Entrepreneurial auditing in the not-for-profit sectorAn entrepreneur is a person embodying the spirit of capitalism - able to scan the scene, locate an unmet need, assemble the resources to address it, and make money on the deal. The skills and the attitudes of the entrepreneur have until now been more often displayed in the for-profit sector. That is now beginning to change, and the approaches of commercial and voluntary organisations are starting to converge.
Many large companies now regard flexibility, innovation, and responsiveness to opportunity - the cluster of qualities that together make up entrepreneurship - as the foremost creators of value in an organisation, and thus see the ability to achieve and encourage these qualities as among the most important features of a well-managed organisation. Not-for-profits are faced with an even greater temptation to fall into self-satisfied complacency, and they should thus attach an even higher value to entrepreneurial skills, drives, and attitudes.
The differences between for-profit and not-for-profit projects are summed up in this table.
Used properly, not-for-profit entrepreneurship enables non-profits to maintain a productive balance between doing good and paying for it.
The TaskAdoption of an entrepreneurial approach begins with an analysis of your mission, your organisation, your finances, and the environment in which you operate.
Review your mission and your strategic plan. Assess how well your mission has been comprehended and adopted by the Board, the CEO, and the staff. Confirm that the mission is the guiding principle in your strategic planning and your administrative decisionmaking.
Begin by identifying and enhancing your current core competencies. Be very cautious indeed about applying your efforts outside your core competencies; it is seldom advisable to start up something that's new to you in a commercial arena you know nothing about.
Effective social entrepreneurs
* find out what they are good at and try to do more of it.
* find out what they are not good at and get out of it
* find out what they're not capable of and don't even think about developing it.
Review your administrative capacity. Does your organisation have an infrastructure - the information systems, personnel systems, financial and accounting systems - that can accommodate significant growth? Is its financial reporting system able to track multiple projects and/or businesses so that their success can be assessed separately from the rest of the organisation?
Is there any prospect of seeking philanthropic venture capital funding for innovations designed to strengthen the organisation and facilitate its mission?
Is there any prospect of increasing the organisation's earned income through fees, contracts, product sales, or non-traditional business activities, thus reducing your reliance on governments and foundations, and reaching greater financial sustainability?
The issue of social auditing is too large to be covered adequately in this paper. See the Ourcommunity helpsheets at http://www.ourcommunity.com.au/management/view_help_sheet_list.do?categoryid=372 for further material.
Developing innovationA commercial business can often be driven by one charismatic individual, but a sustainable not-for-profit organisation needs the commitment of all levels (the Board, the managers and the staff) to the entrepreneurial process if it is to be effective. All parts of the organisation need to develop the skills in planning and marketing that will allow them to identify opportunities and make informed decisions. The task is to learn to think like a business, and the challenge is to know exactly when to think like a business.
The CEONot-for-profit managers are often uncomfortable with taking responsibility for generating change, but social entrepreneurship needs people with the ability to put together ideas, knowledge, financing, and other resources into a coherent business plan. The Board's expectations should be made clear. In searching for a CEO not-for-profits should be seeking someone who combines an entrepreneurial spirit with a concern for social outcomes -- as David Bornstein said in a 1998 article, "...a pathbreaker with a powerful idea, who combines visionary and real world problem-solving creativity, who has a strong ethical fibre and who is totally possessed by his or her vision for change"("Changing the world on a shoestring", Atlantic Monthly, January 1998, 281:1:36).
These are individuals who, in John Catford's words, "...combine street pragmatism with professional skills, visionary insights with pragmatism, an ethical fibre with tactical thrust. They see opportunities where others only see empty buildings, unemployable people and unvalued resources....Radical thinking is what makes social entrepreneurs different from simply 'good' people. They make markets work for people, not the other way around, and gain strength from a wide network of alliances. They can 'boundary-ride' between the various political rhetorics and social paradigms to enthuse all sectors of society"("Social entrepreneurs are vital for health promotion", Health Promotion International, 1998, 13:2:96).
The CEO needs to have a management style that fosters innovative, collaborative, and multi-sectoral approaches to problem solving in their staff.
The staffYes, the existing staff need to be reconciled with the entrepreneurial approach, but that may not be enough. Not-for-profits must also allocate adequate staff time to handle the day-to-day tasks of entrepreneurial endeavors. At least one half-time position is generally appropriate for a the early stages of a vigorous program. You may also want to ask for help from local small businesses and from your financial, educational and volunteer contacts.
The behaviours that are wanted by an entrepreneurial organisation must be reinforced by being included in staff position descriptions and by featuring prominently in performance reviews. Staff should receive training or study time to help them adjust to the new demands.
Whether in the Board's Enterprise Committee or in a management-run social entrepreneurship team, the organisation must establish processes and timetables to match its competencies with the needs of the market. Processes and procedures are called for that can
The AuditAnything that is valued should be set as an organisational goal, and anything that is set as a goal has to be measured so that it's possible to say definitely whether or not you've achieved it. This has created the need for the entrepreneurial audit.
An entrepreneurial audit is a comprehensive examination of an organisation's entrepreneurial and innovative characteristics that can help you decide whether your organisation is ready to test the water.
Such an audit evaluates