Nonprofits Are a Business (Whether You Like It or Not)

I currently serve as an executive director for a regional symphony. The board hired me specifically because my background and education were in business.

This was a risky move. I wasn’t a musician. I didn’t know how a professional symphony concert came together. I wasn’t an expert in the industry. At the time, I wasn’t even an expert in nonprofit management. I was completely out of my element in terms of the mission.

The organization had been run by someone with expertise in music for years. The musicianship and quality of performance were there. Their mission execution was strong.

They had an amazing product: a high-quality orchestra. But they didn’t have a marketing plan to ensure there was a customer for their product.

They had dedicated donors, but they didn’t have a strategic plan to help maximize donor dollars.

They had financial documents, but they weren’t incorporating them into a long-term vision to help guide decisions.

They knew they had problems, but they didn’t have the structure to fix them. What they did understand was that they needed a business perspective.

I may not have been experienced in the music industry. But I understood how to create a product and how to sell it. I understood how to analyze the cost of goods sold and maximize profit.

They didn’t need someone who could read treble clef.

They needed someone who could read a balance sheet.

This instinct was the right direction. But it’s often rare in the world of small nonprofits. We don’t start nonprofits to get rich. We start nonprofits because we see a problem that needs to be solved. When this symphony orchestra was founded, it was to provide a space for professional musicians to practice and grow their craft. It was to provide quality of life to its community. It wasn’t to make money.

It never is with any nonprofit. But regardless of your mission, you have bills. Nonprofits need money.

That is why it is so important to recognize that, whether you like it or not, your nonprofit is a business—and it’s time to start treating it that way.

Before we dig into how business principles and mindset can strengthen a nonprofit, I want to be clear about one thing. While there are many similarities in how both types of organizations are managed, there is a fundamental difference that should never be forgotten: what drives their goals.

A business prices its products and services with the goal of maximizing profit. A nonprofit prices its products and services to ensure the population it serves can afford them.

A business may use surplus to invest in a new product line to reach new customers. A nonprofit may use surplus to expand programming to serve more people.

One is focused on maximizing financial return. The other is focused on serving more people. One is profit-driven, while the other is mission-driven.

Where they should converge is in recognizing the importance of earning revenue and using it effectively to reach their goals.

Most small nonprofits are managed—at both the board and staff level—by people who are deeply passionate about the work being done. They are experts in the communities they serve and the causes they support.

But when the focus is solely on mission fulfillment, an organization risks neglecting its foundation.

Operating without a budget, a strategic plan, usable financial documents, or revenue-generating strategies means ignoring the very tools needed to sustain the work long-term. When this happens, we risk eroding donor trust, creating burnout within our teams, and not just stagnation—but a decline in the quality of our mission delivery.

So how do we start reframing how we think about our organization?

It starts by looking at what businesses do—and how those practices translate to our world.

Businesses strive to generate revenue that exceeds expenses and overhead to create profit.

That same basic principle exists in the nonprofit world. It just requires a few changes in our term definitions.

In our case, we create revenue through mission fulfillment, donations, grants, and other forms of charitable giving that meet or exceed the cost of fulfilling our mission and covering our overhead expenses. When we are successful, we generate surplus that can be used to further strengthen our ability to fulfill our mission.

Reframing the way we see our revenue is key here. Because our focus is usually rooted in a charitable perspective, income that results directly from fulfilling our mission—such as ticket sales for a community theater or sales from a charity thrift shop—is often viewed very differently than it would be in a for-profit business. We may recognize that the money we bring in is vital to supporting our mission, but seeing it as truly earned income can go against our instincts. Monetizing our work can feel like cheapening our passion.

Recognizing this income as an asset requires a shift in perspective. To begin with, it’s important to be quantitative in our analysis. This allows us to step out of the emotion of what we do and look at our work as data. Seeing our mission through the lens of data allows us to make more rational decisions about how we steward the revenue we earn. It helps us create strategic plans and budgets rooted in reality.

A shift in how we think about donations also helps us define revenue and build a fundraising plan that works. It’s easy to see donations as a pure gift. But that simple definition implies they are both unearned and undeserved. They may be unearned in the eyes of the IRS, but anyone who has participated in a donation drive knows that every penny is earned.

Instead of viewing donations as unearned money, think of them as payment for fulfilling your mission. This reframing forces two important perspectives:

1. The quality of mission fulfillment is directly tied to donation levels. In other words, if your mission fulfillment is not high quality, you won’t receive high-quality donations.

2. Just as you would advertise a product and its cost, you should be advertising your mission—and the need for donors to support it.

Additionally, by reframing the way we see our revenue, we can create stability in our finances, allowing us to weather storms ahead. Just as a successful business develops its product line to diversify revenue streams, it’s vital for a nonprofit not to rely on a single source of income. Multiple income streams stabilize an organization.

Funds can come from grants, donations, earned revenue, sponsorships, fundraisers, and other sources. The key is to recognize these as revenue streams that all feed the same river of funds needed to function and fulfill the mission. When one stream is blocked—such as being denied a grant or losing a major donor—the others help keep the river flowing. Diversity in fund development creates a safety net.

Having detailed plans of action is another key way to reframe how we see our own organizations.

Written, specific, and clear strategic, marketing, and fundraising plans allow you to create stability and growth—and, ultimately, to dream big. Successful businesses operate with clearly defined plans and benchmarks. Your nonprofit should, too.

The nonprofit world is filled with people who want to leave the world in a better place than they found it. It’s why we’re here. Nonprofit work is hard and rarely pays well. Our motivation is not money, it’s mission. When your mindset is focused on improving the world, framing that work as a business can feel like a betrayal of your mission.

But it isn’t. It’s a safeguard—and it ensures you are able to do the most good possible.

Talking and thinking about revenue is stewardship.

Planning with money in mind protects your ability to fulfill your mission.

Being professional is caring for your organization.

Thinking about your nonprofit as a business helps you clearly define your goals and plan for sustainability. A business mindset doesn’t replace your mission—it protects it for the future.

Now go do some good.