News media heralded the rise of the nonprofit sector two decades ago, and it’s still the fastest growing sector in the U.S. as well as the largest source of employment in many countries. This means opportunities are mushrooming to join and lead associations, foundations and similar institutions around the world.
But for anyone who thinks management is management, regardless of the sector, think again. It’s not by chance that there are so many MBA and executive-education programmes devoted exclusively to advancing nonprofit careers. There are some major differences in the way nonprofits are expected to operate compared to for-profit businesses.
These differences call for a very specific set of skills that can make or break a career in this sector. Here are three of them.
1. Motivating staff without financial incentives
Nonprofit salaries are modest, and raises and promotions are rare in these generally flat hierarchies. You’re also dealing with a lot of volunteers, both as staff and as board members. “In for-profit enterprises you can get away with being a leader of tasks in order to achieve your goals. Nonprofit managers have to be effective leaders of people, first and foremost,” explains Marc Hardy, Director of Nonprofit Executive Programs at the University of Notre Dame’s Mendoza College of Business. He describes effective nonprofit leadership as “sharing fire” – “It’s not about getting people to follow you; it’s about investing in people as individuals and igniting the passion within them.”
2. Identifying non-financial measures of success
Concepts like key performance indicators and success metrics are critical in both the for-profit and non-for-profit worlds. But in a private business, it’s comparatively easy to look at a spreadsheet full of numbers and measure performance. In the nonprofit world, on the other hand, you need to establish how to measure the social return on investments. “The first step is figuring out which factors you even can measure,” says Hardy, “Next you pick which to focus on and how to communicate them.” Among other things, this means that nonprofit institutions have an increasing need for people who can analyse multifaceted data sets and use them to tell a story that goes beyond profits and losses.
3. Managing diversity – in teams and stakeholder groups
Nonprofit employees come from an incredibly diverse set of professional, cultural, and economic backgrounds. Nonprofit stakeholders are equally diverse – ranging from staff members and service clients to foundation partners and corporate supporters. How can you overcome inertia in this kind of environment? In interviews with nonprofit chief executives, consensus building emerged as one of the most important skill-sets respondents relied on. Effective nonprofit leaders work to ensure that all parties feel free to contribute their feedback and ideas – however novel or divergent – and to implement those ideas where possible and share in any resulting successes. Although decisions and results may take longer this way, the good news is that research consistently shows that diversity leads to greater innovation.
These three skill sets are some of the most common areas of focus in executive-education programmes on nonprofit leadership. You’ll find them at the heart of courses on topics as diverse as nonprofit governance, performance measurement, leadership strategy and even fundraising.
Laura Montgomery is a higher-education expert who blogs for The Economist Careers Network.