Surviving Financially in the Nonprofit World

Are you the kind of person who likes to live life to the fullest? Are you looking for a career that's challenging, with opportunities for advancement, and a large number of openings? Then welcome to the world of financial management in nonprofit organizations. Nonprofits are crying out for the talents of skilled financial managers who often overlook nonprofits in favor of profit-seeking firms. As the availability of public funding becomes scarcer, the demand for financing expertise has soared among nonprofits. The call for innovative and experienced financial managers has grown louder.

Don't be fooled, however, into thinking that nonprofit means "no money." The size and scope of the nonprofit sector often surprises even seasoned business professionals. Also, misconceptions abound about work in nonprofits. For starters, many people assume that the nonprofit sector of the economy is quite small. In reality, it is valued at approximately $665 billion a year. This makes the U.S. nonprofit sector twice as large as the U.S. construction industry. Also, the term nonprofit is sometimes deceiving, bringing to mind church-sponsored bingo games or bake sales. Unfortunately, people forget that the nonprofit sector contains such notables as the National Football League, the Smithsonian Institution, and the National Audubon Society, none of which sponsors bingo or bake sales. In the United States today, the nonprofit sector includes over 1.24 million institutions, including schools, hospitals, human service organizations, religious groups, and museums. Over 15 million people are employed in the nonprofit sector of the economy.

Work in nonprofits often includes important interactions with the profit-seeking sector. For example, Sandy Boutin works as the director of Great Dane Rescue in Plymouth, Michigan. Her organization is always in need of dog food but has a very small budget. Boutin decided to invite dog food manufacturers to participate in her group's fund-raising efforts. The companies got their names exposed to a large group of prospective customers in return for donating dog food to the rescue program. Through Boutin's efforts, both groups got what they wanted. Often large nonprofits, like the Smithsonian Institution, actively seek corporate sponsorship programs to help fund such activities as its traveling exhibitions.

One nonprofit, the Rockland Family Shelter in Rockland County, New York, even enlisted a financial specialist to start a for-profit business to help finance the work of the shelter.

Many nonprofit organizations experience problems at the top of their organizations. David LaGreca, a manager with the Volunteer Consulting Group, says that top management positions at nonprofits are often filled with social workers, former dancers, and musicians. These individuals have creative and artistic skills but often lack the training and business expertise of executives at profit-seeking firms. Chris Perks, president of Perks Reutter Associates, an engineering consulting firm, agrees. According to Perks, "In nonprofits you are often dealing with people whose expertise is in the mission of the organization, not necessarily in administration or management. Furthermore, many employees do not come from business backgrounds. They are often hired as staffers because they are committed to what they are doing." It's also difficult to recruit qualified individuals to serve on nonprofit boards. The corporate scandals of the early 2000s caused waves in the nonprofit sector. Many prospective board members fear that the potential of scandal or poor business practices at a nonprofit could damage their reputation or business standing in a community.

Nonprofits have also been severely lacking in another critical aspect of 21st-century business: Most are not taking advantage of the powerful technology of the Web. Strategic management firm Peppers and Rogers pointedly criticized nonprofits for exercising poor use of such technology tools as tracking software and databases. They advised that with the proper financial management and technological expertise, nonprofits could use the Internet to enhance their fundraising capabilities. Nonprofits seem to be listening to this advice. Convio has become the leading online customer relationship management (CRM) company for the nonprofit sector. It offers Internet software and services to help organizations use the Internet for fund-raising, emarketing, advocacy, event management, and more. The possibilities for nonprofits are clearly there if they can attract qualified business and financial expertise.

1			How is the job of a financial manager in a nonprofit organization different from that of a financial manager with a profit-seeking firm?
2			Should financial managers in nonprofit organizations be compensated equally to their counterparts in profit-seeking firms? Why or why not?
3			Do you see the job of the nonprofit financial manager as getting easier or more difficult in the future? Where might you get facts to support your conclusions?
4			How can a financial manager at a nonprofit make better use of Web capabilities to enhance the financial position of the organization?