Like you, I’ve been working to help boards understand the difference in running a successful business and leading a successful nonprofit. The monograph “Good to Great & the Social Sector” uses language that helps business oriented minds understand. Collins says that in the social sector, money is only an input, and not a measure of greatness, while in business money is the input and the outcome.

For folks used to thinking on business terms, it’s all about the dollars. In business, you need money to produce a product, which you sell to get – – money. So here’s the difference. With nonprofits, we need money to DO something that makes things better. We measure “better.” Not dollars.

Collins recognizes the challenge. Chrysler can say, we spent money to make a car. You paid us money, so you could have that car. You paid us considerably more than it cost us to make that car, so now we can make more cars – and pay our workers enough so they’ll stay, and pay our CEO a huge salary – because he’s really good.

1. Nonprofits say, your dollars helped us do more good. Our challenge is defining “more good,” in a way that makes people want to keep helping. In order to do that, we must first ask some critical questions. Collins defines them as:

1. What are we deeply passionate about?
2. What can we do better than anyone else?
3. What resources do we need to do it?

You may have heard this expressed as: What do we do that is unique and worthy of support?
Once we’ve defined these things, we must define measurable outcomes – for two reasons:

1. So we know what we are trying to accomplish and if we accomplished it.
2. So our “stockholder, those people helping to supply the resources we need to achieve our outcomes, can see that they made a difference. What they “get” is knowing that they made a difference.

Collins recognizes that nonprofit goals are often less tangible and less easily measured that those of a business, but he suggests that if we clearly define what we are trying to accomplish, we can then collect evidence that that was accomplished – and that evidence may be quantitative (something you can count) or qualitative(something that has a story.)

So our first step is taking a hard look at what we’re passionate about, what we can do better than anyone else, and what resources do we need to do this. We have to know where we are going. Funds (or resources) are fuel in the engine, but it is wasted if you don’t have a clear destination. You have to know where you are going and why – and how to tell when you get there.