Making the Transition from For-profit to Non-profit

The distinct differences between the non-profit and for-profit sectors previously made the transfer of skills between the two less likely. Although corporate and business executives provided voluntary leadership for nonprofits, they are now moving into professional leadership roles. We have found that entering the non-profit sector after a career in business can be a surprisingly challenging journey.

In the last few years, “the growing ability of nonprofits to attract attention to their causes and to pull in business professionals as volunteers and contributors has also given business professionals a closer look at the possibilities for employment with nonprofits,” according to Richard M. King, author of From Making a Profit to Making a Difference. King has been encouraging business professionals to consider careers in the nonprofit sector. Although books and articles focused on this theme imply that the cross-over from the private to the nonprofit sector is seamless, our experience with executives who have made the transition highlights some of the significant cultural differences:

  • While the business sector’s primary goal is to make a profit for shareholders through the sale of goods and services, nonprofits strive to be agents of change.
  • In the business sector, outcome measurements are driven by shareholders; in the nonprofit sector, funders often drive outcome measurements.
  • Nonprofits tend to be high on commitment to mission but low on investing resources in staff, such as improving compensation, or providing on-going education, cross-functional training, and retirement planning.
  • The high level of collaboration in the nonprofit world offsets the limited attention paid to human resources and human capital, as there is an understanding that we’re all in this together.
  • To further highlight the cultural differences, many executives that cross-over indicate that they are working harder than they expected, since existing management talent is overextended.

We have found that business executives are surprised to learn that nonprofits may lack a focus on revenues and expenses, and many don’t think of their work as a business. This difference is particularly apparent in the performance arena. According to Peter F. Drucker, respected management guru, businesses define performance narrowly, in quantifiable terms related to the bottom line; nonprofits define performance as the ability to accomplish their mission.

From our extensive experience recruiting cross-over executives, we suggest for-profit executives consider a role in the nonprofit sector only if they are looking to realize a passion, “get their hands dirty” and make an impact. Experience in a volunteer leadership role with a nonprofit board is a good transition into the challenges and realities of nonprofit organizations. We recommend that much consideration be given to the reasons for considering a cross-over, as the role of a nonprofit executive is a demanding, very public role that requires accommodating multiple stakeholders. Armed with the knowledge and exposure to the sector going in, the transition is often rewarding, although not always seamless.

Cross-over opportunities demand serious consideration for both parties. To ensure success in recruiting executives from the business and corporate sector, it is important for nonprofits to determine if a good cultural fit exists. Candidates for nonprofit leadership roles should have a realistic understanding of the nonprofit organization’s challenges and resources. It is critical that they bring transferable competencies and a demonstrated understanding of the nonprofit sector through strategic experience in voluntary leadership roles.