Why Nonprofits MUST be Entrepreneurial

January, 2008. I got a job at a nonprofit that had a seemingly airtight business model. They sold homes to low-income first-time homebuyers at below market rates. They mostly got grants to build the homes, provided homeownership education and counseling, and lived on the proceeds of home sales.

Then again, it was 2008. If you were a cognizant human at the time, you might remember a little something we affectionately called “The Great Recession.” The housing market crashed.

And that meant we were up a creek if we didn’t think fast.

Long story short, we did (think fast). And we grew. (This is one of the biggest yada-yadas ever, by the way).

That is to say, we thought like entrepreneurs, figured out how to solve problems, and created business models to support the activities we implemented.

We did our best, and we managed to save something that was important. I learned a lot about what entrepreneurship looked like in action. I also some things we could have done better. It was this experience that first made me incredibly aware that nonprofits need to be entrepreneurial if they hope to survive and flourish in an uncertain funding environment.

What Is an Entrepreneurial Nonprofit?

Entrepreneurial nonprofits look for problems their stakeholders could use help solving, then look for opportunities to solve those problems with new and innovative programs or services.

They know we operate in “environments of extreme uncertainty,” to borrow Eric Reis’ definition of The Lean Startup, and they move quickly and decisively in response to, and in anticipation of challenges that arise.

Entrepreneurial nonprofits understand that relying on a single funder or even a single prominent funding source (be it grants, a big donor, or even earned revenue alone) will thwart your viability, and that diversifying funding sources and strategies is essential.

Entrepreneurial nonprofits aren’t afraid to take appropriate risks.

They understand how to fail fast and fail well.

They care about measuring results so they can make better decisions and know where to wisely invest the funds with which they are entrusted.

In short, entrepreneurial approaches to doing nonprofit work ensure the mission isn’t dropped in the midst of a particularly tight month because your funding mix is diverse and well-planned, that the programs actually work (and you have measurable data to show for it), and that the beneficiaries are included in the development of interventions.

Nonprofit Entrepreneurship is within Reach

The good news is, any nonprofit can learn how to be more entrepreneurial. It starts with deciding to become more nimble and action-oriented, showing you’re not afraid to question what you’ve “always done” before, and moving toward taking reasonable risks and failing quickly and well. You can learn to celebrate productive failure instead of punishing it. You can learn to take the time to test and evaluate your ideas on a tiny scale instead of dumping tons of resources into full-fledged programs that you hold your breath a pray will work (but you can’t bring yourself to really look at it it because you’re afraid your work will not be supported by the evidence).

If you’re interested in learning more about some methods to integrate so you can learn how to think like an entrepreneur, come to a free webinar where you can hear all about how this works with me and Mazarine Treyz of Wild Woman Fundraising. Rock and Roll! Join us!