“They should want me for my expertise, not my checkbook,” is the perspective I hear from some people interested in serving on nonprofit boards. So what’s the real story here? What exactly do nonprofits need and want from you? Are they just after your money?
The truth about nonprofits and their funding:
- Nonprofit revenue models are complicated. In business, the revenue model tends to be pretty straightforward: there’s a product or service and a price. For each nonprofit, however, there are usually multiple revenue sources (federal, state, and local government; corporate, foundation, and private philanthropy; and fees for services) that each have different requirements and expectations, often with onerous reporting demands and regulations, all timed differently, and most varying from year-to-year based on new and often unpredictable funding trends and interests. Often the payers are third-party, so they are not receiving the services directly.
- Most nonprofit services require significant subsidies through philanthropy. (If a homeless shelter could be profitable, it would be a hotel.)
- Most of the time, if a nonprofit asks people outside of the board for funding, the “outsider” will expect the nonprofit to demonstrate that the board members themselves and their companies and foundations are highly generous; outsiders are reluctant to invest in a nonprofit where its own board members do not believe enough in the organization to support it.
- The nonprofit business model is changing; some might say it’s exploding, given trends that are not dissimilar from changes in the for-profit sector. For example, in both for-profits and nonprofits, it is sometimes becoming less important to invest in a “place” (Amazon as a bookseller for example), and more important to build audiences through electronic communication, or distribute services through hub and spoke models. In the current economy, nonprofits are also increasingly collaborating with each other (Atlas Perfoming Arts) and with businesses (Partners in Preservation) in order to expand their impact and increase efficiencies. And nonprofits are pursuing more enterprising approaches (DC Central Kitchen).
- Philanthropy models are also changing, in many cases becoming more business-like (Ford Foundation), engaging the public in grant decision-making (American Express), and involving business executives and professionals on nonprofit boards to increase impact through service and also foster leadership development as a complement to corporate philanthropy (Clifford Chance).
What the board and organization really need from you as a board member:
- Expertise from business people who will help the organization strengthen its business model to be more successful in today’s marketplace. For example, expertise in branding and messaging, customer service, public relations, pricing, business strategy, and advocacy (for government and philanthropic funding).
- Pro-bono services from your company or firm.
- Expertise from people in the “industry” of the nonprofit, who understand nonprofits and the work of the particular organization, whether that’s in conservation, urban development, arts, or education. (So, indeed, I believe there is a highly valuable role for nonprofit experts on nonprofit boards.)
- Diverse perspectives from people from a broad variety of cultures and backgrounds. Such diversity helps the board enrich its vision of the nonprofit’s potential, ensure that the organization benefits multitudes of people well, and expands its networks of support to maximize revenues.
- A financial contribution from each and every board member at some level in order to experience the pleasure of supporting the organization and demonstrate your support to others. A highly generous financial contribution from those of you who have the means to do so, and meaningful contributions from your companies where such funding is available; this is particularly important to set the pace for fellow board members, new recruits, and prospective funders.
- Your active participation in asking for financial support for the organization from a variety of sources. If you believe in the compelling work of the organization – whether it’s preserving the environment, fighting poverty, protecting human rights, educating children, or providing healthcare – it’s easy to do. You are asking for support on behalf of the community and the people you serve...not for yourself. Your role as a board member is to work with the nonprofit’s CEO, staff, and fellow board members to see where and how you can be most helpful in making the case – whether that’s in meetings with government liaisons, foundation or company representatives, or individuals whom you or the nonprofit knows. And you should be talking about your board whenever you can to help build support.
There are many great reasons to join a nonprofit board, including your own personal and professional development. But, ultimately, you will only succeed and have a good experience if you choose a cause you care about. And if you do care about it, it will be easy to do everything you can to help the organization to achieve success. Do that and you will have an amazing experience and make the world a better place.