Why business thinking is NOT the answer - Part Two based on Jim Collins monograph Good to Great &amp

“What percentage of your organization’s income goes to administration?”

If you work for a nonprofit, you’ve heard this question. I’ve even helped a nonprofit that was 100% volunteer – NO salaries, and they were often asked that question. And it was often asked in an accusatory tone.

We understand.

Yes. There has been the occasional nonprofit that ruined it for everyone, where the Executive Director took a huge salary and the folks carrying out the mission had to pinch pennies.

It angers us all. It breaks trust, and trust is a key component to binding our volunteers, advocates and donors to our cause.

But for most nonprofits, staff is working for WAY less than they could make in the for-profit world. So I was delighted to see Jim Collins call for us to look as this question differently in his monograph, “Good to Great and the Social Sectors.” First Collins says each business and each nonprofit must have the right people in the right place to get the desired results – for business that is profit, in the social sector that is “doing good.” And he emphasizes that the right people deserve the right compensations.

Let me tell you about one person I met while working with an animal shelter. His name was Johnnie. He had walked several miles to come to the shelter, when he was just 16. He wanted to help. So they let him volunteer, and started to notice that he had a natural talent. Animals just trusted Johnnie. There was something about his calm, he genuine caring. As time passed, he was hired full time, and it turned out even animals, who had been rightly labeled vicious, calmed down with Johnny. I saw them. I remember one huge dog, who had just been brought in. I walked by and he lunged against his cage, snarling, spit flying. He would have torn me up given the chance. (No animal is born this way. I can’t imagine what this animal had been through.) When Johnnie came. The dog calmed. Johnnie was patient, kind, and without fear. Johnnie was never bitten. But think, what would we need to pay you to go into a cage with an animal with a history of viciousness? Believe me. We didn’t pay him what he deserved, but the outcomes were nothing short of miraculous. Wouldn't your agree,it would be okay to pay Johnnie more!

Because its outcomes, Collins says nonprofits should focus on (and so should people evaluating nonprofits.)To be able to share outcomes, start with your baseline. Here’s what we accomplished on average over the last five years. Then document on-going outcomes. For business that would be profit margins.

For nonprofits, it’s more challenging to quantify. So, Collins says define exactly “the good” you are trying to accomplish. Describe how you know when you’ve accomplished it. Gather evidence to show your outcomes, such as the number of additional people fed, the amount of nutritious food eaten, the health benefits seen. Gather numbers, but also gather stories. Stories move hearts. Now, you can show your outcome. Document value. Prove that salaries/admin costs were a good investment.

When your outcomes are admirable, people want to help. We all like to be part of a winning team. So, show your success. Then show how much MORE good you could do with more resources. More good. Bigger team. Even more good!