This is the first in a series of blogs about Nonprofit Leadership. 

You may ask, “Why nonprofit leadership?” After all, leadership is leadership, right? The answer  is Yes—and No.  

Unique Challenges 

The context and challenges of leadership in the nonprofit sector are unique. The primary difference, traditionally, between for-profit and nonprofit businesses is the bottom line. The for-profit leader keeps an eye on  return on investment (ROI); she must answer to stockholders about her—and organizational—performance. The nonprofit leader, though, has a double-bottom line to contend with—the return on mission (ROM) and the ROI on investments made by donors, foundations, and other resources. And in recent years, the nonprofit sector has been encouraged to be more “business-like” and efficient. 

Today’s leaders must be visionaries, strategic thinkers, champions of change, entrepreneurial, and great communicators to accomplish either ROI or ROM. However, in addition to these abilities, the nonprofit leader must also be able to: 

• build relationships inside and outside the organization

• lead by influence

• act as a collective decision maker

• stay knowledgeable about their field and management tools. 

Distinctive Framework 

The framework within which the nonprofit leader functions is probably the greatest determinate of the skills and characteristics of the leader. Actually, the very structure of the nonprofit organization can somewhat limit the authority of the leader, the executive director (ED), or chief executive officer (CEO). 

While the ED/CEO has full rein over the daily operations of the organization, the final authority or approval lies with a Board of Directors, which is comprised of volunteers from the community who typically have other full-time jobs—and who also receive no financial compensation for their work on the Board. Nonetheless, the Board holds fiduciary responsibility for the organization’s finance, overall program direction, and the mission. It also hires, reviews, and if necessary fires the ED/CEO. 

It is within this framework that the nonprofit leader builds relationships with staff, constituents, funders, and community stakeholders. Developing trust and credibility is critical to leading and motivating staff who deliver services to the organization’s constituents. Relationships with members, donors, and funders also are built on trust and credibility. 

In fact, the leader’s ability to lead through influence helps to determine the organization’s position in the community. For instance, do community stakeholders look to the nonprofit organization as the expert and source of their specific need? 

Exceptional Awareness 

In addition to being the visionary, the holder of the big picture, the leader of change, and the voice of the organization, the nonprofit leader must always have the pulse of day-to-day operations. Most nonprofit organization leaders do not have the luxury of a full contingent of senior staff to delegate the operational responsibilities. 

In the article, “Profiling the Nonprofit Leader of Tomorrow,” nonprofit consultant Jean Crawford uses the term “manager-leader” to describe the competencies, traits, and expertise needed by an effective nonprofit leader. Some of the competencies she cites include strategic thinker, entrepreneurial achiever, and inspiring motivator, as well as adaptability, perseverance, and passion for the mission.  

Warren G. Bennis is credited with shining a light on the differences between being a leader and being a manager. Leaders do the right thing; managers do it the right way. The nonprofit leader-manager must do it all—both the right thing and the right way.  

Excellent Business Sense 

Although people generally choose to work in the nonprofit sector because they want make a difference, perhaps even change the world, a nonprofit organization is still a business. Therefore, the nonprofit leader, as with most business leaders, must also exhibit financial acumen and be able to successfully raise money. In addition, to these management proficiencies, the nonprofit leaders must also have a depth and breadth of knowledge and expertise in their field. 

In other words, the nonprofit leader must remain focused on the mission, but also appreciate the importance of the bottom line. They must consider: How does the organization accomplish the mission? Provide services to their constituency at low or no fee rates? Lead the organization? Lead in the nonprofit community and stay financially stable?   

Final word: the nonprofit leader must have passion, vision, direction, and business acumen to succeed.