Using For-Profit Business Models to Achieve Nonprofit Success

Many of a community’s most difficult issues are addressed by nonprofit organizations. To be successful in tackling these issues, strong nonprofits design their approach to be effective and efficient. This is a hallmark of the for-profit business model, and nonprofits are increasingly looking at ways to operate their organizations using for-profit thinking. This does not mean compromising the values of the organization or its passion for mission. It does mean the organization should use sound business principles.

For profit businesses measure outcomes to determine whether they are doing the right things in the right way. Are they making money? Are they providing a return to their owners or shareholders? Are they meeting their customers’ needs? These businesses have methods and metrics in place to determine whether they are doing these things at a level necessary to sustain the financial stability of the operation.

Nonprofit organizations can and should do the same thing. And it should be done in the context of the purpose and mission of the organization. How is this accomplished? The organization will identify the outcomes it wants and how to measure their effectiveness. They will create metrics to measure their progress and success. They quantify the value of the services they are providing to the community. This is done with the input of the stakeholders. It sounds a lot like the way successful for-profit businesses operate.

Is this a quick and easy process? No, it’s not. It will involve the time and energy of many people. But organizations that have invested this time and energy have found the results to be well worth the effort.

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