“Let me ask you a question. For-profit or non-profit– is there any difference?”
My friend, the co-founder of a non-profit, asked me this question as we walked to our cars post-dinner. With the distance too short to support my opinion with examples, I just answered her question.
Yes, there are differences like tax status. But the context for her question was strategy, business planning, brand-building, and sales. At least that’s how I would translate our topic in “corporate speak.” Words more common to the non-profit sector are passion, mission, donors and fundraising.
But don’t both for- and non-profit companies need passion and a defined mission? Isn’t sales the same as fundraising? And why do non-profit professionals whisper words like “marketing” and “brand-building,” often only in answering the dreaded donor question about “overhead”?
Why is there a completely different paradigm for non-profit and for-profit companies?
I come to this question with biases. I grew up in the corporate world. I’ve written, executed, and revised numerous business plans. I have a deep respect for the role of sales and marketing, so much so that it became my expertise. I’m constantly analyzing numbers for what they tell me. For me, both trust and transparency are key.
I’m a capitalist. I’m also a humanitarian. I don’t think these are mutually exclusive. In my latest career, I seek to more formally link the two.
Is a non-profit that only spends 10% of its budget on overhead better than one that spends 20%? What if the organization with the higher overhead grows the size of its pie (i.e., funds raised) fourfold? Should the leaders of the non-profit growing fourfold correspondingly see their compensation increased?
Now replace “non-profit” with “for-profit” company. Do your answers differ? Should they?
There’s another question I’ve been asking myself: What criteria is most important for me in considering organizations to work for, partner with, donate to, or invest in?
In my latest career, I am on the other side of the due diligence process. I’ve found I’m quite clear in what I look for, and it boils down to five things:
- Is the organization clear and focused in its mission and strategy?
- Do they clearly articulate their plan for achieving that strategy?
- Do they execute on details?
- Do they prioritize communicating with me? Are they transparent in specific goals, achievements and even mistakes?
- Do I trust the intentions, incentives and capabilities–and just generally like as people– the leaders of the organization?
If all five are not in place (or I don’t see a commitment towards getting them in place), I’m a frustrated employee, advisor, investor, or donor.
My mind and gut know pretty quickly when I’m onboard with a team, or I’m not. My guidelines keep guilt, ego, and friendship out of decision-making.
I re-tested my personal criteria just last week when attending the annual San Francisco benefit for global non-profit Room to Read.
When I first read about Room to Read in 2005, I literally got goose bumps. I still do today.
I can cite in my sleep their mission “World Change Starts With Educated Children,” their core values, and their impact in terms of number of libraries built and girls educated.
They make it so easy.
Room to Read’s website, social media feeds, and employees worldwide are both reporters and storytellers. So as a supporter, I become one, too.
In 2010, they set an audacious goal of impacting 10 million children by year-end 2015; they’ll achieve the milestone mid-year. If I want to know how, I can read their five-year global strategic plan or review their annual reports since 2006.
They are obsessed with details—branding, measuring and reporting on program effectiveness, and the investor (i.e., donor) experience. From South Africa to San Francisco, from CEO to investor relations, their staff is key to my incredible experience.
I use the same personal criteria with for-profit companies.
A friend recently introduced me to impact investing firm RENEW. He had just returned from Ethiopia, visiting several private businesses in which RENEW invests.
RENEW’s belief in the power of private companies in developing countries solving many of the world’s problems jives with my own. They recognize a gap between attractive businesses and investment capital. To address it, they’ve built the largest U.S. angel network for Africa.
Their mission: “Grow a company. Build a nation. Leave a legacy.”
I’m at the early stages of due diligence as a potential investor. I had an introductory phone call with CEO, Matt Davis. Last week, I attended their first-ever investor dinner in Washington DC, meeting Matt and his team, other RENEW investors, and even the CEO of one of their Ethiopian investment companies.
Two things stood out. One is Matt’s obsession with building an incredible client service experience. He wants actively engaged and educated investors, and he sees this as part of his responsibility.
The second was the flawless execution of the investor dinner. I appreciate thoughtful details more than most. While event planning has nothing to do with investment or operational acumen, I believe in the Steve Jobs philosophy of attention to detail on one aspect of a business extending to others.
So what is most important in your personal criteria?
Due diligence isn’t just for institutions. The simple exercise of writing down your criteria provides a guideline for analyzing all kinds of organizations—for-profit and non-profit.
It’s all the same.