities)
4. Have leaders who believe in and passionate about what their company stands for (like a non-profit founder will do)
It is no wonder many of these altruistic leaders also give away a portion of their profit to charities and they have their employees have time off to do volunteer work. They believe in doing good. Even if we are not always aware of it, we all want to contribute and help others. Those are some of our basic drives in life. It makes all of us happy.
The best part is the fact that the companies who choose to be purposeful and treat all their stakeholders right, are doing a lot better with their profits too. Having a clear purpose for their existence, coming before their profit goals, actually makes them more money. There are several books out there based on research that tells in detail how companies like Ikea, Costco, Whole Foods Market make this a reality. Firms of Endearment and Reinventing Organizations are my favorite ones out there to read about great examples.
It makes me sad that many of us are still used to thinking with the Industrial Age mindset which says people need to be closely managed to do a good job, they cannot be trusted on their own and that as long as there are shareholders you cannot do the right thing for your employees. The truth is, yes it can be done. We first have to believe it is possible to do the right thing for everyone impacted by our business, then keep our purpose a priority; we will have a great bottom line. The future definitely belongs to these type of organizations. We just need more believers.