Leadership

What the nonprofit sector can learn from the corporate sector

This article was originally published on LinkedIn on 12/20/2017

In 1989, an article in the Harvard Business Review was published called “What Business Can Learn from Nonprofits.” There are certainly many valuable lessons, and I do believe that the private sector has a lot to learn from the nonprofit sector. I also firmly believe that the nonprofit sector has much to learn from the corporate sector—and it might not be what you think.

It is often said that nonprofits can take key lessons from the private sector: measurement and evaluation, financial acumen, market-based approaches, to name a few. I completely agree, and these approaches should be translated into the nonprofit sector. However, I want to take a step further and discuss a few additional opportunities for nonprofits to learn from the corporate sector.

  1. Duty of Candor. Both for-profit and nonprofit boards must adhere to a duty of loyalty, obedience, and care. Yet corporations also include a fourth duty, which is candor. Why shouldn’t this also be a requirement for nonprofit boards? Since we already know that they are often ineffective, usually because board meetings are not engaging, strategic, or generative, increasing –and requiring—candor would only help the organization better itself.
  1. Shareholder Responsibility. Corporate boards are beholden, to a degree, to their shareholders. This means that the shareholders actually have a decent amount of power given to them. Why shouldn’t this be the same for nonprofit stakeholders? While many nonprofit staff members do a good job of listening to their constituents, the organization doesn’t always do this in a consistent manner. Perhaps we don’t need to encourage “Class Action Lawsuits” against nonprofits, but there could be a more formal process for constituents to deal with issues that arise. To start, we could allow for more board/community interactions, include stakeholders on the board, and be open to receiving (and responding to) open and honest feedback from those the organization is serving.
  1. Professional Development. Corporations do professional development well. There are typically a variety of rotational programs for junior employees, internal leadership development programs, external opportunities, and clear paths to promotion. As a whole, the nonprofit sector does not do any of these things with consistency. Many employees do not see clear paths to promotion, do not typically have lateral moves available to them, and don’t have a significant amount of professional development funds—or they do and are too focused on the work to invest the time in using them. Let’s put a focus on funding professional development opportunities for nonprofit staff, so that we all can learn and grow in a more meaningful and consistent manner.

In order to move the needle on making both nonprofits and for-profits better and more sustainable, each sector must be open to learning from one another and partnering in new ways. While these are just a few short suggestions, I think that with better partnership between sectors, we will begin to move the needle on many of the greatest challenges that we face in the world. As we get closer to the New Year, and think about starting anew, let’s all think about ways we can learn from sectors and industries beyond the one we currently work in—because that knowledge is what will make improvement possible.

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