Career changes

The perils of moving from the corporate world to a nonprofit

March 21, 2014: 11:58 AM ET

Nonprofits need the skills that businesspeople bring with them, but the transition isn't always smooth. Here's what to look out for.

Folders and pens on meeting table

FORTUNE -- Dear Annie: I started my career in finance about 30 years ago at a medical nonprofit in the Midwest, and then moved to the private sector. Now, I'm in senior management at a big company. I've gone about as far as I can go here, and I'm in my late 50s, so I'm thinking about "retirement" (although I don't really want to stop working). The current president of a local charity, who I met on a different nonprofit board, has been talking to me about taking his place when he retires soon, and it's an appealing idea.

My only reservations are, first, I'm aware that nonprofit board membership is a very different animal from running the organization day to day, and I wonder whether I'm cut out for this. And second, the last time I worked full-time for a nonprofit was so long ago that I'm sure a lot has changed in the meantime. What can you and your readers advise me about making this move as frictionless as possible? -- Just Jack

Dear J.J.: First, the good news: After a rocky five years or so, many nonprofits are starting to bounce back from the recession. About 45% of them plan to create new jobs this year, according to a new survey by consultants Nonprofit HR, while only 7% plan to cut staff -- down from 22% who laid people off in 2009. Among nonprofits hiring new senior executives, the survey says, about 40% are looking for seasoned managers from the business world.

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"Traditional candidates for nonprofit senior jobs were often subject-matter experts in the field -- people with extensive special-education experience to run an autism foundation, for example -- but they don't necessarily fit the bill anymore," says John Salveson, a principal and head of the nonprofit practice at executive recruiters Salveson Stetson Group. "Governments have cut funding, and competition for private donations has gotten more intense, so business skills matter more now. Nonprofits are having to 'work smarter' and think more like for-profit companies."

Even so, applying your business know-how to a nonprofit may, as you suspect, prove tricky. Salveson suggests that anyone mulling such a move consider these three factors:

1. Stakeholders. "The biggest difference is the number of stakeholders you have to consider," he says. "There are more of them in nonprofits than in business, and they all believe their opinions are equally important and must be heard."

The head of a nonprofit hospital, for example, has to satisfy local government, the federal government, the hospital board, the community, patients, patients' families, doctors, nurses, other employees, and volunteers -- all of whom may have strong and conflicting views on any decision. "Recognizing that they all matter, and then reconciling their various interests, can make running a nonprofit very complicated," Salveson notes. As a nonprofit board member, you've probably already gotten a taste of this, but as president, be ready for the buck to stop with you.

2. Culture. Salveson often advises candidates to get ready for "a much more collaborative decision-making process" than is generally found in business. One reason is that "staffers are usually paid below-market wages, because they're passionate about what the organization is doing, and you often have large numbers of volunteers who aren't getting paid at all." So, in marked contrast to the people who work for you now, Salveson says, "they really don't have to listen to you." It may well take some extra effort to get everybody behind you and your plans.

On top of that, "many career nonprofit employees have stereotyped ideas about managers who come in from the business world," Salveson says. "They think you're used to unlimited financial resources, and that you always put profits before people." So you will likely need to win their respect, Salveson says, by "slowing down a little and having conversations where you do most of the listening."

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3. The board. Nonprofit boards of directors, as you may already have noticed, tend toward the type that a corporation would consider "activist." They are, or often try to be, deeply involved, quite vocal, and watching (not to say second-guessing) your every move. Moreover, their role has changed in the past several years to include much more fundraising than in the past, "which is often not at all what they signed on for," Salveson notes. "So a delicate part of your job may be giving those people a graceful exit, and finding replacements who are ready and willing to do development work."

Before you take on any executive role, but especially the top job, Salveson urges you to get to know the board as well as you can. "They should want to know you, too, and make sure you're roughly on the same page," he says. "Even if you're considering, say, a chief financial officer position, you certainly should meet the head of the board's finance committee -- and, if he or she isn't interested in meeting with you, run away."

One more thing: Just as you would if you were weighing a job with a for-profit, Salveson says, "Do your due diligence. Study the organization's finances, including how they're funded, and how stable their main sources of funding are. You need to go in with your eyes wide open." Good luck.

Talkback: Have you made a move between the corporate and nonprofit worlds? What are the biggest differences you've seen? Leave a comment below.

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