Why I chose to leave the nonprofit sector and start my own business

I spend a lot of time working with my clients on their why. Why?

Well.. understanding our why gives us the meaning we’re looking for to keep moving forward. Whether that’s as business owners or employees for sure. It’s also important for us to understand our why when it comes to the relationships we’re in, where we choose to live, etc.?

Our why is our inner compass, our on-board GPS that makes sure we’re heading in the right direction for ourselves.

I recently revisited my own why in a talk I was doing with folks connected to the nonprofit sector. In particular, I wanted to share with them why I made the conscious decision to stop working in the sector and to support social change in different ways.?

In short, what I shared with them is that I deeply believe the nonprofit sector is broken. Maybe not irretrievably so, but definitely broken in many, many ways.?

A brief history lesson for those who are not familiar with the nonprofit sector.

The sector did not come about by accident. From the late 1800’s to the 1920’s, there was an increase in social activism and political reform. In 1889, Andrew Carnegie published his book, Gospel of Wealth, promoting the idea of owing a duty to society and encouraging the wealthy to donate to causes. (I will let you surmise the general demographics of the individuals at the helm of these organizations.)?

There was another surge in the nonprofit sector in the 1940s, with the rise of World War II. For the first time, people were coming together to raise money to support global initiatives. In the 1960s and 1970s there was another surge of interest in the nonprofit sector with the rise of the Civil Rights movement. And then, in 1969, the US government got involved with the Tax Reform Act, giving us our first 501(c)(3) - and all of the rules and regulations that came with that.

In the 1980s came a boost in individual or privatized giving by wealthy individuals particularly for tax purposes, followed by crowdfunding and other tools made possible by the internet in the 2000s, bringing charitable giving back to the masses.?

Now, I want to pause for a moment and ask you to think about what you know about the nonprofit sector. Why do you give? Who works in the nonprofit sector? Why do people choose to work in the sector at all??

While much has evolved, developed and changed since those early years, the principles on which nonprofit and other charitable organizations were founded have remained largely unchanged. Couple that with how the things we've been taught to think about the nonprofit sector are actually undermining the work they're doing and you’ll start to get a glimpse of why I had to step out of it.?

I was connected to the sector through volunteering, as an employee, and eventually as a leader for over 30 years. And in that time, I was amazed time and time again that this world of supporting people and the world we live in is not given the same credence and respect that comes with the so-called “corporate sector” (please note… a nonprofit is a corporation, so there’s that, too).?

To fulfill the promise nonprofit organizations make to their constituents, communities and donors, they must include experts of all kinds - from physical and social scientists, to international trade relations, to socio-political experts, to financial and operational gurus. The depth and breadth of expertise that is needed to do the work to care for the world and the individuals in it is mind boggling.?

And yet, nonprofits are treated as outliers, weirdos, and the younger sibling no one takes seriously. They’re given well meaning boards of directors made up of amazing, caring humans who have little or no expertise in their business or field whom the staff is expected to give deference to. Organizational leaders end up spending oodles of time managing a group of generous and well-meaning volunteers who legally “own” the organization through spending 2-10 hours a month reviewing or “supporting” the work that’s being done in the organization. Oh, and they are replaced every three to five years.

Nonprofits are rated based on unstandardized measurements of impact based largely on the percentage of donations that go directly to projects (which, by the way, doesn’t directly include the salaries necessary to pay for implementing said projects). As you can imagine, this ranking then impacts the overall ability to receive additional funding, putting an organization into a feast or famine mode. I’ve seen this play out where organizations that have large budgets and large staff numbers are able to show a much smaller percentage going to overhead than organizations with smaller budgets who only have one or two paid employees showing a larger percentage - because it’s ALL overhead.?

When I look at what my dear friends in the nonprofit sector are currently dealing with, it’s heartbreaking. The Great Resignation has hit them hard. Organizations are losing key employees and aren’t able to support their communities at a time when there is also greater need. Why is this happening? Well, burnout isn’t just for the for-profit sector. Burnout is rampant in the nonprofit sector where many have been significantly underpaid, overworked and taking on huge issues that humanity is facing. They feel hopeless, overwhelmed and don’t see a way to make the change they once knew was possible.

Dan Pallotta did an amazing job of explaining this in his Ted Talk. As I alluded to above, due to outdated policies and the way charities are rated, in order to meet their missions, organizations are forced to hire people for well under what they could be earning elsewhere. This causes high turnover in the best of circumstances.

So, here we are… employees are leaving in droves (especially key leadership positions), lay leadership (the board) is responsible for an organization they actually don’t know how to run and outdated policies and regulations are keeping organizations scraping the bottom of the barrel for crumbs from the for-profit world (which is also on fire).?

Tell me how this helps anyone?!

That’s but the tip of the iceberg as to my why - why I left the nonprofit sector to focus on supporting social good being done through other avenues.

And it’s my why for speaking up - now from the outside - as an advisor to leaders and board members looking for support on how to stem this tide.

If you are an organizational leader (executive or lay), please consider the following:

1. Start compensating your team appropriately. This means in alignment with their for-profit colleagues. They have the same skills so find a way to pay them what they’re worth.
2. Find adequate funding. This means looking at alternative funding models that are not fully dependent on donor and grant cycles.?
3. Educate your donors. Explain the challenges inherent in the industry and how they can help shift their mindset to support the work that’s being done to better the world.
4. Keep governance and fundraising separate. As a former Director, it’s imperative that you have an active fundraising board that knows their sh*t. Governance is not the same as fundraising. Fill your boards according to skillset.

The world’s problems are massive. Each organization - no matter their size - is tiny compared to the work there is to be done.?As Dan Pallotta said:

“We have two rulebooks. We have one for the nonprofit sector, and one for the rest of the economic world. It's an apartheid, and it discriminates against the nonprofit sector.”

It’s time to start asking why. Why do we choose to continue this paradigm??

Personally, I believe it’s beyond time to throw out the old rulebook and start looking at how we can shift to a new reality that encourages good work on both ends of the spectrum.?