Wokai Blog: Profiting From Non-Profits: What Businesses Can Learn From Charities

"Some non-profits, as Schumpeter will continue to call them, are almost indistinguishable from for-profit businesses.

In tough economic times businesses would do well to find ways of motivating workers without paying them a fortune—which anyway is no guarantee of success, as the recent performance of generously paid Wall Streeters made clear. Few non-profits pay well and many depend on volunteers. It helps that they tend to have a clear purpose to which these underpaid employees and volunteers are often personally committed.

As long as the firm’s purpose is clear and distinctive, it can do the trick, she says—even if it is simply to be the “first, only, faster, better, or cheaper.

Non-profits do plenty of other things to motivate their workers that for-profits could imitate. They often have a flat management structure. Non-profit bosses tend to muck in with volunteers when the heat is on (you’ll find them, for example, helping to stuff goody bags for fund-raising events). New employees are quickly given real responsibility, even if they are young. Ensuring there is plenty of time during the working week for genuine fun, not of the forced kind satirised in “The Office”, can deliver better results than a bonus.

The marketing prowess of many leading non-profits tends to derive from the fact that, unlike most for-profits, they have to persuade people to part with money for goods or services that are used by others. A lot of effort goes into convincing these donors that they are getting value for their money. The key is to focus on building long-term relationships based on frequent contact, repeatedly saying thank you and sending updates through newsletters. This contrasts sharply with the one-off transactional approach to customers that is all too common in the business world.

For too long, for-profit firms have focused on learning only from each other as they try to do better. It is time that business started to tap the valuable know-how of the best non-profits rather than dismissing the whole lot as hopelessly inefficient."