Leading a nonprofit organization can be incredibly rewarding, and uniquely challenging, especially in the early stages of its development. With your mind on your mission, it is easier to focus on programming and fundraising than on the underlying operations that keep an organization healthy. In some ways, operating a nonprofit is like running a business: it requires discipline, organization, and clear systems. In other ways, a nonprofit is very different from for-profit businesses because you must balance the board of directors/staff relationship; success is measured by efficacy, rather than profit; and there are more reporting, record-keeping requirements.

Take a look at our 5 Keys to honing your nonprofit operations for a healthier, more impactful organization.

Key #1 Balancing the Board of Directors and Staff Relationship

Unlike a for-profit business, there is no “owner” of a nonprofit organization. Instead, the organization is controlled by the board of directors, a group of volunteers who commit themselves to run the organization in service of its charitable mission. Some nonprofits are operated solely by this board and daily operations are divided among board members and volunteers. Think of about the community associations you know; these are likely run by their board of directors. Other nonprofits, however, use a portion of their budgets to hire staff to run the day-to-day operations of the organization. Colleges, hospitals, churches, and international organizations fall into this category, as do smaller nonprofits with only a handful of staff.

In general, the staff and the board of directors of a nonprofit should remain separate. The board of directors has a fiduciary duty to serve the interests and mission of the organization, so any personal interest that arises from being paid by the organization would cause a conflict of interest.

With two separate bodies running the organization, the board and the staff, there is a possibility for confusion. It can be unclear who is responsible for tasks, which can result in conflict between the two bodies and important tasks falling through the cracks. To combat confusion, create an organizational chart for your organization. An organizational chart outlines the chain of command, designates responsibilities, and defines staff, chair, and officer job descriptions. With a clear organizational chart, your nonprofit can clarify workflow and create board, committee, and staff yearly work plans that lay out annual objectives and timelines.

Because the board of directors is the highest level of operation for a nonprofit, it is responsible for hiring and overseeing the staff. It should have a regular procedure in place to evaluate staff members and to reflect on its own efficacy.

Key #2 Measuring Success: Program and Outcomes Evaluation

If you have worked in the nonprofit sector for long, you know that one of the greatest challenges facing nonprofits is defining and measuring success. In the for-profit world, measuring success is simpler: more profit equals more success. For nonprofits, each organization needs to define success and create a system for measuring progress on its own. One great way to do this is to implement an evaluation strategy. Depending on your organization’s mission and programming, this will look very different.

For example, organizations that provide programs or services for a target clientele may go straight to the source for feedback. Client Needs Assessments (in the form of focus groups or surveys) are a useful way to process feedback from the population your organization serves. Based on Needs Assessment results, your organization can set benchmarks for success and conduct the assessment again and again to track progress. Think of this process as defining your yardstick: what do the tick marks indicate to your organization? Something quantitative like the number of clients served or dollars raised for a particular cause? Or something more qualitative like did the program create a significant result in the life of the client?

Once the yardstick is defined, it can be used again and again to measure success over time. These results can be reported in an Annual Report to demonstrate to volunteers, donors, and grantmakers that your organization is achieving its goals.

Key #3 Implement Proper Information Management

One of the major differences between nonprofit and for-profit entities are the reporting requirements. Nonprofit organizations not only have to report their financial records to the IRS, state tax authorities, and grantmakers, but they also must keep records about their programming, volunteers, personnel, and contributions. To keep records up-to-date and accurate, nonprofits should implement information management systems that keep on top of data. All too often, we see nonprofits that have a place to store records, but they have not input data (such as volunteer names and contact information, donor information, or even staff records) in years. Out-of-date records do not serve their purpose and can get nonprofits into trouble. 

Beyond reporting and oversight requirements, proper information management makes smart financial sense, too. By keeping mailing lists, donor records, and volunteer information current, your organization will better be able to adapt to changing circumstances and respond by reaching out to your community. Use services and software to integrate your mailing lists with automated thank you messages and receipts, for example. The more you can automate your process, the better you can serve your mission.  

Key #4 Communication is Key

Communication is also improved by staying organized and creating systems. Often, a busy nonprofit will put communications and marketing on the backburner while it focuses its energy on serving the mission. Although it is important to keep the mission central to your nonprofit’s work, the ongoing maintenance of communication tools like your website, social media platforms, online calendars, and donor outreach are essential. Without them, your organization will find itself without support and without funding quickly.

Keep your website up-to-date! We cannot emphasize this enough. Your organization’s website and social media pages may be many potential donors first point of contact with you. Your website should clearly define your organization’s mission statement, highlight upcoming events, provide information about how to donate and get involved, and supply current contact information.

Key #5 Financial Health is the Root of Nonprofit Success

In the nonprofit world, boards often find themselves locked in a funding cycle of applying for grants, submitting reports, hosting fundraisers, and soliciting donations. However, the financial health of a nonprofit is about more than the amount of money coming into the organization. Nonprofit boards should have clearly defined fiscal policies, budgets, procedures, and reviews to ensure that the organization stays on track. If the organization has a staff, the staff should provide monthly financial statements to the board of directors. At the board of directors level, the whole board should be reviewing its financial statements at least quarterly. Once a year, the board and staff should meet together for a full annual financial review. At this time, the board can also check in with its tax reporting schedule and ensure it is in compliance will all reporting requirements. For more information about nonprofit compliance, see our blog post here.

Bonus Tip! Build a Great Team that Shares Your Vision

We know you have heard us say this before, but nonprofits are all about teamwork! Teamwork means asking for help when you need it and sharing the burden with others. As your nonprofit continues to grow and evolve, identify those areas where you might need some extra help. Is it in reporting and compliance? Creating effective operations systems? Communication? Wherever you know your organization has blind spots, reach out to the right people to get some help.At Enterprise Esquire, we have the experience and expertise to help nonprofits sort their operations and get clear on where they need to improve. Our founding attorney, Alexis Hart McDowell, has over 15 years of experience working with nonprofits, both as an attorney and a board member. If you think your organization may need some TLC, Alexis is your lawyer. Reach out to her for a FREE 15-minute phone consultation, or take a look at our nonprofit legal service packages. They are stuffed with value that will help get your nonprofit on track.