Effective Leadership and Management in Nonprofit Organizations

Introduction: The Unique Demands of Nonprofit Management

The management of any type of organization is inherently accompanied by a long list of responsibilities, without which the functionality of said organization would be severely compromised. Among these demands are the maintenance of a qualified and dedicated staff, a clarity of mission, a comprehensible and dynamic hierarchical structure, and a flexible plan for the achievement of short- and long-range goals. Such characteristics describe the basic ingredients of a viable organization, in terms generic enough to apply to nearly any sector. However, such demands take on a higher degree of importance in smaller or less financially secured organizations, whose capacity to sustain dramatic errors with resiliency is considerably lesser than their large-corporation counterparts. Thus, these are qualities which must be central to the establishment of a successful nonprofit organization.

For such organizations, the operational premise that social service is the prime reason for existence yields an organization that has committed itself to two separate ends. Where many profitable corporations are driven only to meet the goals of sustainability and growth, a nonprofit organization must balance such needs with the advancement of its identifying cause. This circumstance sets nonprofit organizations apart in their own sector, employing a relative de-emphasis on the bottom line compared to the importance of meeting social service goals. And while the notion of a nonprofit organization tends to elicit admiration and respect from both the public and the corporate world, such organizations still suffer from widespread failure — with only a few examples standing out as historically viable organizations amid the thousands that are launched each year. This is not for a lack of viability, however. The failure of nonprofit organizations, either to sustain a viable enterprise or to meet projected social goals, can be attributed to a need for great managerial dexterity.

Planning, Staffing, and Organizational Orientation

With respect to effective management, there is a core necessity for effective long-term planning that responds to structural inadequacies, internal philosophy, and the implications of larger economic circumstances. With proper planning, it may be found that nonprofit organizations are not necessarily at a disadvantage in competing for market viability. In many ways, in fact, such organizations are granted advantages not afforded to for-profit organizations.

In terms of planning, experienced management is crucial. This is particularly evident given that so many for-profit organizations enter the nonprofit arena with both economic and social interests in mind. Though this is a popular diversification strategy for many corporations and estates, the unique characteristics of running nonprofit organizations can be difficult to adapt to. One of the most commonly identified reasons for the failure of companies to find successful diversification in the nonprofit sector is their incapacity to foresee, through effective planning, the differences between their standard operations and this newly entered sector.

The Workventures study, which provided a useful primary source for this paper, conducted a survey of nonprofit organizations in order to identify the reasons for the success and failure of the 24 groups included in its research. One such case study was revealing of this trend. In this case, "Hornsby Challenge's Business Support Centre was set up to contract work in its administrative area and try to offer that to small business. It provided office support, word processing, filing, faxing, etc. for small businesses." The concept is certainly a seemingly viable one, with small business startup assistance appearing as a worthwhile social service. However, "it didn't work at all. The staff didn't have the confidence to do it. They hadn't really sought their jobs to start up a small business. They were admin people." (Bullen, 1) This illustrates the dangers an organization risks encountering by mishandling the need for staff that is tailored to the task at hand.

The nonprofit world is legitimately a different sector, which requires a savvy familiarity with the philosophies and culture of balancing social services and enterprise viability. Perhaps more concretely, adapting to the nonprofit world also demands a networked involvement with other similarly aimed social activist groups. It is therefore advantageous to begin a nonprofit enterprise by bringing on-board staff members who are versed in the field and who bring with them the industry contacts to make the operation a known entity within its community. This type of organizational orientation also implies one of the central opportunities in terms of organizational development that is unique to this sector. At the very core, "community enterprises have particular competitive advantages. Often these competitive advantages are linked to the enterprise's social objectives or the support base of the parent organization." (Bullen, 1)

This is to say that social causes do not evolve from a vacuum. Rather, the creation of a nonprofit organization is often spawned by either an indication that there may be a wide base of grassroots support for the cause in question, or that an associated benefactor group or individual has expressed an interest in that cause. Thus, where corporations enter into a competitive landscape with effective marketing as the primary means of garnering commercial support, nonprofits often enter into existence with a product that already enjoys backing and the social opportunity for organizing around its purpose.

In order to channel this backing, management of a nonprofit must extend from a strong sense of leadership — both from within the organization and in its field.

Leadership Development and Internal Training

According to the research, "good nonprofit management does not happen by accident. Good management happens with an ongoing commitment by the board, staff, and community to learn, persevere, implement, and evaluate management practices." (Sanow, 1) This is to say that effective leadership in a nonprofit must both be actively sought and developed. An organization that is coming into existence or emerging in its marketplace must seek out individuals with experience and credibility in the field, with the aim of channeling their abilities and insights into an effective training and mentoring program for future leaders.

The research demonstrates that a nonprofit organization will benefit from a system of internal advancement whereby leaders are cultivated among those already possessed of proven training and skill to excel within the specific field and organization. Therefore, the findings here tend to endorse ongoing training in the areas of management and leadership from within. A study focused on the establishment of internal Management Training and Development (MTD) programs contends that "programs to develop and improve management skills, typically offered by professional associations, consultants, or business schools, may be viewed as relating mainly to profit-making concerns. This view, however, ignores the nation's largest employment sector — nonprofits. Clearly, nonprofits have management needs much like the for-profit sector. In fact, recent articles in Business Week and Harvard Business Review tout the management virtues of nonprofits such as the Girl Scouts and Red Cross. One reason for the high levels of management skills found in some nonprofits is their attention to MTD." (Cosier & Dalton) This distinction will differentiate the failing nonprofit from one possessed of sound planning, organizational orientation, and leadership.

Ultimately, this endows members of the organization with the on-site training needed to become effective decision-makers. Effective decision-making is a crucial part of working within this sector, as funding and personnel circumstances may often be in a state of ongoing flux. Today in particular, with the atmosphere uncertain for nonprofit sources of finance, decision-making must be based on a constantly shifting forecast. As one study notes, "the decrease in funding from traditional revenue streams, coupled with intensely competitive markets, have taken their toll and often paint a gloomy picture for many nonprofit organizations. As a result, a number of nonprofit organizations have been forced to close their doors to their constituents or to reduce their program offerings substantially. In order to ensure survival, executive directors and CEOs of nonprofit organizations must exhibit a special brand of leadership by becoming more vigilant, aggressive, creative, entrepreneurial, and willing to accept and embrace change." (Santora et al., 101)

This flux can be managed by creating an organizational orientation built around certain consistencies. Even with respect to the mission and vision typically espoused by the nonprofit, there are disputes on terminology. For the purposes of this discussion, such organizations must adhere to a few basic features. By mission, an organization must recognize itself as enterprising — generating revenue through the production of goods or services — but must also express that its primary purpose is to provide a social benefit, even if it operates under the auspices of a for-profit parent company. In a general sense, its vision will hold that income originating from a nonprofit is to be dedicated to the social cause in question or invested back into the growth of the organization — in lieu of distributing profits to shareholders.

One of the greatest challenges in meeting its ambitions as a socially conscious organization is the refinement of its ability to tend to the diverse needs of those who might specifically benefit from its services. This may involve racial, ethnic, social, geographical, professional, or economic diversity — indicating that there is a constant imperative to shape procedures according to the needs of manifold groups. As the research indicates, "no program is ever completely homogeneous. Its clientele usually fall into categories, though one category may predominate at a particular point in time. It is important to know who your clients are and what their primary characteristics and needs are, if you wish to service them properly. You will discover that diverse clientele groups may possess different needs and wants that may be in conflict." (Koteen, 113) Thus, even if a professional demographic shares a common feature designating their shared interest in a nonprofit program, said program must be prepared for potentially vast differences in individual needs.

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