“Run It Like a Business” is possibly the worst advice you can give to a nonprofit (but probably not for the reasons you think)
You’ve heard it before, usually from the consultant class: “Nonprofits need to be run more like businesses.”
It’s a phrase that resurfaces anytime finances tighten, operations sputter, or leadership turns over. It sounds smart and tough-minded. But as someone who owns a business and works inside complex nonprofits every day, I’m telling you: it’s terrible advice.
And not for the reason you might think. The problem with telling nonprofits to “run it like a business” isn’t that the comparison is unfair (which is often the knee-jerk reaction from within the sector), but that the phrase is meaningless.
Nonprofits already are businesses. They hire and fire. They build strategic plans. They manage cash flow. They market their work. They navigate customer expectations (yes, donors are customers), competitive landscapes, and regulatory scrutiny.
What they aren’t is shareholder-driven. That’s a difference in purpose, not in function. Nonprofits are mission- and stakeholder-driven — something many for-profits would do well to emulate.
The Redundancy at the Heart of the Advice
Nonprofits, like any enterprise, must bring in more money than they spend. They manage teams, design programs, build community and donor loyalty, file audited financials, comply with labor laws, secure financing, pay taxes, and manage risk.
So when someone says, “Run it like a business,” what they’re usually trying to say is:
Be more disciplined
Be more financially savvy
Be more efficient
Fair enough. But here’s a data point to chew on: 20% of businesses fail in their first year. Nearly 50% don’t make it to year five. So unless you’re offering a clear definition of what successful businesses do — and how nonprofits can borrow wisely — you’re not helping. You may actually be setting them up to fail.
Are we trying to be average, or are we trying to be excellent?
If you’re serious about helping nonprofits perform better, stop with the soundbites and focus on what actually makes a business work. There are three traits, in particular, that are worth emulating.
1. A Profitable, Repeatable Business Model
Let’s start with the obvious: successful businesses make more than they spend. But it’s not just about being “in the black.” It’s about predictability. Repeatability. Resilience.
Look at fast food. McDonald’s, Burger King, Wendy’s. They’re all selling essentially the same thing. Nobody’s winning based on culinary innovation. What separates the winners is how well they’ve systematized pricing, operations, and volume. Every franchise — whether corporate-owned or independently run — follows a model that consistently generates profit.
Even mature brands like Wendy’s, with slow growth and a loyal customer base, continue to post positive returns year after year. Not because they reinvent the menu (although I do love those spicy nuggs dipped into a chocolate frosty), but because they’ve nailed the business model.
Now flip to the nonprofit world. You’ll find organizations with brilliant programs, deep community roots, passionate teams — and no financial engine to sustain them.
They depend too heavily on a single grant cycle or major donor
They offer services for free even when a sliding scale or fee-for-service model is possible
They launch programs before securing recurring revenue
They avoid hard conversations about earned income because it feels “too corporate”
This is where the “run it like a business” crowd could be useful. If you want to help, ask the real question: Does this organization have a model that predictably generates more revenue than it spends, year after year?
If not, they don’t need to “act more like a business.” They need to become a better one.
2. Leadership Interchangeability
In a well-run company, no one person is synonymous with the business. Not even the founder.
Apple didn’t collapse when Steve Jobs left — twice. Starbucks didn’t fold after Howard Schultz stepped down. Why? Because their success wasn’t built on personality. It was built on culture, systems, and institutional knowledge that outlast any single leader.
That’s not to say leadership doesn’t matter. It most certainly does. Some CEOs outperform others. Some founders are irreplaceable in early stages. But durable businesses (like durable political movements) don’t hinge on any one individual.
Contrast that with the nonprofit sector.
How many organizations do you know that collapsed or slowly unraveled after a longtime executive or charismatic founder left? It’s disturbingly common.
If everything depends on one person, you’re not running a business. You’re running a personal brand.
A “run it like a business” mindset should mean:
Succession plans are real, not theoretical
SOPs are documented, not tribal knowledge
Governance structures function independently of personalities
Institutional memory doesn’t disappear when a Dropbox account is deleted
Durable organizations are built to withstand leadership changes.
3. A Unique Value Proposition with a Defensible Niche
Successful businesses own something. A segment. A customer type. A category. Then they build moats around it.
Apple commands premium pricing through design, exclusivity, and customer loyalty. They didn’t invent smartphones, but they dominate the high-end slice of the market.
Patagonia wins not just because they make good gear, but because their customers believe in their mission. Their coats come with a worldview. That’s hard to copy.
Strong businesses resist commoditization. They create stickiness.
And here again, nonprofits can fall short.
Too many nonprofits:
Try to be too many things to too many people
Expand programs horizontally instead of deepening what they already do well
Dilute their brand trying to attract every funder or appease every stakeholder
The result? Fuzzy messaging, weak positioning, and low impact.
Nonprofits need to do what any successful company does: define the problem they solve better than anyone else. Double down on it. Build a moat around it.
Donors should feel the difference and communities should know why this org matters in ways others don’t.
Stop Chasing a Metaphor and Start Building a Sustainable Business.
“Run it like a business” sounds like advice. But without a clear definition of what success looks like, it’s no better than telling someone to “just be confident” before a big interview.
Motivational? Maybe. Actionable? Not even close.
If you really want to help nonprofits, ask sharper questions:
Do we have a business model that consistently generates more revenue than we spend?
Are our operations strong enough to outlast current leadership?
Is our value to the world clear, compelling, and hard to replicate?
If you can answer yes to all three, you’re not simply “acting like a business.” You’re building a good one.
And that’s advice worth giving.
