Nonprofits Should Pretend To Be For-profits

Happy New Year!

[Stepping up to the podium]

I am going to proclaim (while sucking in a deep breath and raising one eyebrow as I brace for criticism):

Any nonprofit organization claiming they can’t measure performance like a for-profit business is lying to themselves.

There seems to be a belief among some nonprofits that measuring performance is impossible because nothing is sold; there are no shareholders to report to.  So oftentimes performance metrics are sharply avoided.

Robert S. Kaplan’s, “Strategic Performance Measurement and Management in Nonprofit Organizations,” confirms this belief is common.

[You can find it in Nonprofit Management and Leadership, 2001, vol. 11 (3), pp 353-370. Or you can find an online version using Google Scholar that appears to be a copyright violation.]

Really?  That’s the excuse?  A nonprofit can’t measure its performance because it doesn’t sell anything?

What a bunch of baloney!

Nonprofits sell something every day.  Ideas.  Beliefs.  Stories.  Solutions.  Advice.  Hope.  Knowledge. Data. Expertise.

The price tag for these things may read zero dollars on the outside, but they are worth something.  It cost money to create the things and a nonprofit benefits when someone uses the things they ‘sell’.

Why can’t nonprofits put a price tag on the ideas, beliefs, stories, solutions, advice, hope, knowledge, data, expertise that they ‘sell’?

Think MasterCard.  Come up with a MasterCard “Priceless” campaign for your nonprofit.   Humor me:

  • New visitor spends time on nonprofit website getting to know, “Why Changing the World is good” – $1.00
  • Visitor downloads Change the World white paper – $2.00
  • Someone publishes a scholarly article and references Change the World – $50.00
  • Same person donates $1,000 every year – $2,000 (’cause they are worth more than just $1K a year!)
  • Famous actor begins living life according to Change the World and tells everyone about it – $500,000
  • Congress enacts Change the World Day and lots and lots of people do change the world stuff – $priceless

And now perhaps the nonprofit can get a sense of how it stacks up year after year.

Yes, it’s an over simplification, but maybe there is something to this idea.  The “priceless” approach puts a value on the ways people interact or share the things that a nonprofit is attempting to “sell”.

If you’d prefer a more scholarly approach take a look at the balanced scorecard solution Kaplan suggests.  It’s one of the few approaches I’ve found so far.

At the end of the day, nonprofits who say they can’t develop performance metrics because they don’t sell anything are missing a valuable opportunity to do more good in the world.

If you can prove successful, meaningful performance you’re probably going to receive more funding.  More funding means more opportunities to change the world.

And isn’t that what being a nonprofit is usually all about?

[Stepping down from podium]

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One thought on “Nonprofits Should Pretend To Be For-profits

  1. You know you’ll get absolutely no criticism from me. I couldn’t agree more. It’s incredible to me how many nonprofit website managers will almost say “we have no goals for our website” without actually saying it.

    When I was at the emetrics conference, I talked to a guy from MTV (read: very much for-profit) who said that their main metric was page views, because of advertising. Page views! If a money-as-bottom-line company like that can measure success with such a basic metric, a non-profit surely can.

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