Why Nonprofits Should Run Like Businesses

Milton is one of the happiest, most joyful people I know. He has a smile that could light up a room and a confidence about him that is beyond his years. He loves sports, especially basketball, and is a No. 1 fan of the Miami Heat. Milton is also a three-time cancer survivor and a patient at Miami Children's Hospital.

He was diagnosed on St. Patrick's Day, in 2009, when he was only 12 years old. His condition, nasopharyngeal carcinoma, is a cancer that typically appears in tobacco chewers and is extremely rare in children. From the beginning, Miami Children's Hospital was there for him, from the moment of diagnosis through the treatment stage and the three relapses. Today, Milton's cancer is in remission, and Miami Children's continues to be there for him, supporting him and his family, every step of way.

Because of his condition, Milton frequently visits Miami Children's, which is only able to provide this world-class care and treatment thanks to the generous donations that come through the Miami Children's Health Foundation (MCH Foundation). Stories like Milton's are the reason why I do what I do every day, raising funds and awareness for Miami Children's Hospital.

Throughout my career, as a "reformed" lawyer, I have learned that in order to succeed in raising funds as a nonprofit organization, we must think and act like a business. What makes us different is that our bottom line is not just generating dollars, but more resources and, ultimately, more opportunities for patients like Milton.

Let's face it; we are in a saturated market. Competition is fierce, and consumers, as well as donors, are very cautious about how to spend the money. To remain relevant and current in such a market, a nonprofit must impose business-like standards, because people will judge and compare them to such.

A nonprofit, like a business, has a board of directors, marketing and human resources departments, and decision-making executives, all geared toward understanding the market and making day-to-day choices that ultimately help us be more competitive and successful. These groups develop strategic plans, keep financial records and audits, and monitor compliance. So why treat it differently just because we are not in it to make a profit?

For nonprofits, it's important to invest in key aspects of the organization just as any business does to help it grow and prosper. When a business does well, consumers immediately see the value of purchasing its product or service. When a nonprofit does well, donors immediately see the rewards of doing something good. For the MCH Foundation, this means an effective, competitive strategy that helps us support our children and families throughout the continuum of health and wellness wherever they are, whenever they need us, and make it possible for them to realize their full potential.

However, nonprofits inevitably have fewer resources and capital to invest, and this is where the business senses diverge.

As best said by Dan Pallotta in the TED Talk "The Way We Think About Charity is Dead Wrong," the nonprofit sector has "to do more with less," from staffing to resources. This means the nonprofit has to "think differently and be more creative and innovative."

Investing more in staffing and planning may seem helpful in the short term, but in the long term, quality investment that promotes the foundation's goals and values is more sustainable. This is, particularly, because nonprofits should not be judged by what they put into administrative costs, but by how these investments help them raise more funds and do more good. This requires a different set of standards, including transparency, leadership and results.

The good news is that donors are increasingly recognizing the importance of nonprofit capacity-building. In Philadelphia, the Pew Charitable Trusts partnered with the OMG Center for Collaborative Learning to award more than $5 million to more than 120 local nonprofits. The funds are intended to help these nonprofits support capacity-building in six areas and give the organizations the opportunities to raise money through streamlined processes, improved services, well-trained leaders and more — all for the future benefit of those they serve and help.

Nonprofits are changing lives across the world, and we have a responsibility to continue thinking of ways to excel — to grow and become the best at what we do. But real change can only be accomplished if we modify the way we think about how nonprofits should "invest" their resources while making a mark for themselves. Let's not limit the scale of their dreams; instead, let's help them obtain the resources they'll need to get there. Becoming generous and open-minded donors is the key to changing what surrounds you and, ultimately, the world.

Lucy Morillo is president and CEO of Miami Children's Health Foundation.