What ‘Star Trek’ Can Teach Us About Nonprofits

As a youngster, my favorite TV show was “Star Trek.” I loved the heroism, the courage and the crew’s sense of adventure. One particular episode, “The Enemy Within,” stands out in my memory. 

In the show’s opening minutes, legendary Captain Kirk is being beamed up from an alien planet when the transporter goes awry. Captain Kirk is split into two beings: the good captain and the bad captain. For the next 55 minutes, a struggle of epic proportions ensues — a classic fight between the principled and the unprincipled, order versus chaos. 

Besides being wildly entertaining, “The Enemy Within” is also the story of nonprofits in America.

A Nonprofit or a Business?

In the taxonomy of corporations, nonprofits are businesses — entities formed to provide a service. That they don’t have a profit motive is a relatively low-level distinction. And this is important as the various disciplines required to run successful for-profit endeavors are integral for the success of nonprofits. 

Unfortunately, many nonprofit leaders operate their organizations as if they existed in a parallel universe — outside the laws of a market-driven economy. Nonprofits, run by those who understand this lack of real-world differentiation, flourish, while their counterparts, organizations that disregard the fundamentals of corporate dynamics, decline. This refusal to acknowledge reality is tantamount to self-loathing and a willingness to accept a subpar result — hence, the bad nonprofit.

Nonprofits also have no shareholders but a single partner in the attorney general, but that’s about where the important differences end. And that’s the point. The similarities are more than merely corresponding attributes, they are strong equivalences between these two concerns. Yet despite their similarities, the market treats nonprofits much differently than their corporate counterparts. In fact, it's fair to say that there are vastly different rules and ethics for nonprofits compared to for-profit entities.

Playing by Different Operation Rules

Why does this persist? It's because there is a strong discrimination over how nonprofits operate. There is a widespread expectation that because nonprofits provide a public benefit, are usually tax-exempt and have widely varying funding sources, they should govern themselves in a manner that is untainted by the real world. 

Thou shall not advertise widely, thou shall not provide monetary rewards for outstanding results, and thou shall not take calculated risks that offer proportional returns. Nonprofits, their donors and grantors have told themselves for decades that these endeavors — exactly those that make corporate America successful — are the antithesis of good charitable entity governance. Here’s a few areas of a nonprofit where these different rules are apparent. 

1. Employees

Oftentimes, I hear executive directors speak of their employees as a breed apart, unique and existing in a separate reality. While those who dedicate themselves to charitable causes are indeed special, they still must be managed in a way that motivates them. They need training, key performance indicators, realistic opportunities for career advancement and, most importantly, market compensation. 

The public glorifies CEOs who make millions building apps that steal our personal data, but try promoting higher wages for staff with donors and you are treated like a Klingon. Consider the benefits that might accrue if nonprofits were to pay incentives, rewards for longevity and bonuses for success. I personally know nonprofit directors who have convinced their boards and donors to pay staff well. Their superior results are not surprising. 

2. Advertising

Another one of my favorites is the practice of advertising. When was the last time a nonprofit bought a full page ad in The Wall Street Journal? Apple does it every time it launches a new phone. It’s good business. 

However, nonprofits and their grantors are often blind to the fact that dollars spent on highly targeted ads for an event can have significant return in terms of outreach and awareness. When a nonprofit cannot compete with its corporate peers for capital, it’s at a disadvantage. Fliers posted at the library and posts on Facebook aren't going to scale an event geometrically. 

3. Finance

As for finance, such matters require equal parts discipline and creativity. Examine your ratios, why is overhead so low? Because those who assess nonprofits tell us that spending money on indirect costs, on technology, on those things that make the administration of an ongoing concern more efficient is bad. 

Another example is patience. Investors in for-profit ventures are accustomed  to waiting around for a decade before meaningful return on investment. Ebay, Amazon and Apple were not immediately successful. In fact, if you were an early investor in any of these ventures, you received no return for quite some time. 

But nonprofits are held to a different expectation. If a fundraising event returns 5%, the executive director is criticized. If it fails, they might have to look for another job. However, a less-than-popular iPhone release is a learning opportunity.

Going Boldly Where No Nonprofit Has Gone Before

For someone with 30 years of working experience, I came to the nonprofit world late in life. It’s only been six years. For most of my career, I either owned my own businesses or worked for large, global money center banks. For me, these two experiences have made all of the difference. 

As a nonprofit leader, I have worked hard to seamlessly operate between my organization’s mission and the realities of a market-driven economy. It isn’t easy, and there are real obstacles preventing the type of transformation I’ve described. But if, as nonprofit leaders, we allow these obstacles to prevent us from solving the social problems to which we are committed, then nothing will change. And that seems to be what has occurred — after all, homelessness has been stuck at around 600,000 Americans for the past 20 years.

Where does this leave us? Nonprofits might want to reconsider what they have set forth in their strategic plans. If growth in revenue and assets are essential to mission accomplishment, then going boldly where no nonprofit has gone before might require heeding the lessons of “Star Trek.” If not (and not all nonprofits are geared toward scaling, nor should they be), then one needn’t be bothered with all of this. You are fine the way you are.

In the final moments of “The Enemy Within” episode, there is an old-fashioned fistfight between the two captains. A stalemate ensues with both men exhausted. In an instant, the good Captain Kirk reaches out to his bad twin and says, “Half a man can’t exist.” Spock initiates the transporter, the good and bad embrace, and the two men are merged. 

In similar fashion, nonprofits can’t survive as their own adversaries — they must reconcile themselves with the real world. Let’s feed the hungry, house the homeless and cure diseases, but without embracing your inner, for-profit twin, half a nonprofit can’t exist.

The preceding post was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.