Also, remember that the first organization to be formed under the laws of the state will operate. In other words, an organization (usually a corporation not-for-stock) joined first and then apply a non-profit designation by the IRS. For the purposes of this article, we are talking about small and medium-sized community-based organizations in the nonprofit sector, not churches, hospitals, educational institutions or bodies financed by the government.

I often wonder if it's OK for a nonprofit organization to make a profit. The answer is yes. I also wondered if the nonprofit needs to be managed like a business. The answer is yes again. However, there are distinguishing characteristics between the nonprofit sector, and nonprofit sectors and is important for the nonprofit organization to understand the differences in order to continue fulfilling its IRS designation.

I work with a number of nonprofit organizations that are facing real financial difficulties, especially in recent years, with the recession and down economy. It is important to distinguish these uncontrollable economic setbacks and political philosophical trends driven by a benefit that has not elected within the guidelines of their mission. For example, if a community-based rural health clinic is not charging enough in fees to cover expenses, then it must be funded by donations to offset the loss of income or, quite simply, that will go broke. This should not be a difficult concept to understand: if a nonprofit has no more money than expenses, then you are in financial trouble. Yes, like for-profit, a nonprofit organization must cover their costs. However, any momentum of a typical non-profit to exceed their costs to income is likely to be perceived by its members to go against its charitable mission. By contrast, owners of a profit-making are very interested in maximizing profits.

Therefore, if you ask me if a nonprofit organization should be run like a business, my answer must be yes and no. Yes, there are many basic aspects of the organization should be run like a business, but, no, there are differences within a nonprofit organization that should be viewed differently than a typical for-profit business. Using the example of the rural health clinic, again, if the mission of the clinic is providing medical care to everyone regardless of ability to pay the full fee, then their services should be subsidized by other means, such donations, which is probably exactly what their mission statements, and probably the main reason it was granted charitable status by the IRS in the first place.

Over the years, I have urged board members to make their nonprofit responsibilities very seriously. However, caution should be exercised if a board begins to find any difference in operation as a business for profit. This is potentially one of the most difficult aspects of a nonprofit board to understand. Not all aspects of a nonprofit organization can be managed like a business - and most nonprofit board members come from the nonprofit industry - which is understandable to the member of the board to try to apply the business skills practiced every day for which non-profit that have agreed to serve.

I have no problem with that state of mind if you can moderate. In fact, most "business" practices, in fact, apply equally to non-profit and for profit. Things like the responsibility of living, political conflict of interest, the need for good maintenance of adequate accounting records and, adhesion to the issues of human relationships, rules and regulations, and the list goes on and on, but the point should be clear. Unfortunately, too many nonprofit fail when it comes to managing the business of the company. There are three immediate reasons come to mind as a common challenge among all nonprofit organizations:

1. Council members often leave the business of raising funds for nonprofit operate with the executive director and other staff, but the experience and interest of the CEO is within the powers of execution of the current mission organization. Fundraising becomes very frustrating.

2. Increasingly, board members do not have enough time to provide the service that requires a dynamic meeting and collection of funds is not enjoyed by many people, so it is not, nor the general meeting, drive approach run enterprise-class organization.

3. Executive directors and nonprofit staff excel in the mission of the organization and do not usually have strong business skills, and no one available to help. Disagreements over business issues often arise from "all activities" and "not all business" philosophy among staff.

Every time I look into the inner workings of a nonprofit organization that is having problems with the business of the company, which almost always be determined that the case falls into one of these three areas mentioned above.

Where is the right balance and how to find a nonprofit that? Well, depends heavily on the nonprofit and its mission, but the staff and the board must work together to identify the hues that best suit your operation so that the organization remains viable and sustainable. If agreement can not be found, CEOs become very frustrated and ultimately leave the organization. Similarly, hard to find board members become less and less committed. No one wants to volunteer to oversee an organization that is in constant financial challenge.

I remember my first meeting of the board in a nonprofit. I asked why there was a financial report on the agenda and if I could have a copy of the budget. Honest to goodness, the CEO told me that the organization does not have a budget and actually argued with me that it was not necessary. To make matters worse, most board members told me that he agreed with the CEO! I remember considering to get up and walk out the door at that very moment! Seriously. True story. I spent the next few months concerned and frustrated. I forced the board and staff to act more like a business that perhaps should have spent more time teaching the reasons for that change was essential. Ultimately, the CEO had to be canceled for failure to carry out the policy table, which is always a shame.

At some point, a friend counter in a nonprofit board expressed an interesting line of thought to myself: "Money is good, no money is evil." We all laughed at his comment, but it is surprising how many times in recent years I have remembered what he said. Obviously, it is true. If the benefit has no money, the focus of the staff and board produced in crisis mode, the organization's mission becomes secondary, and every day is a struggle. This is exactly the same for a non-profit and nonprofit, so if the basic concepts of the company are analyzed, a nonprofit organization is a great company and they better be or cease acting as a exist.

In fairness to the pessimists, the nuances of the nonprofit must be determined and guided by politics. Returning to the example of the rural health clinic, if no allowance service rates for customers in certain sectors of the clinic is required, then there would be no need for charitable status and non-profit organization that would operate as a profit and definitely not providing a community service of charity. This distinction is not obtuse and should be clearly understood by staff and the board.

In summary, all organizations in the nonprofit sector, should follow the basic practices of business and will not be able to maintain its operation. And, most importantly, each charity must remain true to its mission or lose its non-tax designation. These are key issues for boards and staff to understand and apply. In the end, always on the implementation of company's business.