Are Nonprofits a Business? A 30,000 Foot Overview of the Business Model of Nonprofit Organizations

Anybody who believes that a nonprofit shouldn’t be run like a business is sadly mistaken. And those organizations that are not run like a business are destined for failure. Gary Ridge from WD-40 once told me, “Some organizations have the heart but don’t have the business sense, and some have the business sense but not the heart. You have both.” The organizations I have run, especially the San Diego Food Bank, had both. It had the heart, but we had the business acumen. If you think about it, the San Diego Food Bank was a hundred-million-dollar corporation with 85 employees and many moving parts. You can’t run an organization like that unless you’re running it with fundamentally strong business principles: stellar financials; a healthy volunteer base; solid donor base, which is your sales if you want to bridge it to the private sector. You must also add marketing, media, PR, and culture—a tremendously important aspect of any successful business, nonprofit or otherwise—because you build to culture. You can train or educate people to do a job, but if they don’t fit your culture, they’re not a good fit.

I’ve seen many times in the nonprofit sector that somebody gets this great idea. They’re charismatic. They have people who want to support them, so they start their own nonprofit organization. They begin raising money and start doing things in the community. They have some success but then hit a wall. Because they don’t have a strong business model, they can’t attract sophisticated, more significant donors, larger grants, and the like. They lack strong financials. They don’t have strong board governance, and they don’t have the fiduciary responsibilities of board members firmly in place. Their fundraising program is not one you can base a foundation. They need a CRM, a big part of the fund development program. A reliable database is essential for any nonprofit. It’s where your volunteer and donor information is collected and stored, so you know how they want to be treated, what their histories are, what programs they’ve given to when they’ve given, what mailings, and how you’re going to approach them. A CRM also goes a long way toward donor stewardship. New donors are great, but retaining existing donors is probably even more important. It’s better to steward and groom those donors so they not only continue to support your cause, but you’re taking those donors and stewarding them up to larger gifts. In Nonprofit 101, there’s a fundraising pyramid that highlights the life of a donor. It shows where they enter your organization, their pathway through the years, upgrades to more significant gifts, and then ends with the hope of a planned gift in their will.

A strong business model is essential to any long-term successful nonprofit organization. Going back in my work history to my first nonprofit job, my first boss was a gentleman by the name of Frank Klein. He was from IBM World Headquarters, and at the time, IBM had a program, “Executives on Loan,” where they would loan out executives heading towards retirement. IBM would pay their salaries for 2 to 3 years, and these executives would bring private sector business sense to nonprofits. I’m in my mid-20s, and my boss Frank, who was probably one of the most influential people who shaped the way I have conducted myself throughout my nonprofit career, sat me down and said, “Jim, don’t fall in love with your charity. Businesses do business things for business reasons. Their philanthropy is tied to their organizational goals. If you help them achieve those goals, they’ll support you. And if you don’t, they’ll find another nonprofit. There are 10,000 worthwhile nonprofits.” Well, that was a little stunning to me, but I’ve used that philosophy my entire career, and I can’t tell you how many times I have heard from sponsors, donors, and media partners, “You know what, Jim, we’ve never heard that from any nonprofit. All you guys say is, “Oh, please support us because we have a worthwhile cause.” So especially in the corporate sector, I enter every relationship focused on ROI. What do they need to succeed and feel like this was an impactful, beneficial relationship? Many times, especially when I bring in media partners, these organizations support us, not through their philanthropy budget but via their marketing budget, because they will be involved with million-dollar campaigns. This has been integral to my success in developing business relationships for the nonprofit organizations I run. I never expect anyone to support us because we’re a good cause. I will make our case and try to have them realize that this is a very valuable organization. But really, it’s a business partnership, and if they’re taken care of and feel it’s a beneficial relationship, then they’ll support us. We’ll get the funding needed to further my organization’s programs. I also want to overdeliver because I intend to develop long-term relationships. I want to ensure those sponsors and donors come back year after year, so I do not have to chase that money. I won’t need to fill that hole with a new donation. Instead, I can get and count on those existing donations, and that’s how I build the organization.

If you need assistance, feel free to call on Floros & Associates. We have for-profit solutions for nonprofits.

< Older Post Newer Post >

A Nonprofit Professional's Guide to Working the Room

By Cheryl Floros • March 5, 2025

Let’s be honest—networking isn’t everyone’s favorite activity. For many nonprofit professionals, it can feel awkward, forced, or even like a waste of time. But here’s the reality: your ability to work a room directly impacts your organization’s success. Whether you’re looking for donors, sponsors, or key connections, networking is a necessary skill. And like any skill, it can be mastered. Floros & Associates recently hosted a number of nonprofit CEOs, who are members of our Philotimo Executive Sessions, at the San Diego Regional Chamber of Commerce’s annual gala—in my mind, one of the biggest networking events of the year. Some are seasoned pros, but a few weren’t as comfortable in that setting. So, I gave them a few simple, no-nonsense tips to make the most of the evening. And now, I’m sharing them with you. 1. Dress the Part Professional—not formal, not cocktail. This isn’t a wedding, and it’s not casual Friday. Many attendees are coming straight from work, so aim for sharp, polished, and confident. First impressions matter. 2. Timing is Everything The first 80 minutes of a networking event are your prime hunting time. Show up on time! Walking in late is a missed opportunity to connect when people are fresh and eager to meet others. 3. You’re Here to Network, Not Eat Most of these events serve food buffet-style during the reception. Pro tip: eat a late, heavy lunch so you’re not distracted by the food. Grab a plate right before the doors open for the program portion, but remember—you’re there to make connections, not to indulge in a three-course meal. 4. Bring Business Cards and Work the Room Don’t get stuck in long conversations with just a few people. You’re here to make connections, not have a deep dive over sliders and pasta. That said, if you’ve got a “big fish” on the line, trust your instincts and spend the time needed to make a solid connection. If you’re not a comfortable networker, no problem—find a buddy who is, or stick with me (I’ll introduce you around). 5. Have Your Ask Ready This is just the first date—you’re not closing any deals here. What’s your next step? A coffee meeting? A tour of your facility? Have a clear and simple call to action so that the conversation leads somewhere. 6. Get Their Info & Follow Up If you don’t follow up, you just wasted your time. Get their contact info and connect within a day or two. No needy, desperate emails—just a simple LinkedIn connection and a quick follow-up to confirm your next step. 7. Stick Around for the After-Event Networking Some of the best conversations happen at the bar afterward. Many people head there once the main event wraps up, so if you didn’t get to talk to someone earlier, this is your second chance. 8. Stake Out the Exit Here’s a trick I learned years ago: stand near the exit with your development director and casually chat. A lot of people will have to pass by you. If there’s someone you didn’t get a chance to connect with earlier, this is a great opportunity to grab a quick moment with them before they leave. 9. Master the Soft Sell No one likes the pushy nonprofit person who won’t stop talking about their cause. Your job is to tell your story in a compelling way without overwhelming them with details. Keep it high-level and leave them wanting more. 10. Understand the Corporate Mindset Corporate donors and sponsors don’t give just because you have a great cause—there are 17,000 nonprofits in San Diego County alone. They need to see the ROI. Figure out how you can help them succeed, look good, and meet their goals. 11. Always Play the Long Game Networking is about relationships, not transactions. This is just the first step in building something meaningful. Whether you’re meeting someone for the first time or deepening an existing connection, make sure you leave a strong impression and set the stage for the next conversation. Forging long-term funding relationships based on a mutually beneficial partnership are essential to building your organization and key to your success. At the end of the day, networking isn’t about schmoozing—it’s about connection. The more you refine your approach, the more natural it will feel. So, suit up, show up, and make the most of every opportunity. Happy hunting! Onward and upward! PS: If you or your nonprofit could use strategic guidance to elevate your networking, fundraising, or partnerships, let’s talk. Email me at Jim@FlorosAssociates.com to set up a quick call—We would love to help you take your career or organization to the next level.

What is your expiration date?

By Jim Floros • September 4, 2022

Are you going to be that three-year and out, or the 31-year CEO that has to be gently asked to leave or nudged to retire? CEOs do have a shelf life. If you are a cutting-edge, push-hard, calculated risk-taker, then your expiration is probably sooner. You will either burn out, step on one toe too many, or become bored and complacent because you have all the trains running on time. How do you stay inspired, energetic, and still feel like you have something to prove?

The Greater Good podcast host Jeff Wohler chats with Jim Floros

By Floros & Associates • June 24, 2022

The Greater Good, host Jeff Wohler talks to Jim Floros about his lifelong career in the nonprofit sector. The chat kicks off with Jim walking through his storied career and his inspiration.

For Profit Solutions for Nonprofits