Op-Ed: Are non-profit leaders different from business leaders?

There is a strong push from both the business sector and the world of philanthropy for non-profit organisations to become more “business-like”.

Besides attracting donor support (which is deemed unsustainable), they are required to be income generators, great financial planners and performance managers with significant executive skills and the ability to show social impact results at a speed no corporate would be able to deliver.

While the world expects a business approach, it is suddenly coy about market related salaries in the non-profit sector, demanding overheads below 10% (which means none of that business stuff such as marketing or research and development) and volunteer trustees. In a setting where an entity has to behave like a business, but not look like a business, what is the role of the leader?

According to the Non Profit Answer Guide, “A strong non-profit leader drives a sense of mission down through the organization, upward into the board and outward in to the community. He or she is willing to do whatever it takes to enable the organization to follow their mission effectively.” (Light, P. 2002. Grasping for the Ring: Defining Strong Non-profit Leadership)

This doesn’t focus on financial outcomes, but rather social outcomes. Yet it doesn’t differ widely from the definition of a business leader. Taking into account that non-profit leaders generally emerge from civil society as activists rather than from business schools as trained executives, expectations are often at odds with the reality of civil society leadership.

Many non-profits expect their leaders to lead and manage the organisation. This means undertaking the operational and programmatic work, whilst trying to implement strategy, raise funds, develop collaborative partnerships that are beneficial to the social outcomes expected, negotiate with communities through complex social problems, oversee the systems and business processes of the organisation and beyond. This is often expected with little staff support and an unrealistic measure of overheads as an indicator of success.

Often pegged at 10%, one wonders whether any businesses could survive on this.

It is important for non-profits to separate the operations or programme work from the CEO’s role, which, besides the accountability to the board, his/her oversight and monitoring role and his/her serving as a resource to the organisation, is basically an externally facing role. This means that when a board employs a CEO, there should be expectations and clarity around this external role. The bottom line is that the CEO is the key individual to build trusting external relationships to attract resources (not only funding); to build partnerships with others in the field; to build networks with others who share the organisation’s objectives; to represent the values of the organisation; to engage with communities and understand the challenges they face; to serve as the image of the organisation and to be the organisation’s key advocate, spokesperson and ambassador. Being externally facing means that the CEO would have a keen understanding of the external environment and how the organisation can continue to service social needs. This would contribute towards more effective strategy to ensure that the organisation is currently relevant, but also ready to innovate for the future. Like any business, the services of a non-profit organisation need to change and adapt according to changes in context and what they have learnt from work or services already undertaken. An inability to constantly reinvent the organisation to meet changing needs leads to a level of obsolescence. In South Africa we live in a fast changing society and organisations need to grasp opportunities as they emerge.

The creation of external relationships is critical to the survival and sustainability of civil society organisations and, in many ways, an organisation is only as strong as its external relationships. The ability to engage with external stakeholders such as donors, partners and the organisation’s beneficiaries is a special requirement for non-profit leaders.

If the non-profit CEO has delegated the management of its programmes and other operations, he/she still has a role in attracting talent to the organisation, serving as a key resource through his/her expertise and building the foundation of the organisation both financially and through its people. Importantly, non-profit leaders should also be ready to delegate responsibilities to staff including donor and other stakeholder relations; programme implementation and to encourage new ideas from within the organisation.

It is important to recognise that non-profit leaders are measured by the impact their organisations make in their communities and not by financial profit, although there are targets in terms of funding requirements. One of the most commonly made mistakes is an obsessive focus on the internal workings of the organisation and its bureaucracy at the expense of its external relationships. The organisation could be highly efficient, but doing the wrong thing and therefore ineffective in the change it is seeking to make.

The other reality is that a leader is not necessarily a friend. They often have to make difficult decisions in line with strategy and the long-term interests of the organisation, rather than short term gains. Even if others are not in agreement, the organisational team should know where the leader is going and what is required to get there. Every leader has experienced resistance in some form or another, and it is often a lonely road to ensure that a sense of mission is driven “down through the organization, upward into the board and outward in to the community.” DM

Photo: Desert Leader by Hamed Saber, via Flickr