Nonprofit/Forprofit Boards

This is a book review of a new book (having greater value than a book soley about nonprofit boards in the congruence between the two) about boards and transitioning from one to the other, from Harvard Business Weekly.

An excerpt.

“Editor's note: For those of who have attended meetings of both nonprofit and for-profit boards, the differences between the two organizations couldn't be clearer. Nonprofit boards meetings tend to be longer, less tightly organized, and more sporadically attended by the board members themselves. Why this happens is one of the many subjects discussed in the new book Joining a Nonprofit Board: What You Need to Know, by authors Marc J. Epstein of Rice University and F. Warren McFarlan of Harvard Business School. In this excerpt from the introduction, Rice and McFarland highlight the major similarities and differences between the different types of boards and what newcomers to nonprofit governance can expect.

“Comparing Nonprofits and For-Profits

"There are a number of important similarities and differences between the operations and challenges of nonprofits and for-profits of which a new nonprofit board member must be cognizant. Some of the more important items are discussed in this section.

“Similarities

"There are a number of similarities between for-profits and non-profits which make people with for-profit experience particularly helpful as board members. The key similarities include:

1. Both organizations can grow, transform, merge, or die. Success is not guaranteed for either type of organization, but requires sustained work.
2. In both cases, cash is king. This for-profit focus is critical for a nonprofit board.
3. In both settings, good management and leadership really matter. Delivery of service, motivating and inspiring staff, and conceiving of new directions for growth are all vitally important.
4. Planning, budgeting, and measurement systems in are vital in both settings.
5. Both types of organizations face the challenges of integrating subject matter specialists into a generalist framework.
6. Both organizations add value to society. They just do it in different ways.

"In short, there is much overlap between the skills needed and perspectives provided by leaders in the two types of organizations. This is a key reason why social enterprise courses have taken root in business schools and why, appropriately socialized, those with for-profit backgrounds can contribute so much to the nonprofit world.”