"Why do business people on nonprofit boards make decisions they'd never make on behalf of their companies?" This was one of the intriguing questions from the audience this evening when Matthew Bishop interviewed Nancy Lublin at the 92nd Street Y. Lublin is the CEO of DO Something, founder of Dress for Success, and author of Zilch: The Power of Zero in Business. Bishop is the American Business Editor and New York Bureau Chief, The Economist, author of Philanthrocapitalism, and proponent of wealthy business people "redirecting the talents and techniques that made them rich toward doing good."
"Because in business, it's straightforward. The customer is also the payer," explained Lublin. "In nonprofits, it's sometimes difficult for board members to understand that the customer and the payer are two different people. And the payers—the funders, are not necessarily in touch with what the customers want and need. That makes it tricky to know what to measure and confusing for board decision-making." This is one of the fundamental issues that I see business people struggle with when they first join nonprofit boards; this is why board training and coaching are so important.
In Lublin's book, and her subsequent interviews and discussions, she challenges the common wisdom that nonprofits can learn from businesses. Turning the tables, Lublin provides advice to businesses on what they can learn from nonprofits.
Going right to the core of the matter, Lublin recommends that companies emulate nonprofits by being purpose-driven. Not necessarily lofty or cause-y. Rather, defining a purpose for being on this planet. For a company, Lublin says that might mean being the first to... or the only to...or the fastest at...or the best at...or the cheapest...and so on.
I have always believed that both nonprofit and for-profit boards need to focus on envisioning the organization's greatest potential (the "Duty of Imagination"). Of course, boards must fulfill their oversight and compliance responsibilities but that alone is not sufficient. That alone does not build a vibrant and robust organization.
Despite the growing demands on the board's time to address compliance matters, my recommendation to for-profit boards continues to be to work with senior management to imagine how the company can maximize shareholder value by creating and delivering highly competitive goods and services at an optimal price in the global marketplace.
And despite increasing demands for compliance in the nonprofit sector, my advice to nonprofit boards continues to be to engage with the CEO to imagine how the organization will achieve a better future for the community, and develop and accomplish the revenue model for success.
Yes, nonprofits have the advantage of having a cause no matter what; causes are motivating. But boards in both sectors will have happier, more motivated employees, achieve greater success, and build a better world if boards imagine and help their for-profits, or nonprofits, to achieve their greater potential.