It's All Related: "Enlightened" Not-for-Profit Management
©2002 by Doug Borwick
All rights reserved.

Many have written that the essence of not-for-profit management lies in the primacy of organizational mission as the root premise from which all other management decisions must flow.  (This author is among them, having done so in We’re Not in Kansas Anymore: Not-for-Profit vs. For-Profit Management.)  This fundamental principle is, of course, key to successfully leading not-for-profit corporations.  However, by itself, it is an insufficient basis for fully understanding not-for-profit management.  What is, in addition, required, is an awareness of the way that all facets of a not-for-profit corporation are interconnected.  In a manner similar to the essence of Zen enlightenment (satori), every element of management in this field is mutually dependent on every other; each is inevitably, inextricably interrelated.

The principal source of this revelation has come from  observation of recurring management difficulties faced by nfp’s (not-for-profits).   There is, in the not-for-profit world, a common practice of handing organizational programming as a fait accomplis to marketing directors and telling them to "sell" it.  (Admittedly, some nfp’s have a problem with the word marketing and the ideas associated with it.  However, all organizations face the task of getting their message to those who need their services and those who can help support that work.  That is what is meant here by marketing.)  Without reciprocal feedback between programming and marketing, there is a real danger that whole categories of people needing an organization’s services might be missed and creative ways of doing so overlooked.  Such feedback helps in choosing the best programs above the "merely" good and, if properly implemented, reinforces the centrality of organizational mission.

A good (albeit "over-the-edge") example of this would be a suburban church establishing a soup kitchen in its basement.  It would be the person most attuned to the "market" who could best point out that the real target population might be better served at an urban location.  While this scenario might stretch the bounds of believability, as the issues become subtler, the principle continues to apply.

A Conceptual Model of Not-for-Profit Management
To fully understand the implications presented by the mutual dependencies of management categories in not-for-profit organizations, it is necessary to consider each of them individually.  Before doing so, however, a conceptual model for the organization of not-for-profit management needs to be presented.  As has been said, the center of all not-for-profit activity is mission. This is the foundation upon which all else is built and it provides the only benchmark against which organizational achievement can be measured.

Moving out from mission, the next most critical element of not-for-profit management is awareness of the public being served.  If mission is the why of a not-for-profit corporation, that why is meaningless without a full appreciation of the wants and needs of the people for whom the service is being provided.  Some nfp’s, most notably in the arts and education, run a danger of over-focus on "product" at the expense of meeting the real needs of those they should be serving.

After the why and who are fully appreciated, the organizational whats can be addressed.  It is particularly important that mission and market drive programming, rather than the other way around.  At the same time, however, programming experience can illuminate important issues related to both organizational mission and market.

Finally, the organization must find and effectively utilize the necessary resources to carry out its work.  Personnel, finances, along with facilities and equipment provide the support for all of a nfp’s activities.  Certainly in the practical sense, resources could be said to be the driving force in an organization, and some nfp’s behave as if that is the case.  However, to the extent that they do so, they tend to drift away from their core mission which is both the legal and the ethical reason they exist.

Mission
Not-for-profits’ answer to the question "Why Do We Exist?" is "Service"—service to the public.  As a result, they have a responsibility not only to their own raison d’être  and the communities they serve but also to the public trust.  This means that in addition to their self-defined mandate to serve (their mission statement) they also must ensure that they reach the maximum number of people possible (market) with programs making the most efficient use of resources.
 
Mission certainly drives the work of nfp’s.  However, consideration of market, program results, and resource history must provide important feedback to the organization as to the appropriateness and relevance of the mission as currently understood and articulated.  Changing demographics can dictate a change or reinterpretation of mission.  (Social service agencies with an historical emphasis on the African-American community are increasingly being forced to address somewhat different issues arising from growing Hispanic communities.)  A history of less than optimally successful programming may indicate the need for re-evaluation of mission rather than just an improvement in marketing practices.  (Health care nfp’s focused on providing services to individuals with "traditional" venereal diseases have found, as a result of AIDS, the need to re-vision their work.)  Fundraising difficulties may indicate a problem with an organization’s mission—either a poorly articulated concept or a shift in social forces which makes it less compelling.  (Arts organizations discovering that less money is available for "arts for arts sake" programming than was true two decades ago are being forced to wrestle with the notion of "socially responsible" programming.)  Mission, while the core of a nfp, is also, from a management point of view, dependent upon feedback from market, program, and resources.

Market
There are two fundamental questions each not-for-profit organization must address with respect to market: "For Whom Do We Work?" and "How Do We Communicate with Them?"  The simple answer to the first question is "Those in need."  Like all simple answers, though, this is not a sufficient answer to the question.  Every nfp must, on the basis of its mission, determine what populations it can reasonably serve.  It must create programs to serve them and analyze the results of those programs at least in part in order to see whether it has accurately judged the nature of its market.  As a result of its responsibility to the public trust, an nfp must reach as many as it possibly can.  This dictates a consideration of available resources in determining the scope of its market.  While a stated mission might argue that the market served should be nationwide, the resources potentially available usually dictates a more modest subset of the whole to be the realistic target market.  Mission, programs, and resources influence determination of markets to be served.

The answer to the second question is also dependent on those same three categories of management.  The American Cancer Society, due to the nature of its mission, does not advertise on the back of cigarette cartons.   It is axiomatic in marketing that modes and methods of communicating about a program will flow from that program’s nature.  Retirement homes are not a common place to display posters about family planning services.  Most nfp’s do not utilizing television advertising because of its great expense as well as the fact that it usually does not effectively target the relatively narrow slice of the community they are attempting to reach.  Mission, programs, and resources play a role in choosing how a nfp communicates with its public.

Another important consideration in not-for-profit marketing is its basic understanding of the relationship between its mission and its "market" (those it serves).  For-profit corporations have a consumer-oriented approach.  Since their target is "those most able to buy," they ascertain what their customers want and proceed to find ways to give it to them.  Some not-for-profit corporations (to their peril) hold their programming to be central.  Their primary loyalty is to their "product."  If  the public "buys" it, fine; if not, they are still fulfilling their mission.  This approach is most often found in the worlds of the arts and higher education, explaining why some elements of those two sectors are experiencing difficulty at the beginning of the twenty-first century.  

Effective not-for-profit management does not need to succumb to the pandering of consumer-oriented marketing or the elitism of a product-oriented approach.  There is a middle way which more effectively serves both the mission and the market.  The target market for all not-for-profits is "those most in need."  In faithfulness to its responsibility to the public good, it should also be seeking to maximize the number of people it serves.  If a not-for-profit corporation thoroughly examines it mission and then the needs of its market, it can devise ways to provide service which are faithful to that mission and serve the greatest possible number of people.  The difficult aspect of this mission-oriented approach is that it demands that programming decisions be based both  on organizational mission and "market analysis."  If not properly understood, some leaders in the not-for-profit world might imagine this to represent a subversion of mission.  In truth, it is the best means of fulfilling that mission.  Mission, market, and programming must be connected on the deepest levels of organizational planning.

Programs
The answer to "What Do We Do?" is the ultimate fruit of organizational mission.  The greatest care and the most time must go into programming decisions.  The options are limited only by the creativity of the people involved; at the same time, the public trust responsibility dictates that the organization undertake only those programs which most effectively utilize its resources.  The goal should be always to focus on the best programming options, winnowing out all others.  It is often a painful thing to abandon good programs.  However, responsible nfp management demands it.

Clearly, good programming is a direct outgrowth of organizational mission.  In addition, as has been pointed out above, programming must also result from careful consideration of the wants and needs of those to be served (the market).  At the risk of redundancy, this does not imply a consumerist mentality.  It is perfectly possible to arrive at a balance between an organization’s mission and the interests of those in the target market without pandering.  If the goal is service, those being served must represent a key consideration in programming decisions.  Finally, it is so obvious as to be superfluous to observe that programming decisions are dependent upon available resources.  No not-for-profit with a staff of three and a budget of $150,000 will attempt to host the next Winter Olympics.

Resources
Personnel
There are three basic categories of resources in all organizations—personnel, finances, and infrastructure.  However, in the not-for-profit world, all three have important characteristics foreign to for-profit or governmental institutions (sometimes referred to as the First and Second Sectors).  Staff members in not-for-profits (the Third Sector) have roles not unlike those found in parallel organizations.  However, it is often the case that their commitment to organizational mission is a powerful motivator in their motivation to join the nfp, superceding their commitment to the organization itself.  This presents interesting management challenges, discussed in greater depth in this author’s primer on not-for-profit management, We’re Not in Kansas Anymore..  Similarly, the subset of personnel which is unique to the not-for-profit arena, volunteers, is sometimes even more passionate about organizational mission than the staff.  (At least they should be passionate about it.)  Both the governance volunteers (Board of Directors/Trustees) and the operational volunteers (the traditional understanding of the word "volunteer" in the not-for-profit sector) are sensitive to issues emanating from mission.  For both categories—staff and volunteers—if the organization has not adequately integrated mission, market, and programs, an unease will develop which can result in productivity-sapping attitudes ranging from dissatisfaction to outright rebellion.  In addition, not-for-profit personnel often have a level of sensitivity to responsible use of financial and infrastructure resources that would be unheard of in for-profits and sadly rare in government.

Finances
When the word "resources" is considered, the first thought is often money.  This is particularly unfortunate in considering not-for-profit management because, as in all labor-intensive industries, personnel represent the most important element in organizational life.  Indeed, this is especially true in not-for-profits due to the critical role volunteers play in governance and operations.  Nevertheless, money and in-kind support are vital elements in nfp management.

For some subsets of the not-for-profit world, revenue (fees paid for goods and services) plays a significant role in organizational finances (e.g., health care, the arts, and educational institutions).  For others it is insignificant or non-existent.  For any nfp, however, the central but exceedingly difficult truth about revenue is that it must be a secondary (or even tertiary) consideration.  Commitment to mission and market should supercede it in all decision-making.

Support (contributed money, goods, and services) is the central financial base of not-for-profits.  The Third Sector exists because there are crucial needs for the work it carries out but an inability for that work to be fully funded by traditional market forces.  Support—from whatever source (individuals, foundations, corporations, or the government—is uniquely tied to all of the factors of nfp management already considered.  Any potential giver is vitally interested in the organization’s mission, its commitment to its market, the effectiveness of its programs, and the efficiency with which it utilizes resources in carrying out its mission.  Even if all of the considerations discussed above did not compel nfp’s to take a holistic approach to management, this factor by itself should make it obligatory.

Infrastructure
Due to the nature of its enterprises, the vast majority of not-for-profit corporations have a relatively small investment in infrastructure—facilities, equipment, and supplies.  (This is, of course, patently untrue when considering some institutions in the health care and education fields.)  Nevertheless, the importance of responsible, effective utilization of resources pointed out above holds true here as well whether considering a building, a photocopier, or a ream of letterhead.  Not-for-profit managers should bear in mind that their infrastructural resources should properly reflect the nature of their organization.  A luxurious headquarters building or elaborate (expensive) promotional materials could belie a social service agency’s commitment to its clients.  Personnel and supporters (both current and potential) have a well-warranted interest in how not-for-profits utilize all of their resources.

Conclusion
The interrelated character of not-for-profit management means that no management process is ever complete.  While in many senses this is true of everything humans do, the requirement of constant feedback among all elements of a not-for-profit makes this a challenging and, if properly approached, rewarding principle.

There has been little observed here that, upon consideration, will prove surprising or unsettling to anyone with experience in the not-for-profit world.  Successful leaders in the sector have at the very least an intuitive awareness of everything contained in this article.  However, there is a case to be made for making these principles explicit—particularly with regard to those aspects which might seem a bit controversial (e.g., the importance of feedback between programming and marketing).  As in any circumstance, bringing axiomatic concepts to conscious awareness can be an aid in making effective use of the principles.  

As attractive as an understanding of these principles might be for its own sake, their practical uses are far more important.  These ideas—the conceptual model of not-for-profit organizations and the interconnectedness of all facets of an organization—can serve as important tools for not-for-profit organizations in analyzing problems and developing their solutions.  Awareness of root causes is the first step in addressing difficult situations.  The ultimate value of everything discussed above is its effectiveness in improving the quality of service delivery in the not-for-profit world.  Considering the importance of the work carried out in the Third Sector, this goal of "enlightened not-for-profit management" is a vital one for the well-being of society as a whole.