It would be difficult to win a soccer game (known as football to most of the world) by following the rules of football as it is known in the United States. While there are similarities, the games are different. As I have outlined in throughout this series on the Third Sector, nonprofit organizations grapple with a similar dilemma on a regular basis — they are often held accountable to a “game” whose rules are different from those they have to live by on a daily basis. Nonprofit leaders clearly see the discrepancies. In my research study, nonprofit leaders gave consistent answers whether they led a $3 million organization or one whose budget topped $100 million, whether their organizations were located in small towns or large metropolitan areas, and regardless of the tenure of the leader.
There is a reason that nonprofit entities are known as the Third Sector — because there are clear differences between nonprofits and the public or private sectors. Even I you are not a nonprofit leader, you are undoubtedly touched by the sector . . . as a patron on the arts, a recipient of supportive services, a board member, a donor, a member of a faith community . . . the list goes on. The differences within the Third Sector don’t mean that a nonprofit does not have to follow strong business principles (they do), or that they should not be held accountable for the outcomes of their efforts (they should). It simply means that the rules of the game are different.
As I have highlighted in recent weeks, the study identified five key areas in which strategic leadership in nonprofit organizations is unique when compared to the other sectors:
- The mission/margin tension of multiple bottom lines;
- The diffused, influence-based power structure needed to respond to multiple stakeholders;
- The critical nature of the nonprofit leader/board relationship;
- The importance of strategic communication skills to build understanding and maintain mission alignment; and,
- The need to go beyond metrics to individual stories to convey mission impact.
Understanding these “rules” can provide insight into why nonprofits may act in ways that seem inefficient or indecisive when viewed through a for-profit lens (which is the natural perspective of many board members and donors), or why it is harder to capture the true impact of their work.
I would love to hear your perspective on this study. Do the five unique aspects of strategic leadership in the nonprofit sector resonate with you? Are there other differences between the sectors that you have experienced? Your insight will add to the nuance of identifying and understanding the rules of the nonprofit game. I look forward to the conversation.