Key Differences Between For-Profits and Not-for-Profits

Key Differences Between For-Profits and Not-for-Profits

Corporate social responsibility intersects with volunteering when a for-profit company encourages its employees to volunteer in the community, whether on company time or on the employees’ personal time – and whether in a pro bono capacity sharing the skills with which they earn a living or pursuing outside interests. And business people are fantastic resources. But sometimes, as former head of General Electric’s employee volunteer program, David Warshaw, says, “Businesses are from Mars; Nonprofits are from Venus.”

There are indeed many things that are different in world view and operating practices between businesses and both nonprofits and government agencies. Being aware of these differences can help you to orient volunteers from the business sector more effectively and, in turn, help them to maneuver in their new volunteer environment. Also, it’s vital to consider what attitudes might be held by the company as an entity, separate from those of individual company employees.

Here are some examples:

  • Decision-Making Process

In for-profits: Within a pre-set budget, the authority to make decisions is decentralized and often rapid.

In nonprofits/gov’t: Often, plans made on the frontline must be submitted for board approval or legislative review. Rare to have fast action.

  • Method of Project Funding

In for-profits: Once a decision is made, cash is allocated and available to carry it out.

In nonprofits/gov’t: Unless already in the budget, a new project may need special fundraising or grant-writing, which can take a lot of time (and may not get approved).

  • Non-cash Resources

In for-profits: Companies may draw on assets that it pays for:
Employees as volunteers
Employees for in-kind services (printing, designing, etc.)
Meeting space
Equipment, including transport
In nonprofits/gov’t: Nonprofits have fewer cash-based assets, but offer other benefits:
Employees and volunteers
Community contacts and sphere of influence
Location (possibly)
Possible Concerns
In for-profits:
Remaining profitable is the business’ primary focus rather than the nonprofit cause/mission
Businesses may question the capacity of the nonprofit to contribute to the project
Businesses may worry about loss of control
What is the amount of cash ultimately needed?
Could unexpected business climate changes arise affecting the ability to continue with the volunteer project?
In nonprofits/gov’t:
The cause/mission is the agency’s primary focus, but not for the business
Will the business commitment last through a slow process?
Nonprofits may worry about loss of control
Will there be equity of labor, or will the company assume it pays the bill and the nonprofit does the work?

  • Image Issues

In for-profits:
Who might dislike the company’s involvement with the specific cause or agency?
Will the company gain a “halo effect” for good works or be suspected for self-serving motives?
In nonprofits/gov’t:
Who might dislike the corporate involvement?
Might some see the agency as “selling out”?

You can see that it’s a mistake to assume that someone from the “other side” approaches projects in the same way. Learn and appreciate the differences while you find your commonalities. Your agency, the business, and the volunteers in the middle will all benefit.

This Quick Tip comes from Susan J. Ellis, President of Energize, Inc.

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