The Problem With “Business Leadership” In The Nonprofit Field

I was challenged recently by reading a posting in a leadership discussion group I participate in concerning the difference between nonprofit and for-profit leadership.  I am usually not so “professional” in the content of this blog but this paradigm got me thinking about several things in this area that I wanted to put down in writing.
Here are some of my thoughts for all my nonprofit and for-profit leadership friends.  Comment and let me know what you think!
What we are learning in nonprofit leadership today is that nonprofits differ from for-profits in some core underpinnings; the main one being “the bottom line”. The bottom line for a for-profit is financial and involves making money for a limited group of people. The bottom line for a nonprofit is its mission.
A for-profit’s “mission” is to make money for its stakeholders. A nonprofits mission is to bring about change with the assistance of its stakeholders. A for-profit’s stakeholders are going to push the business to be as profitable as possible for financial gain. A nonprofit’s stakeholders are going to push the agency to be as effective as possible for social gain.
This line has been blurred significantly because of decades of focus on the “Nonprofit needs to be run like a for-profit” myopic paradigm. This has led to the death of a true mission driven agency, sacrificed to the god of the business leader fallacy. The last two decades has taught us that mission and business ethics have been significantly weakened in the rush towards “business leadership” focused on profit rather than product, customer, service, and company mission.
Here are some core issues as I see them:
Issue 1 – Mission should the primary focus of any good leader. Because the mission is the driving focus that shapes sustainability for a nonprofit, it should be the main focus of a leader, rather than the financial bottom-line. If the primary focus is sustainability (having enough money to operate a fiscally sound agency), then profit becomes the bottom line and the nonprofit just lost its focus on its mission in sacrifice of gaining more dollars. Sustainability is critically important to a nonprofits survival and growth but focusing on sustainability in deference to mission will lead to mission drift. Mission drift for a for-profit means they are losing money and getting back on track involves finding a way to collect more cash. Mission drift for a nonprofit means endangering its 501(c)* status and losing that mission focus can lead to the swift dissolution of the charter.
Issue 2 – Business risk for a nonprofit, as viewed from a for-profit perspective, equates to poor leadership and a lack of wisdom. I prefer the concept of “boldness” for decision-making by a nonprofit leader. The for-profit leader can take risks that put product and services in jeopardy and if the risk leads to failure, only products and services (and stakeholders’ wallets) are usually affected. Failed risk-taking for a nonprofit usually comes at a higher price where lives are affected and, in some sectors, people who depend on the services and products to maintain basic, life-giving assistance would have to go without. The nonprofit leader and his/her team needs to be bold and make decisions that might be edgy to grow the effectiveness of the services but “risky” is not the smartest of tactics for a nonprofit to engage in.
Issue 3 – “More business leadership is needed in nonprofits”.  This has been a major paradigm in the both fields for a while now.  It is believed that a business leader can pick up the commitment to a cause easier than a nonprofit leader can pick-up the business skills needed to effectively lead an agency.  Being trained in psychology and business at a Master’s degree level and with over 25 years of experience in leading, consulting and counseling people, I have learned that business leaders can be quite ridged in their views of the world and how it works, and to create “commitment” outside of their particular paradigm can cause significant cognitive dissidence and can be a difficult interpersonal journey indeed!
But, if you have a leader committed to a cause and they catch the true concept of the necessity of sustainability (effective business skills that keep a nonprofit operating in the black) to keep the cause going, business skills can be picked up quickly because a leader’s heart and passion (character traits that cannot be taught) is already engaged and business prowess (a skill-set that can be learned) can be taught and learned quickly and eagerly.
Issue 4 – Business risk has its rewards and that needs to be recognized more fully by small businesses and nonprofits. For nonprofits though, boldness in decision-making equates to an improvement in services and meeting the mission-centered needs more effectively. For a for-profit, risk has a financial focus primarily.
  In some current leadership circles, nonprofits and their leaders are being portrayed as fearful and weak primarily. In my experience with leaders in both areas, the nonprofit leader is far more bold, creative, trust worthy, ethical, forward thinking and innovative when compared side by side.  The nonprofit leader has to be because the resources are fewer and the opportunities greater!  I have been amazed by the way many nonprofit leaders I have worked with and for can leverage minimal resources for maximum impact!