Dear nonprofit board, so you want to hire a corporate leader as your new nonprofit CEO?

This may not be the best idea.

“The ‘non-profit’ institution neither supplies goods nor services; it supplies humanity. It transforms the human being. The product of the non-profit organization is a changed human being.” Peter F Drucker

The nonprofit sector is vital to society’s successful operation. While the government provides much assistance, more is needed to meet all needs. They represent the third largest workforce, with $1.047 trillion contributed to the U.S. economy (Ariella, 2023, para. 3). Nonprofit organizations address society’s “unmet needs” (Nodoushani & Gallagher, 2019, p.145), gaps not provided for by the private or government sector for human, animal, educational, environmental, and arts causes.

Nonprofits are complex organizations focused on achieving what Drucker termed “a changed human being” (p. 3). The complexity in part arises from the difficulty of measuring success within the nonprofit sector. How do you accurately measure a changed life? Within the for-profit sector, success is much cleaner: the profit for shareholders. Further complicating nonprofit organizations is, as Nodoushani and Gallagher (2019) stated, “Nonprofit organizations exist at the intersection of the market, government, and social forces and occupy a unique role in communities where they are located” (p. 145). The nonprofit has to factor in all the parts of society to address society’s challenges while being located in the same community. Also complicating the work of nonprofits is addressing the systemic issues, often based on hundreds of years of endemic discrimination. Selling a widget is much simpler than helping a family caught in multigenerational poverty.

While for-profit organizations strive to generate financial value, nonprofits are driven by the goal of creating social value. These distinct objectives necessitate a unique set of skills for their effective execution. The success of a for-profit leader does not automatically guarantee the same level of achievement in the nonprofit sector. This contrast in goals and required skills underscores the unique nature of the nonprofit sector and the need for leaders who can navigate its complexities.

It concerns me when nonprofit boards appoint CEOs with extensive corporate experience but limited exposure to the nonprofit sector. This practice, unfortunately, is all too common. The selection panel often assumes that the financial acumen, entrepreneurial charm, and corporate contacts will seamlessly transfer to the nonprofit setting. However, they overlook the crucial tripartite of nonprofit leadership skills: fundraising, volunteer development, and altruistic vision-casting. This highlights the need for a change in the current practice, advocating for the selection of leaders with a deep understanding and experience in the unique challenges of the nonprofit sector.

Another reason this practice occurs is the long-standing false belief that nonprofits are less complicated than for-profit entities. I argue the opposite is true; as Renz (2010) stated, nonprofits have a dual bottom line: They must fulfill their mission while maintaining financial sustainability. This requires business acumen, a passion for improving society, and a long-term perspective to address the deep, complex systemic issues.

While hiring an experienced corporate leader who wants to ‘give back to society’ might be attractive, nonprofit boards should find leaders who understand and have significant experience in the unique peculiarities of creating social value and financial sustainability.

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Ariella, S. (2023, January 16). 25 incredible nonprofit statistics [2023]: How many nonprofits are in the US? Zippia 25 Incredible Nonprofit Statistics 2023 How Many Nonprofits Are In The US Comments. Retrieved February 11, 2023, from https://www.zippia.com/advice/nonprofit-statistics/

Drucker, P. F. (1990). Managing the non-profit organization: Principles and practices. HarperCollins.

Nodoushani, O., Stewart, C., & Gallagher, E. J. (2019). Another outlook towards the U.S. nonprofit sector segments. Competition Forum, 17(1), 145–151. https://www.proquest.com/scholarly-journals/another-outlook-towards-u-s-nonprofit-sector/docview/2341681010/se-2

Renz, D. O. (2010). The Jossey-Bass Handbook of Nonprofit Leadership and Management (3rd ed.). John Wiley & Sons.

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