Not for profits – Balancing commerciality?
Many not for profit organisations (NFPs) have traditionally relied on government grants for their continued operation and future sustainability.
However there will always be uncertainties at the state and federal grant levels, especially in the difficult times in which we currently find ourselves, such that basing your future plans on these grants could be perceived by some as “risky”, and by others as “downright crazy”.
One obvious option is for NFPs to build commercial and profitable divisions within their organisations which can then generate surpluses to be used in the achievement of their mission and social purpose through various good works in the community.
But mentioning the “C” word (ie. commerciality) in NFPs can sometimes lead to issues including:
- The Board may think that they will jeopardise, or lose, their not for profit status
- Staff may perceive that “commercial = profits” and that “profits cannot exist in a not for profit organisation”
- Management may be unsure of its ability to recruit and retain good people who can operate and grow commercial businesses
But there is no reason why commerciality and social purpose cannot co-exist, and part of that is ensuring that each understands what the other can do for the organisation.
If commerciality can help to protect the organisation against future cuts in government grants, and possibly produce a greater operating surplus than previously, then the social purpose can be funded to do more great works and achieve more for all concerned (members, public and staff alike).
All it takes is for the Board and Senior Management of a NFP to think outside the square a little and:
- Undertake some robust and disciplined strategic planning;
- Analyse the business opportunities that may already exist within their market place but which are not being realised;
- Understand the human capital that they have within their organisations from CEO down to the coal face; and
- Plan for how they can balance a stronger focus on commercial activities with the overall expectation of their mission and values.