Non-Profit success can happen from day one
A non-profit organisation (sometimes known as a not-for-profit organisation) can be successful almost from the day they start. Non-Profit success can sometimes be elusive as many have a constant struggle to survive. To maximise their effectiveness, today’s organisations need to change their trajectories because staying the same is no longer an option. They need to be responsive to evolving circumstances in their communities, or face the consequences.
Many Non-Profit organisations are started and run by people with a passion for a cause. However, many have had very little experience with ‘business principles’ and how to apply them. The solution to the problems you face could already be inside your business community. The difficulty is knowing the right questions to ask and the right people to approach for help and guidance.
One of the keys to having Non-Profit success is being able to ask questions about the organisation and to respond with the right actions. By asking questions you can identify what is working and what isn’t. You can also establish what objectives, strategies and actions are needed because that will move you forward while improving the services to the people you seek to serve.
Disruptions will always be there
Disruptions to your organisation are not something you look forward to. But something will disrupt it at some stage. It may be the breaking up of a relationship, a location problem, a new government policy, the impact of mobility, robotics and social media, to name a few. Whatever the disruption is, it can cause your Business Model to fall to pieces and your Business Plans to become obsolete, http://goo.gl/dWSbkk.
Many organisations are being pushed to the limit, there are fewer resources and reduced headcounts. There are instances of burnout and low employee morale within the sector, which is often a catalyst for people to look elsewhere. However, some are taking new actions because that is what will make their organisations more effective and efficient.
It’s better to see the issues and fix them than to bury your head and let them fail permanently. After all, you probably started or joined the organisation because you were passionate about what it was trying to achieve.
Non-Profit is not something most people think about (until they need something)
When you think about your non-profit organisation, thoughts such as being successful, or being a ‘change agent’ probably aren’t the things that come to mind. But maybe it should be, may be more engagement with the business community could help to make a real difference. The way of thinking of today’s new breed of Non-Profit organisations is about becoming more entrepreneurial and focusing on innovation. These are keys to minimise the struggles you might be having.
Today, more and more Non-Profit organisations are not only making a difference, they are making it because they do things differently. Taking full advantage of such things as information technology and communications, social media, mobility, analytics and big data. By using these things to leverage existing resources and community support can have a big impact on the clients and the community.
Non-Profit success comes with understanding their purpose
Some people are under the mistaken impression that Not-For-Profits don’t have to pay as much attention to the bottom line, as people do in the business world.
A Non-Profit organisation is, in fact, a business. While a business is there to make money or profits for its shareholders, a Non-Profit success is based on other reasons. They are generally focused on health, social, environmental or sporting activities. However, both must strive to be profitable, otherwise, they will cease to exist. You could liken a non-profit to a builder who is technically competent but lacks business management skills which cause the business to fail.
Do you understand exactly what are you seeking to address with your Non-Profit’s success and growth potential, because if you don’t trouble could be looming? Many become self-serving and don’t focus on the problems, frustrations, wants and needs of the people and communities they are there to serve. Without a crystal-clear focus, they will continue to struggle and funders will keep walking away.
As an organisation continues to operate and grow, they must be flexible enough to move with the changing circumstances. The entire landscape of the Non-Profit industry has changed. Cloud computing, mobility, big data, robotics, analytics and social media have seen to that. New networks and clusters are emerging with new technologies and methods of marketing and communications. The whole marketing landscape has changed. Those organisations not keeping up, will continue to struggle.
Modern business practices are essential in Non-Profit success
Some or all of the following can be reviewed, or adopted, to improve the overall effectiveness and efficiency of your organisation. You don’t have to be a business in order to adopt good business practices associated with the following:
- Board of Directors.
- Management Team.
- Business Model.
- Business Planning.
- Value Chain.
- Funding Models.
- Creativity and innovation
- Financial management.
- Gap Analysis.
- Risk Management Plan.
- Community engagement.
- Management Succession Plan.
In addition, the following may be considered in order to improve performance
- The most appropriate naming of the Not-For-Profit.
- Branding and positioning.
- Upgrading systems and processes.
- Strategic Partners and Alliances.
- Corporate Social Responsibility Program.
- Developing commercial opportunities.
- Implementing a Marketing Platform.
- Possibility Thinking.
- Managing ‘big data’.
- Forming or becoming part of community networks and clusters.
- Staff training programs.
- Change Management Program.
- Outsourcing Program.
- Affiliations and their management.
- Communications and motivation of people.
- Resources management.
- Monitoring and analytics.
- And more across all functions of the Not-for-Profit.
Non-Profit struggles often revolve around strategy
Developing a winning strategy for a Non-Profit is more important than ever in today’s turbulent environment. At the same time, their strategy work is often a frustrating, stressful process that rarely leads to the best actionable results. This is because strategy requires making choices about an uncertain future, based on good research, analytics and practical experience.
It’s better to see the problems and fix them than to bury your head in the sand because compounding problems are often followed by failure. The best way to see the problems associated with the struggle is to take a cold hard look at the key aspects of the organisation. Start asking meaningful questions as well as really listening to the answers, as a result, problems can be avoided.
Good strategy requires an understanding of how all the components of the organisation work best.
There is an old saying “It’s too hard doing it by yourself”. It applies equally to Non-Profit success as it does to a business’s success. Therefore seeking external help to provide objectivity and perspective is critical. There may not necessarily be flaws in the way a Non-Profit works, but there is likely a better, more efficient way to use resources. Your problems, frustrations, wants or needs, may be just waiting for an innovative solution.
External advisors must be competent in strategy development
External advisors may cost money. However, they can provide the answers to the struggles and help the organisation save money while attracting more funding to meet the objectives. Like a business, you should see external advisors as an investment in your future, rather than a cost. If their contribution can’t be measured, be careful.
Improving your services and moving forward beyond the struggle, means losing any fear and adjusting your strategies. Don’t avoid the hard questions that can make your organisation work more effectively and efficiently. Survival means keeping your finger on the pulse and staying one step ahead of market forces that can impact your organisation and impede your progress.
Seek and you will find Non-Profit success
The problem with many people is that they are not used to seeking and finding the right answers. Unfortunately, there is not always a single right answer to find, so learning to cope with ambiguity can be an advantage. It is not possible, no matter how hard you try, to always discover the one right answer. In fact, even after the fact, there is no way to determine that a choice was the right one. There is often no time or no way to judge the relative quality of any decision. Sometimes we all have to ‘suck it and see’. The real answers are buried somewhere in the actions you take, so become action orientated.
To be a great manager, we have to step back from the frustrations, problems, wants and needs. You need to ask the right questions and then find the right answers to help move the organisation forward. The best managers are not intimidated or analysis paralysed uncertainty and ambiguity. Become creative enough to imagine possibilities that may or may not actually exist. Be willing to try a course of action knowing full well that it will have to be adjusted as events unfold.
The essential qualities for this type of person are flexibility, imagination, creativity and resilience. Like good social entrepreneurs, they need to feel right and to have confidence in their own decision-making. A Non-Profit needs people who respect one another for their attributes, something that is often difficult for some. Every Non-Profit should have an entrepreneur on the Board of Directors. If you don’t it is important to learn the characteristics of an entrepreneur. https://goo.gl/CV31Gu. Be wary of people who think they are entrepreneurs. Being able to talk about being an entrepreneur and being one are quite different.
Funding is arguably a critical key to Non-Profit success
With many Non-Profit people, the word ‘profit’ is a dirty word. Fundraising costs are another area of contention. If any organisation is to survive it must make a ‘profit’, or as some like to disguise it, ‘a surplus’. Whatever words you use, if you want to survive, there must be more money coming into the organisation, than is going out.
Budget constraints are the main problem associated with recruitment and retention of good talent in the Non-Profit sector. If you don’t want to lose people to the higher paying business sector and are not making sufficient surplus. You might need to consider creative measures such as non-financial benefits.
Too much of a positive revenue over expenses can subject a Non-Profit organisation to criticism for not spending enough on the people it was set up to serve. Even more public scrutiny occurs if excessive administrative costs are involved.
Something to be aware of with government grants is the high cost acquiring the funding in this way. And don’t overlook the high cost of compliance and reporting. Governments also have a habit of trying to micro-manage in order to reach unrealistic expectations of performance, which causes your costs and frustrations to rise.
Governance is always a big issue
Definitions of Governance vary widely. Two general definitions can be made.
- Concerned with a set of behavioural patterns, in terms of performance, efficiency, growth, financial structure, treatment of stakeholders.
- Concerned with a framework, the rules under which organisations are operating, with the rules covering legal, financial and people.
The law recognises that directors (or committee members), as well as some office holders in the Non-Profit, make important decisions. Decisions about the strategic direction and activities of the organisation. The people holding formal positions in these organisations have special legal responsibilities.
Every Non-Profit should develop a viable set of team rules and procedures. A facilitator can ensure that team members understand the rules and do not feel intimidated by them.
Decisions and rules made by committees should include:
- Organisation values
- Financial management.
- Hiring staff, contractors and volunteers.
- Whether or not to take disciplinary action.
- Which contractors or service providers to engage.
- Outsourcing of non-core activities.
- What projects to undertake and how they are undertaken.
- Whether the organisation is working within the laws of the land.
Because committees have this power, the law requires them to comply with legal duties. This includes acting in good faith and in the best interests of the organisation. Where the standards set by legal duties are not met, penalties can apply. Sometimes conflicts arise between the personal interests of a committee member, and the interests of the organisation. The law also provides a framework on how to deal with this situation.
Evidence suggests strongly that, better Governance leads to improved revenue and stronger growth. On the other hand, weak Governance leads to poor client services and client experience. It also leads to higher costs, inefficiencies, reduced effectiveness, failures and unwanted personal stress.
Good governance focuses attention on all the factors that help to achieve the desired future. Translate the vision and mission into strategies and actions that can be measured and scored. Good governance also addresses the risks and threats that the organisation might face.
Success will come easier by using performance measures, commonly known as Key Performance Indicators (KPI). You need to measure performance by taking into account the inputs. This can be done by linking your vision to the actions. Focus your management on what you can measure.
Governance is the responsibility of the Board of Directors and the Management Team. It’s important to note that even if you appoint an agent to look after the organisation’s affairs, you, not the agent, may still be held responsible for the legal obligations.
Only be a director or a company secretary if you are willing to put in the required effort to achieve the organisation’s vision and objectives.
- Directors control the business, therefore the success of the organisation depends on them.
- The constitution sets out the rules in addition to setting out the directors’ powers and functions.
- Each director must be fully up to date on what the organisation is doing as the probability of success rests with them.
- Find out for themselves about how any proposed action will affect the organisation’s performance. Especially if it involves working capital.
- Seek outside professional advice when needing more details to make an informed decision since directors don’t know everything.
- Question managers and staff about how the organisation is performance, because this will particularly impact client services.
- Take an active part in director’s meetings because directors must keep abreast of the main activities of the organisation.
- Directors who are absent for most meetings should be asked to step down because they can be derelict in their duties.
Non-Profit success and government compliance
A non-profit success is important, even though these organisations do not operate for the profit or gain of its individuals involved. However they do use public funds, and while compliance is necessary, it could be simplified. This applies both while the organisation is operating and when it winds up. When a Non-Profit is wound up, any surplus money and other resources have to be passed onto another Non-Profit organisation.
When you set up a non-profit organisation, it is important to choose an appropriate legal structure. Different structures are available with different situations.
Non-Profit success can come from a range of concessions available to them. However few concessions apply to all organisations, they generally apply to particular types of Non-Profit organisations.
Accessing tax concessions
In order to access tax concessions and comply with your organisation’s tax obligations your organisation may need to:
- Register for an Australian business number (ABN), goods and services tax (GST), fringe benefits tax (FBT) and pay as you go (PAYG) withholding
- Obtain a written confirmation from the government to access the tax concessions.
You also need to be aware of capital gains tax issues that can apply and the PAYG instalments system.
If your organisation has a turnover equal to, or greater than, the GST registration threshold, you must register for GST. You can also choose to register if your organisation’s turnover is less. This decision should be based on your organisation’s administrative needs. There are ways you can register for GST to suit the structure of your organisation and other GST concessions are available.
Stamp duty, payroll tax and land tax may apply to your Non-Profit organisation. These taxes are governed by individual state and territory governments. Enquiries about these taxes should be directed to the relevant departments.
For more information on government compliance, visit your accountant/auditor or go to this website, https://goo.gl/WUfh2t.
“No matter how far you have gone on a wrong road, turn back”. Turkish Proverb
“Non-Profit success comes when you act with passion and the recipients of your services can feel it”. Peter Sergeant