Courtesy Citybizlist – John Hoey left the profit driven realm where success was measured “quarter to quarter” to lead the region’s YMCA. He was excited to have a chance to “think long term about how to build something and not have to make inane short term decisions.” But John brought with him his entrepreneurial DNA and also the question of how you run a nonprofit like a business.
The Profit Motif. We started by discussing the effect of having a profit driven perspective in a nonprofit world. “That discipline is a good discipline. It teaches you to make trade-offs.” John continued, “it teaches you not to go too far over the edge, that [a decision] has to make sense financially.” Not for profit colleagues, John explains, “might understand it in theory but never lived in that world.” One of the initial conversations has to be around “understanding the short term [financial] cause and effect” of a decision. He continues, by making a decision without thinking about financial ramifications, nonprofits seemingly “can make trade-offs without a negative effect.” But the decision has to be based on a shared understanding of what is expected from the financial investment. To help John suggests a reshaping of the traditional for profit “financial return on investment definition”, by expanding it to include “a return on investment in terms of mission and strategy.” But for John it is all three pieces – financial, mission and strategy, not just the latter two.
Measuring Success. A for profit company (or at least its current management team) won’t last long if its mission gets muddled with too many opportunities poorly executed. In the nonprofit world, it’s worse. In John’s mind, organizations “very easily get distracted by opportunities” that seemingly resonate with mission. Sometimes these distractions emanate from an influential group, distractions that John calls affectionately “board member rat holes.” The critical challenge for mission driven organizations is clarity of focus. Regarding any new idea, John reflexively asks “does this really move us forward and, most importantly, is it a scalable idea.” One of John’s absolutes is “we will only do things if we can do them at scale,” a discipline that he feels is “often missing in nonprofits.” “We look at all traditional financial metrics; we have debt, so our bank is looking at them too.” John continues, “we look at impact measures.” To figure these measures out, John explains, requires “having a strategy – what are we trying to accomplish.”
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