On Linked In, I recently described the NFP CEO role as similar to the Deputy Minister of a government department, except they report to a board of 13 instead of one Minister, have 3 staff instead of 3,000 and the same scope of work. A colleague replied, “terrifyingly accurate!”
1. Reporting Relationships and Decision-Making
Yes, I simplified the Deputy Minister situation. But it is more stable and predictable than when high level decisions are made by 13 volunteers, often with no leadership experience or knowledge of your charitable sector. And they together only a few hours every month or quarter rather than a full time relationship.
In business, there is usually a CEO or owner who can make most quick decisions. The CEO serves on the board or even chooses the board, or chooses not to even had a board if not publicly traded. In government, a Premier or Prime Minister at the top can make certain quick decisions. Not-for-profit chairs have no such decision power (though some pretend they do) and good chairs rarely even need to vote.
CEOs (I am using the term to include Executive Directors) who need a quick decision between board meetings may struggle to get that quick decision. The organization might miss a great opportunity, or fail to mitigate a new risk, and the CEO may get blamed for that later.
2. Multiple Budgets
Outside of the NFP world, there is often one annual budget that can be adapted as needed and that provides for considerable flexibility. In organizations primarily funded by grants, each grantmaker may have demanded a different way of presenting financial details. They may have added utterly weird restrictions on what it will or will not fund, or what percentage of some costs it will fund. Major donors may also have demanded unique ways for using and accounting for their donations.
And each government contract for services may have its own special conditions for accounting for costs, without care for how much effort and time that takes away from achieving desired outcomes.
3. Lack of Corporate Services
It would be easier to keep track of multiple budgets, restrictions and reporting deadlines with a finance branch. But most Canadian not-for-profits have fewer than five staff, so finance, human resources (including volunteer management), IT, facilities management and more may be all done by the same one or two people – and sometimes it’s the CEO. That’s also true for many small businesses and most entrepreneurs, but without the same level of government oversight and reporting, plus public scrutiny, to deal with.
4. Complexity
In business, the service or product is paid for by the client or customer. Very straight-forward. The purchaser decides whether or not they got value.
In charities, the client or customer may pay nothing, or a small fee that does not cover costs, and other parties – a mix of grantmakers, donors, and governments – pay. Those paying may want different outcomes than those receiving. And in some cases, the benefits are to communities or even to nature rather than to individuals.
On top of that, a high demand for services may have zero relationship with revenue. https://blog.garthsonleadership.ca/wp-login.php?itsec-hb-token=myadmin
5. Risk
Again, I’m simplifying, but most roles in business are not life and death, and a great many are in charities (especially when you remember that almost all hospitals in Canada are charities).
A customer may get angry when an item they want is out of stock or delivery will be late. Key clients may change suppliers, making your business precarious Tariffs may make your product unaffordable. There can be many tense, uncomfortable situations. But think about having to turn away a desperate women with three little kids in pjs because all the shelters are full, sending her back to an abuser and possible death. Think about telling an addict who is finally seeking help to avoid dying from street drugs, that there are no treatment beds.
Many charity employees deal with such high-risk situations all too often. Even if the CEO isn’t the one relaying the dire messages, they are responsible for ensuring traumatized staff get safety and support, and for creating healthy workplaces.
6. In Summary
I’m not saying running a business is easy. There wouldn’t be such a high failure rate if it was. I’ve been an entrepreneur since 1992, interrupted by stints as Executive Director or CEO.
But corporate folks who think a charity CEO role would be a nice way to ease into retirement are deluding themselves. On average, they will work longer hours for a LOT less money and have way more sleepless nights.
There is an in-between I encourages some business folk to seek out when they ask about transitioning to not-for-profits. Industry and professional association CEOs have tough jobs too but IMHO not as tough as charity CEOs. Co-operatives like credit unions are also an option between business and charity. Government agencies, regulatory bodies and amateur sport governing bodies can also be worth checking out.
Some of the issues remain, like trying to get timely decisions from a volunteer board, but at least their board members are more often knowledgeable about what they are governing.
There are a lot fewer life and death situations. Income from membership dues is not usually restricted. The members pay and the members get the direct benefits, so complexity is reduced – though keeping members satisfied can be quite a challenge.
Also, the Certified Association Executive education program is widely available, whereas training for charitable leadership is harder to find and often less accessible.
Regardless of your choice, the top thing to remember is that it’s different and your corporate knowledge won’t directly translate. At the very least, start going to webinars and workshops and reading books and blogs on not-for-profit leadership. I recommend this for all NFP volunteer leaders as well.
