Business Methods

A non-profit, community or interest group should be run efficiently, honestly and ethically in order to achieve its mission. This is also true, however, of any modern business.  Modern businesses are disciplined, focussed, and effective. Not-for-profit organisations should accept no less.  

The not-for-profit sector should be prepared to use modern business methods and practices - and it will be judged on how well it uses them.  Good intentions are no excuse for sub-standard performance, particularly in an era when donors and financial supporters are increasingly keen to see their money used to maximum effect.

Important business practices that should be identified and utilised within a community organisation include financial management, human resource management, staff training, reward and recognition, the maintenance and upkeep of programs and services, performance evaluations, and quality assurance.

The key to developing an effective organisation is to think through the planning process rather than just ambling along from one month to the next. There are no one-size-fits-all solutions. You must be prepared to be flexible; the practices required for a small organisation, or an organisation designed to operate for a limited period, will obviously be different to those required to run a much larger operation.

What is your organisation for?

Much of the advice given below is only a guide, because all the actions and activities of any organisation should flow from its mission statement - a statement which identifies exactly the goals for whose sake the organisation exists. Guidelines outlining the general methods though which you want to achieve those goals should also be established right from the start.

Only then...
Once you have established why you exist, who you serve, and how best to proceed, determine how long your organisation will be needed. When you know how long you are going, you can establish the amount of human and capital resources that you will require to sustain a business or a campaign. From this point you can then implement procedures, structures and practices that will allow your organisation to function, grow and progress in a professional manner.

You are more likely to be received in the wider community as a credible, organised group if your presentation is professional,. If you are seeking public support, then it is important to communicate a clear message. You don't want anything else  - internal bickering, mismanagement of funds, dodgy dealings - to get public attention. Proper procedures will minimise this risk.

Written procedures and structures should be established from the beginning. They should be updated, reviewed and expanded as needed. Procedures and methods should be sufficiently flexible to suit members and employees and should be in line with the best practice guidelines for your industry.

Consultation is important if you are implementing new practices. If you wish change to be embraced by staff and stakeholders, consult them (and consult them meaningfully - before final decisions are taken, and with a willingness to change the original proposal if they make a good case).  If a minor procedural change only effects a few individuals then it can probably can be implemented very quickly with a minimum of fuss; a major change in organisational priorities will need to be talked through in detail with all concerned over a considerable while.  Allow for this time in your planning.

What business methods should be implemented in not-for-profit organisations?

The first priority is to establish exactly what an organisation stands for and what its mission is.  You can then set about finding ways to achieve these goals (pretty basic stuff, but  nonetheless standard business practice).

If an organisation is to endure, it needs to maintain a certain level of financial security - there are very few not-for-profit groups that have access to all the financial resources they require. This means that that the next priority must be the establishment of appropriate financial structures and practices within the organisation. It is hard enough to raise money so the last thing a non-profit group wants is a situation where that money is not put to the best possible advantage. 

The business practices you adopt will largely depend on the nature of  your cause or group.
  • Are you involved with a long-term commitment or a one-off issue?
  • How many people will be involved?
  • Will you become incorporated?
  • Where does your money come from, and how will you seek funding in the future?
Your response to these questions and other similar types of questions will help determine how structured and formal your organisation needs to be.

If you plan to be around for a long time, then you really need to run your organisation in a professional manner and to adopt appropriate practices that will sustain a healthy group.

Consider drawing up in greater or lesser detail :
  • Procedures regarding financial accountability and financial reporting (to donors, funders, members, the government, the community and the public)
  • Accounting systems (cash accounting, payroll, receipts, invoices, etc.)
  • Financial management guidelines on such things as audits, bookkeeping, tax, budgets, financial reports, for members, staff, and the Board.
  • Banking and investment management (for example, how does your organisation handle or distribute any surplus?)
  • Lines of responsibility and authorisation procedures (for example, who can sign cheques, and for how much?  Who can authorise new members?  Who has access to resources?)
  • Roles and responsibilities of different positions -- officebearers, committees, Board members, staff members
  • Risk management schemes to identify any risks to your organisation and then a set of procedures to be able to either eliminate, avoid, minimise, or insure the risks. 
  • Procedures to reassess your organisation's goals, programs and services, and to plan and anticipate change so that you can remain relevant in a changing environment.
  • Human resource management (career development, training, mentoring, health care, childcare provisions, etc.)
  • Management structures (layers of management, lines of responsibility, interdepartmental liaison)
  • Ethical standards (guidelines for appropriate behaviour, and punishment for breaches)
  • Occupational health and safety guidelines
  • Criteria for reward and recognition - promotion, praise
  • Review schedules (for both  individual performances and organisational goals and procedures)

Keep abreast of new information

Business practices keep changing to reflect a changing local and global environment. They are not set in concrete and in fact your procedures need to take in the flexibility to be able to constantly update and improve the way you go about your work. Some of this can be gleaned from sites such as this, by keeping up to date with the latest trends in your own area of interest through industry publications and peak associations or to adopt and adapt the latest business practices that you think might be advantageous to your organisation.

What is happening in other countries can also be a guide to improved procedures in your own organisation. Look for organisations that have been successful or have established innovative procedures and find out why. Bring businesspeople or people who have expertise in implementing modern business methods on to your Board or onto sub-committees..

Adopt management styles or business practices that can ultimately help your organisation achieve its mission.