The Language of Nonprofits Dr. Rob Sheehan Academic Director, Executive MBA Program

1. The Language of Nonprofits Dr. Rob Sheehan Academic Director, Executive MBA Program Robert H. Smith School of Business 301-523-1864 rsheehan@rhsmith.umd.edu

2. Nonprofit • What a bad term! • Does not describe purpose, but we can’t think of anything better that will “stick” • “Not-for-Profit” may be a bit better • “Nonprofits” actually do produce “surpluses” – they need to in order to build reserves and make sure that they meet budget regularly

3. Performance • If they don’t exist to make “profit” for “owners” then why do they exist • The purpose of nonprofits is to accomplish their missions to make a difference in society • The measure their performance based on how successful they are at accomplishing their missions

4. Funding • Most nonprofits rely on subsidizing their operations by raising money from individuals, companies, and foundations so they can provide their services at a lower cost – or no cost • Pressures to raise money can create many challenges for nonprofit leaders – especially during the recent economic downturn. • Federal, State, & Local governments are big funders of nonprofits – often relying on them to carry out services the government wants citizens to receive. But government funding is an uncertain source of income.

5. Volunteers • Most nonprofits rely on volunteers – unpaid staff – to help do the work of the organization. • Volunteer activity can take many forms – providing actual services, doing office work, helping to raise money, or serving on the Board of Directors. • Proper management of volunteers is important for them to be used effectively.

6. Board of Directors • Like publicly traded companies, nonprofits are required to have a Board of Directors which has the fiduciary responsibility for the operations of the organization. • Unlike corporate boards, they are unpaid volunteers • Unlike corporate boards, they usually take responsibility for assisting the organization in accomplishing its goals – far beyond simple oversight responsibility.

7. Sizes • Nonprofits range from the very small which may be run out of someone’s basement to very large, sophisticated organizations that seem more like companies • A smaller nonprofit may barely have a budget and the operation could be run out of someone’s checkbook • In doing your projects, it is important to understand the organization’s real capacity for being able to sustainably implement any recommendations you make.

8. Values • Nonprofits tend to be very mission focused – very focused on who they serve and the difference they make • Ethical Behavior and “Trust” are even more important in nonprofits as donors rely on them to keep their word • Nonprofits often rely more on transformational leadership versus transactional leadership • People who work for or volunteer for nonprofits often report feeling a “calling” to do the work – it is very personal

9. Applying Business Principles • Many of the “for-profit” practices and principles used in companies can be applied in the nonprofit setting, but this must be done carefully. • Be careful not to say “this place needs to be run more like a business” as it offends many nonprofit leaders. Unfortunately, when many nonprofit leaders hear “business,” they make it mean “we only care about money” and it is an affront to their values. • Be more specific and apply your business idea to the situation, e. g., “I see how we can apply some of the ideas we have learned in our marketing course to promote your big fund-raising event.”

10. Electives in Public Policy • Nonprofit Management & Leadership • Fundraising • Strategic Management