Free Management Library for All Organizations

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    Free Management Library for All: Expert Resources and Tools

    © Copyright Carter McNamara, MBA, Ph.D., Authenticity Consulting, LLC.

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    The Goal of Integrating For-Profit and Nonprofit Information in the Library

    To date, there has been a great deal of online management information that, at first glance, appears exclusive to the needs of for-profits. Online management information for nonprofits tends to be focused on activities unique to nonprofits, but not on the many areas of management that are common to both for-profits and nonprofits. Consequently, nonprofit organizations tend to miss out on a great deal of useful online information about management.

    Hopefully, one of the outcomes of the library will be an increased range of management information available to nonprofit organizations. Another outcome might be an increased understanding of both types of organizations, including their strong similarities.

    For-Profit and Nonprofit Organizations Have a Great Deal in Common

    Many people have a misconception that nonprofit organizations are very different from for-profit organizations. While the two types of organizations are different in certain aspects (see General Features Often Unique to Nonprofits), the vast majority of management activities are common to both types of organizations.

    Often, in management practices, the most important difference to focus on is the size of the organization, rather than whether it’s for-profit or nonprofit. Small nonprofits are often much more similar to small for-profits than to large nonprofits. Similarly, large nonprofits are often more similar to large for-profits than small nonprofits.

    Different Names for Similar Concepts

    Each of these two types of organizations tends to have its own wording for the same (or similar) concepts. The following table depicts this different wording.

    For-Profit Term

    Nonprofit Term

    employees staff
    customers clients
    investors funders
    products services
    results outcomes (see note 2 below)
    chief executive officer executive director
    sales revenue

    NOTE 1: For-profits often use the term “results” to mean a desired level of profit or certain solutions for customers (internal or external). Nonprofits use the term “outcomes” to mean impacts on clients, that is, enhanced learning, self-reliance, etc.

    Features Generally Unique to Nonprofits

    Nonprofit organizations differ from for-profit generally in the following areas:

    1. Nonprofits focus more on fundraising from donors, e.g., grants, contributions, etc.

    For-profit organizations, on the other hand, focus more on “fundraising” from investors.

    2. Nonprofits tend to focus more on board of directors activities

    For-profit corporations also have boards of directors. However, their board members are usually more highly trained and experienced in business, leadership, and management than in nonprofits, where board members are often volunteers who bring a strong passion for the nonprofit mission. However, with the fairly recent Enron debacle, both for-profits and nonprofits are having to focus more on developing their boards.

    3. Nonprofits focus more on volunteer management
    However, volunteers are (or should be) managed much like employees, e.g., with job descriptions, policies, etc.

    4. Nonprofit finances are a little different than for-profit
    Nonprofits focus on “human capital” whereas for-profits focus on monetary capital. Nonprofits have certain unique accounts, e.g., restricted accounts, or accounts designating funds (usually grants) that can only be spent on certain activities. However, both types of organizations carry out very similar basic bookkeeping activities, generating financial statements (they each use different names for the statements, which are also quite similar), analyzing financial statements, and reporting financial information. With the recent focus on for-profits being more accountable to the community and society, for-profits are focusing more on social impacts than ever before.

    5. Nonprofit taxes are different than for-profit
    Many nonprofits can be tax-exempt (that is, exempt from paying federal and certain other kinds of taxes) and tax-deductible (that is, donations to the nonprofits can be deducted from the donor’s gross income). Accordingly, they are expected to file certain kinds of tax forms. Certain types of nonprofits also must minimize certain kinds of activities, such as lobbying or earning certain amounts of revenue that are not associated with the nonprofit mission.

    Library Indicates For-Profit and/or Nonprofit at Top of Each Page

    Information at the top of each topic in the library will indicate if the topic is intended for either for-profit or nonprofit organizations, but not both.

    Library Designates Nonprofit-Focused Information With “Additional Information for Nonprofits” in Various Topics

    Some topics will include a section dedicated specifically to nonprofit organizations. These sections will be marked with “Additional Information for Nonprofits”.

    Additional Information About Comparisons of For-Profit and Nonprofit

    For the Category of Organizational Development: