Nonprofit: Just a Tax Status

If there’s one thing I’d like to change about working with nonprofits of all kinds, it’s the belief that nonprofits are somehow the “minor leagues” of organizations—that it’s ok for them to have deficits in leadership, operations or strategy that you wouldn’t see in a for profit corporation.

That’s a load of hooey.

Being a nonprofit is your tax status, not your business strategy. There’s no reason not to have extraordinary leadership in a nonprofit, or, for that matter, a positive bottom line. Too often, Boards are to blame, holding a nonprofit organization to a lower standard that they might otherwise. I’ve seen Boards tolerate subpar performance from their ED with the justification “we’re a nonprofit so I guess it’s ok.”

Here’s something to remember. Here in Boston, we have some nonprofits that are pretty well run. Harvard University is a nonprofit. They’ve amassed $35 billion in cash and have some extraordinary people in leadership. Mass General is a nonprofit. They’ve done ok for themselves. And the list could go on and on. It’s not the minor leagues—it’s just another tax status.

And there’s no reason for any organization—nonprofit or otherwise—to settle for second best.