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“Nonprofit Mentality” – Updated –

April 30, 2010

Recently, a retired founder/CEO/board member-type friend shared with us that “the problem with nonprofits is they all behave like they’re not real businesses”. He went on to lament the tendency of orgs to ignore fundamental business best practices while citing their mission or nonprofit status as some sort of excuse… all the while, sucking money from other well-run and efficient organizations”. We knew this was a gross generalization, but we also had to admit to having encountered more than a few nonprofits where what can only be described as a “nonprofit mentality” prevails.

There are of course other differences affecting nonprofits, but in terms of the daily running of either, the only significant difference between nonprofit businesses and their “real”  counterparts is how their income is taxed. Otherwise, both should be run as businesses striving to ethically serve their respective constituency to the best of their ability, or face bankruptcy.

Nonprofit mentality seems to stem from the typically admirable quality of altruism, but when it’s exaggerated to the point of trumping sound economic practices and business acumen, it’s gone too far and it’s time for a change.

This video, while inexplicably employing lame audio, demonstrates exactly what we mean by “nonprofit mentality”. Enjoy!

Ultimately, the board of directors is responsible for correcting course in this situation, but the wise executive will maintain a vigilant lookout for tale-tale signs of nonprofit mentality and will act swiftly to avoid the negative effects before board involvement becomes necessary.

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