Not every business school graduate makes an effective NPO manager

“Non-profit organisations are confronted with the heterogeneous, often contradictory interests, needs, expectations of success and goals of their diverse stakeholders”, according to Anna Oppelmayer, who recently completed her doctoral thesis at the Department of Public, Non-profit and Health Management. NPOs face a multitude of interest groups – from donors to civil servants, from taxpayers to volunteers. Dealing with them requires a professional strategy. 

Anna Oppelmayer, you focus on stakeholder management in non-profit organisations. How do non-profit organisations (NPOs) differ from profit-oriented companies when it comes to dealing with their interest groups?

Every organisation and every company is confronted with the expectations of different stakeholders and the objectives they pursue. What sets stakeholder management in non-profit organisations apart is that, on the one hand, there are a large number of stakeholders and, on the other hand, active stakeholder management is, or should be, of particular importance given some of the specific characteristics of NPOs. Non-profit organisations interact with an array of other stakeholders that simply do not exist in for-profit companies. One example is the group consisting of staff members, which also includes many volunteers. And the shaping of the relationship between the NPO and its stakeholders is also special. For instance, NPOs have to be accountable to their donors, but also to the general public. Moreover, NPOs have different goals, so managers have to behave differently.

It is vital to emphasise that non-profit organisations are private organisations, even though they often fulfil public functions. This clearly distinguishes them from both public administration and public enterprises, as well as from profit-oriented enterprises, and necessitates a different business management approach.

Staying with the specific topic of volunteers: what challenges do they present to managers?

In an NPO, human resources management has to be organised in an alternative way. There are many different reasons why people work for an organisation or a company. In this context, the staff structure in NPOs represents a special feature; in many cases, volunteers, full-time employees, people doing a voluntary social year and civilian servants are all equally involved. They need to be recruited and retained, and ultimately managed, in different ways. A particular focus of my research in this regard was the question of why young people, specifically the frequently mentioned Generation Z, commit to volunteer at an NPO. Ultimately, a deeper understanding of motives is indispensable for the successful recruitment and long-term retention of volunteers in organisations.

What expectations are placed on managers?

A study of job advertisements for first-level managers in NPOs clearly showed: professionalisation in NPO management is increasing, not least in response to a variety of NPO-specific management problems. The study demonstrated that there is a high demand for business management competences, although of course we also see other, subject-specific training requirements, especially in the case of institutions operating in the social and health sectors.  On the other hand, specific training or further education in non-profit management or experience with the management of non-profit organisations is rarely called for. However, I believe that this is precisely what is needed, because the requirements in NPOs are different, and this applies across virtually all operational divisions: human resources management, controlling, marketing and fundraising as well as financial management and accountability.

Why should a graduate in business administration become an NPO manager in the first place? After all, they can earn more in profit-oriented companies.

The goal of an NPO is not to make a profit, but to fulfil its mission. NPOs are allowed to make profits, but they may not disburse them. This means that the executive director does not benefit primarily from the financial success of the NPO. The true profit of the NPO, if this economic term may be used somewhat loosely, is achieving the goal in its particular area of activity, whether this means better protection of an animal species, inspiring young people to take up sports, protecting the rights of trade union members or providing help for people in need. That is the true profit of the NPO. Today, this mission and the sense of meaningfulness associated with work are also attracting many aspiring young leaders.

What other indicators reveal the need for more business management expertise?

Let’s consider the area of accountability, which I mentioned earlier. NPOs are not only answerable to their donors, but they also enjoy a range of tax breaks and are thus funded with the support of the public. As a result, they are also accountable to the general public, an important stakeholder group that may not be obvious at first glance. We conducted an analysis of Austrian NPOs and their accountability efforts and identified so-called Accountability Reporter Types.

What did you learn?

There are major differences in the extent and depth of accountability. For example, many NPOs, even large ones, do not publicly communicate information such as their balance sheet or information on the use of donations. However, donors would perhaps also be interested in knowing how much of their donation actually goes towards the purpose of the donation and how much goes towards administrative costs. Many organisations are making an effort, but interestingly, both large and small NPOs seem to be failing in the task of properly implementing accountability. The Austrian NPO sector lags behind other countries in terms of an active information policy.

Why is this so problematic?

Non-profit organisations must be deemed trustworthy by the public; their very basis is public trust. When questions arise about whether work is being done properly, even in the form of rumours, this can have an enormous impact on the NPO’s funding and ultimately on its ability to achieve its goals. So, I think it makes sense to invest in business expertise here; and at the same time to take a much more active approach to informing and interacting with stakeholders.

Professionalisation on the one hand and a commitment to a good cause on the other – how can these two things be reconciled?

We examine the problem at the institutional level and we see that there are many things that need to be weighed: Increasing professionalism costs money, the administrative burden rises. How much professionalisation is necessary, and when does it come at the expense of mission fulfilment? It is also interesting that NPOs often take the form of associations headed by volunteer leaders, a president or a volunteer board of directors. They often make the final decision. At the same time, there is also a full-time management team. These are interesting areas of tension and we hope to prepare our students for tackling them by offering a dedicated elective module in the Business Administration degree programme.