PROFITING FROM NONPROFITS
Reprinted by permission:
United Airlines Hemisphere's Magazine by permission.
In record numbers, business managers and executives are turning to the nonprofit world for employment. Those who take the time to learn the bottom-line realities of this sector stand a much better chance of making a successful getaway.
John Read had worked in government, been the chief executive of a $400 million global manufacturing company, and started his own consulting firm. But it was the experience 12 years ago of dangling off a cliff on an Outward Bound course that changed his life—and his career. Today, Read jokes, "I rappel under the stars and get paid for it." That's because for the past two years, Read, 57, has been the president of Outward Bound.
The scenario of CEOs capping off their careers with a stint of do-gooding is almost a cliché. Now, however, they are being joined by an increasing number of managers and executives at many different stages of their professions. The migration to nonprofits has skyrocketed in recent years. "At least 50 percent of all the incoming inquiries are from people in the corporate sector," reports Debra Oppenheim, co-principal of the nonprofit search firm Phillips Oppenheim.
A variety of factors is prompting the shift. With more competition for fewer dollars, nonprofit organizations are looking to sharpen their business skills. "Knowing your market, your products and services, your competitors, and your brand values and revenue base are the key elements that allow you to succeed," says Bennett Freeman, managing director for Burson Marsteller's global corporate responsibility practice. "It's that straightforward."
At the same time that nonprofits want to boost their business expertise, many corporate warriors, wearied by one too many mergers and downsizings, are questioning their chosen career paths. Oppenheim recently interviewed a survivor of the high-tech maelstrom whose family was pushing her to change her life. She told Oppenheim, "My children are all activists and every day they're saying, 'What are you doing, Mom?'"
But before you yourself make the decision to join the chorus of "do good, give back," think seriously about whether this is a song you can sing. Burnishing your halo doesn't necessarily mean you'll be successful in the nonprofit world, cautions Phillips Oppenheim co-principal Jane Phillips. "It can't be 'I'm going to use my financial skills to help a nonprofit do better,'" she says. "You've got to have a specific understanding of the mission and connect with it."
And while the entente between the corporate and nonprofit worlds is more cordial than ever, the two worlds are still fundamentally different and exist for fundamentally different purposes. Regardless of whether the nonprofit is a foundation, an advocacy group, an academic or religious institution, or a service organization, the mission almost always comes first. "Nonprofits are nonprofits for good reasons," warns Freeman. "Revenue flows and sound management of budgets are seen purely as a means, not an end."
Sally Sterling puts it even more bluntly. "Corporate executives think it's easier to run a nonprofit than a corporate enterprise," says the nonprofit specialist for executive search firm Spencer Stuart. "Boy, are they in for a big surprise."
The culture shock of moving from corporate to nonprofit reminds Read, an eight-time Outward Bound alumnus, of the way the self-discovery group challenges its students to go outside their comfort zones. "You have to examine critically what you think you know and test it against what you're faced with," Read explains. "It's not a job you retire into. You have to have humility about what you don't know and learn things all over again. I find that whole process refreshing."
At the core of the clash of cultures is the difference between managing people who are motivated by passion and managing those who are propelled by a paycheck. That difference resonates throughout every aspect of working in a nonprofit organization.
Take management style. The style that made you so successful in the for-profit world may rub nonprofit people the wrong way. Most nonprofits are run more like a partnership than a dictatorship. "These organizations don't direct well," says Read. "It's a cat-herding exercise more than command and control."
Achieving consensus among a myriad of stakeholders requires nurturing what Freeman calls "a culture of persuasion." Everybody has an opinion—usually a passionate one—and it requires an enormous amount of patience to tease out the pertinent points behind the passion and present a different perspective in a reasonable way. "I went to business school to learn how to keep the club in the closet until needed," Read muses. "But in this job, there's no club and no closet, so it's more a matter of organizing the data to make visible what the problems are."
Because nonprofits have to address the concerns of a full universe of stakeholders, the vetting process is a lot more exhaustive. "You don't have the alacrity of decision-making," notes Morris Offit, president of UJA-Federation of New York, who estimates that it takes a good 25 percent to 50 percent longer to reach a decision in a nonprofit organization than in a for-profit counterpart.
Discussing an issue is itself an exercise in diplomacy, with plenty of opportunities for misunderstanding. "You have to learn the language," counsels Bill Novelli, CEO of American Association of Retired Persons (AARP). Using standard corporate vocabulary like "profit," "market share," "competition," and "bottom line" automatically alienates staffers who worry about selling their soul.
"Our people are all about social justice and environmental action," Read comments, "and the hair goes up on the backs of their necks if they hear you talking like a businessperson."
Even after an issue is resolved and a course decided upon, the lack of resources that dogs almost all nonprofits may stymie speedy action. "Often, nonprofits don't have as many staff members, especially at times like this when so many have had to cut back," says Oppenheim. "You can't snap your fingers and have someone implement strategies or programs on an immediate basis."
Not only are the management tools at your disposal in nonprofits different from those available in the corporate world, but so are the measures of success. "The Holy Grail of the nonprofit world is impact evaluation," says Barbara Fiorito, chair of Oxfam America. She explains, "You can force the timing of some business elements, but you can't force the timing of cultural or social change. You can be doing an extraordinary job and there could be riots breaking out in the area you're working in. Would you consider that success or not?"
Instead of hard results, there are measures of success. Is there enough money coming in? Are the budgets balanced? Do you have the right managers in place? Do the programs work? "That's where it's useful to have corporate experience, because that kind of approach is increasingly important in the nonprofit sector," says Phillips.
John Barr, who became president of the Poetry Foundation in the wake of its headline-making $100 million bequest from philanthropist Ruth Lilly, describes what constitutes a good day. "If we were able to reach a benchmark or milestone in one or more initiatives in our strategic plan—for instance, if we announced a joint venture with the Library of Congress or the National Endowment for the Arts to promote poetry—that would be a red-letter day." But, as a former investment banker and venture capitalist, as well as a published poet, Barr confesses, "There's something so simple and elegant about a bottom line in the business world. The equivalent of the bottom line in the arts world is much more judgmental. You make impacts, but it's hard to judge how deep those impacts are."
The Nonprofit Payout
Every seasoned manager knows that there's a frustration quotient associated with every job. Still, the level seems to be a lot higher in the nonprofit world—and without plush perks to salve the pain.
It helps that salaries are no longer quite as skimpy as they have been. "People used to think that if they went into a nonprofit, they would have to work a second job on weekends to pay the rent," Phillips remarks. But although The Chronicle of Philanthropy recently reported that some 52 nonprofit organizations paid their chief executives more than $1 million a year, most of these were chief executives of nonprofit hospitals and medical centers, with some foundation managers and symphony leaders thrown in. The vast majority of the approximately 230,000 organizations classified by the IRS as nonprofit offer their directors salaries rarely exceeding half that amount—and the trickle-down theory of economics doesn't make exceptions for nonprofit salaries further down the line. "Get ready for a pay cut," advises Barr. "When they say 'not for profit,' they mean it."
Most Likely to Succeed
If there's one thing that everyone involved in nonprofits agrees on, it's the absolute necessity of testing the waters before taking the plunge. In addition to taking Outward Bound courses, Read served on the board of a regional Outward Bound school and became its chair before taking the national post. Barr had spent a number of years on the board of Bennington College and Yaddo, the prestigious artists' community, as well as publishing six books of poetry. Novelli had worked for CARE and other social change endeavors. You're already part of the family if you're on the board or serve as a volunteer, says Sterling, adding, "There are very few success stories of people with no previous experience in nonprofits."
Volunteering and getting engaged with the nonprofit network enables you to take the same due diligence you would apply if you were going after a corporate spot. And such diligence makes just as much sense in the nonprofit world as in the for-profit world. "Not all nonprofits are the same, just as not all companies are the same. You may go into the wrong one," cautions Novelli. "It's important to be careful and go into the place where you have confidence in the management and resources and board."
At the same time, evaluate your skills to judge whether they're something a nonprofit would be willing to expend its hard-earned resources on and whether they're something that fits the organization's needs. If you have an MBA but know little about government policy, you may want to take classes in public policy. If you're interested in hands-on social change, consider getting field work experience in a hospital, school, or advocacy program.
"Whatever you have been doing in your career will be the basis for what you bring. It shouldn't be a dreamy-eyed proposition. It should be a decision made as much by the head as by the heart," counsels Barr. But, he quickly adds, "If the head makes the right decision, the satisfactions of the heart will follow."