# How to manage a not-for-profit organization

While many of the [abstracted elements of management](mgmt-1_why.md) work exactly the same, not-for-profit organizations (NPOs) require a separate flow of actions.

## The model

NPOs aren't always isolated from other entities.

- They can sometimes effectively be a branch of a for-profit organization through their board's leadership (e.g., the Ronald McDonald Foundation is basically run by the McDonald's corporation).
- They may *have* for-profit branches underneath their structure (e.g., Raspberry Pi, Mozilla).
- They may have a board that is built to create secondary benefit to for-profit endeavors (e.g., most [open source organizations](legal-ip-floss.md), OpenAI at its beginning).
- Sometimes the organization will redesign itself based on the leadership's decisions (e.g., W3C transitioning from a university affiliate to a traditional NPO).

Further, there are definite [political incentives](politics-conservativeliberal.md) that steer NPOs.

- Over time, every NPO will drift leftward due to these external pressures ([O'Sullivan's First Law](lawsaxioms-large.md)).

## How the money flows different

To start with, the essence of an NPO's cash flow is from donations.

- In the case of a for-profit organization, the purchasers of the goods and services are the same people (except for odd circumstances like government assistance and [parents](parenting-children.md)).
- This radically changes the [marketing structure](marketing.md), since every NPO has to manage two domains at once:
  1. They must promote goods and services that the recipients may need.
  2. They must advertise the need for funding those goods and services.

Many NPOs only exist due to a [tax-advantaged arrangement](money-accounting-taxes.md).

- Essentially, many people would typically not donate at all, except that many income tax returns can write off the donations.
- Further, beyond the tax incentive, many *other* organizations can [advertise](marketing.md) their magnanimity.

However, NPOs can't simply spend money as they receive it.

1. In the [accounting](money-accounting.md), many donations are earmarked with some cause or purpose tied to its donation (e.g., a homeless shoe fund).
2. For that purpose, the fund can be used freely, but it can't be used for anything else without [some perversion of the truth](people-image-distortion.md).
3. To that end, an NPO can have millions of dollars in cash, but are completely unable to use it for anything except a need that nobody seems to have.
4. Due to this extra money, many NPOs will [invest](money-investing.md) their money while they wait for it to be needed.

And, the scarce resource in most NPOs is money *far* more than time.

- Mismanaged resources may waste a *ton* of time, but NPO workers can overlook that more often.
- However, there is less money, and therefore every project will be either slow or low-quality (Project Management Triangle)

In light of this, [carefully handle your marketing approach](marketing-npo.md).

## The mission

Having an effective mission statement is far more important than a for-profit corporation.

- While a corporate mission statement is a combination of [virtue](morality-virtues.md) signaling and [marketing](marketing.md), NPOs need it to even understand their [purpose](purpose.md) for existing!

The mission should essentially be the expansion of what one person can do.

- This prevents the mission from becoming so vague that it doesn't apply to anything in particular.
  - Most external [political influence](power-influence-how.md) comes through the vagueness of a mission.
- As the [organization scales](mgmt-7_changes.md), the mission statement will often need to change, but never lose the original vision of why it exists.
- Typically, most NPOs devolve into [bad systems](mgmt-badsystems.md) as their mission statement becomes unclear.

The only way an NPO can fight against politics is to address it directly:

1. Take a stand within the mission statement about what the organization will *not* do.
2. Maintain that stance even when some people don't like it.
3. Continue to seek support from like-minded organizations.

It's worth noting that NPOs must be careful about their [political endorsement](politics-conservativeliberal.md), since the Johnson Amendment in the US tax code forbids them from officially endorsing political candidates.

- This can be circumvented with [creative](mind-creativity.md) language (e.g., the Democrat Party was heavily endorsed in the early 2020s without officially stating names).

## Stay honest

An NPO's mission and goals must always be sincere.

- NPOs only survive with many volunteers assisting in many ways, and therefore their [trust](mind-trust.md) in the vision holds everything together.
- If there is even an *implication* that the leadership is doing something [immoral](morality.md), the organization will radically drop in size and resources before anyone can fix the problem.

With [all the information available](information.md), at least some people will always be skeptical of any altruistic vision.

- Many times, NPOs can abuse the public's trust by reframing things into complicated flows of thought (e.g., "effective altruism").
- Every NPO will keep everyone's trust and last longer by plainly stating reality.

## Measuring success

For-profit companies have the luxury of measuring money, but NPOs have to be more [creative](mind-creativity.md) over what they measure.

- Measuring the number of people served can be effective for [marketing](marketing-npo.md), but is often unreliable for several reasons:
  1. The [professional victims](https://gainedin.site/victim/) will flock to the product and abuse it.
  2. The number served gives an incentive to get more people using the service, which is the *opposite* of your long-term goal.
- Instead, measure the number of people who have used the service and no longer need it (i.e., "turnover").
  - The reliability of the service helping people to self-sufficiency, as well as the speed it happens, is the best indicator the organization helps others.

Most NPOs typically want to be the "central repository" of something.

- It may be the meeting place for churchgoers every Sunday or a major website for a particular type of research, but each one of them wants to be important.
- At the same time, that importance comes with extra maintenance requirements as well as the likelihood of being politically swayed to keep that [power](power.md).

The mark of many successful NPOs is that they have successfully made themselves less needed.

- Some services will always be present but less necessary (e.g., homeless shelters, ex-con reentry programs) while others may cease to be useful at all (e.g., food security programs).
- Further, if other groups serve the community better in every way, consider disbanding the NPO or [merging into that group](mgmt-7_changes.md).
  - Everything of value to the organization will make its way to better serve the designated purposes.