Five Things Non Profits Do Wrong

These not-for-profit “businesses” employ millions and include some of the most dynamic performing arts, education and human service organizations in the country.

Everything from a local food bank or traveling dance troupe, to major universities and national organizations like The Cancer Society and The Red Cross, weave together commitment and mission to serve for the betterment of society.

In a perfect world, these would be perfectly-run entities. Unfortunately, nonprofit agencies are as susceptible to human fallacy and mismanagement as for-profit businesses and often make bigger news stories when things go awry. Nonprofits might even be more susceptible to stumbling due to inept board management, lack of funds and budgeting savy, and poor personnel capabilities. As a veteran of over twenty years of working with nonprofit agencies, I’ve targeted what I see as five major things many nonprofits do wrong…

1. Unclear Mission/Irrelevency
Despite the trendiness in recent years to establish “mission statements,” Nonprofits often have an unclear or convuluted missions. Over several years, many organizations shift services due to changes in population, competition, or to meet grant and donor requirements. This can cause an organization to get away from it’s original mission without ever clearly establishing guidelines from which to deliver services. Another common problem can be that an organization has become irrelevent – perhaps a problem or social ill has been solved or there is another organization in your community doing a better job at serving the same population. This is becoming increasingly common as organizations founded in the 1960’s and 1970’s have simply outlived their effectiveness. The decision needs to be made to either make the agency relevent or to close the doors.

2. Duplication of Services
The larger the community, the more likely it is to find an increasing duplication of services. As nonprofit agencies have grown, many have funded themselves with grants to fund specific programs and/or services. I call this “chasing funding streams.” The social service sector is as susceptible to political climate and social trends as any other organization; there are constantly new “buzz words” and new “grand plans” to solve old problems. Organizations may add services to new populations because there is a big pot of federal money available. The result is several organizations in one community doing basically the same thing. This reality confuses donors, and it can potentially leave gaps in meeting the community’s needs. It is important for an agency to take stock and truly evaluate if they are offering services that are better met elsewhere and duplicating what already exists in the community.

3. Under pay & Under development of employees I see this as a huge problem. In my over twenty years of working with
nonprofits, I have consistently watched the best, brightest and most talented employees not only leave organizations, but also leave the nonprofit sector in droves due to being under-paid and, more importantly, under-developed. If we think of why
individuals get into social and human services work, it seems even more tragic that we run them out! Here are what I see as the main issues: agencies hire a lot of workers and pay them a substandard wage instead of hiring fewer, more qualified
people and paying them a better wage; there is no place for employees to go in terms of job development, “moving up the ladder,” etc. – because organizations are often smaller than for profit corporations, there are fewer opportunities for promotion.
Agencies can look for ways to cross-train, share staff with other organizations, and expand jobs (and compensation) to develop employees; Ignoring talents, skills, education level employees bring to an agency and viewing them as “workers” – the reaity is that most nonprofit employees can generate more income using the same skills in the private sector – non profit agencies need to look for ways to keep them before they lose them. As anyone who works with nonprofits knows, high personnel turn-over is an oft-sited problem.

4. Not planning for Growth

It is very common for nonprofit agencies to still be operating like a “start-up” five or ten years into their existance. It is this operating without a plan that can get agencies into trouble with lack of a coherent mission and duplication of services. It is important for leaders, staff, board members and clients to participate in long-term planning and establish a plan for growing to meet the needs of the community or the client population, as well as a plan for growing staff and resources to accomplish the tasks.

5. Poor record-keeping/accountability/financial management

This is what we read about splashed across the front page of the newspaper. I have seen organizations of all size and scope get into trouble due to lack of financial oversight, poor management and lack of accountability. As an organization grows, it is imperative to keep fiscal operations a priority. Seek professional help, put checks and balances in place, and keep clean, coherent records. Public perception and trust is very difficult to re-establish once it has been lost. IF an organizations
writes a grant proposal that is funded saying they will use the money to serve the homeless, purchasing new computers for the executive staff is not wise use of the funds. Agencies need to make sure they are filing all the necessary government
forms, doing the required reporting, getting audits if required and answering to the public for how they are managing finances.

The nonprofit sector is an amazing success in the United States. So much so, that other countries have followed our lead in the past few decades with the establishment and growth of NGO’s (Non Governmental Organizations) and other agencies. But, with this growth and influence comes increased scrutiny and increased expectations by the public. It is important that we rise to these challenges and work to continue improving our nonprofit agency operations.