Nonprofit organisations have been under pressure for a while to become more businesslike, to adopt the tools and mindset of market-driven private enterprise.

At the same time, expectations have been growing that business should act responsibly and contribute positively to society and the environment.

My argument is that the best way for corporates to respond to this challenge is to become more nonprofit-like. The question is no longer what NFPs can learn from the corporate sector, but what the corporate sector can learn from NFPs.

I have been thinking a lot about this since the introduction of the UTS Business School’s Master of Not-for-Profit and Social Enterprise degree last year. 

Dynamic environment

Classes in many of the core NFP stream subjects have changed in composition so they comprise fairly equal numbers of students from the corporate and NFP sectors. Many of these students had previously not had a chance to deeply engage with those “on the other side of the fence”.

This has created a particularly dynamic learning environment and some intense debate – even heated discussion. In the subject “CSR and Measuring Social Impact”, one student commented: “There are too many tree huggers in class – the corporate world needs to be shown to them”.

But by the end of the course, student responses to the question,“What do you like about the subject?” included: “The diverse student experience and thought-provoking conversation” and “The projects were interesting and really made me think about CSR and the corporate world”. 

Cross-sector, peer-to-peer learning in this subject really intensified during the final assignment, which required groups made up of students from both sectors to together design a CSR program to address disadvantage. They also had to present an evaluation plan showing how they would measure the program’s success.

Measuring success

During the course of the assignment, students from a corporate background came to realise not only why NFPs’ core business is described as “wicked problems”, but also how tricky it is to measure success when profit is not the metric.

As one senior banking executive told me, “This assignment really brought home to me that making money is easy; making a difference and proving that you have – well, that’s a whole new kettle of fish.”

Let’s hope we “convert” enough CSR managers so that one day corporates adequately fund program evaluation. 

I also believe our business folk learned something about leadership nonprofit-style.

 Crisis of confidence

Business works in the context of increasing volatility and uncertainty. As competition increases, the pressure to create new sources of income has grown and customers are forthright about receiving value for money.

More fundamentally, business is facing a crisis of confidence. Trust in business is at an all-time low, and many believe that the world’s major social, environmental and economic problems are a direct result of the behaviour of big business.

 In this environment, businesses need a new style of leadership – leadership where a firm’s future is driven by a clear, beyond-profit vision to realise a greater purpose. In short, values-based leadership.

Today, the source of a firm’s reputation – and the best motivator for employees – is having management that works hard to ensure the company is not only profitable but also demonstrably contributes to our total social, intellectual, cultural and creative capital in an unquestionably socially responsible manner. That is leadership NFP-style.

By Dr Bronwen Dalton, Director, Cosmopolitan Civil Societies Research Centre Co-ordinator, Not-for-Profit and Community Management Program Management Discipline Group, UTS Business School.

This article originally appeared in Third Sector’s September print magazine- click here for more info.