People get into nonprofit leadership for all sorts of reasons. 

Maybe this is you: You always had a passion for [insert mission here]. It was like you were made for the work. Your first employer felt lucky to get you – especially at the price. You felt lucky to be there. Most of your classmates didn’t find jobs in your field. 

Or perhaps this scenario resonates more closely with you: After a long, unsatisfying career in [insert hated industry here] you finally got to do what you loved. And what’s better? You’re really good at it.

How about this? Once [tragic event] happened, you knew you had to do something more. Even when you went back to work, you couldn’t stop thinking about how if you started a nonprofit, you could make a difference. 

Maybe you’re one of the above, or maybe you have a different story. But regardless, someday you may decide to take the leap and become a nonprofit leader. While some leaders have the finest education, the best skills, and the most passion for their cause, you can see that it’s not nearly enough. 

To make a nonprofit succeed you need to get out of your comfort zone and get some of those skills you never thought you’d need, or even want. To be an effective leader in the nonprofit sector, you’ll need to be skilled in the following key areas:

1. Revenue

Let’s start with what’s usually the biggest stumbling block: money. When you were doing the good work of your mission as a typical employee, perhaps you didn’t have to worry too much about money. You got a budget each year, and as long as you stayed within it, you were good. Sure, you applied for a grant or two, but most of your work was supplying the grant writer with information on the project you hoped to fund. Yet when you take the leap to becoming a leader, revenue and money management becomes an even bigger part of your day. 

When you start digging into the revenue side of the nonprofit world, you’re surprised to learn that most of your organization’s funds don’t come from fundraising, but from your clients! Fee-for-service is the most common revenue source for the average nonprofit. You knew that your clients paid, but you never realized that it was such a big contributing factor of your budget. 

But what about fundraising? That, you found out, was definitely important. Big corporations and foundations, right? Ah, no. More than 70% of your fundraising revenue comes from individual donors – from huge, “major gifts,” to rank-and-file contributions by mail and online givers. That grant you went for? That was good for your project, but to keep the lights on you need unrestricted funds—which is where fundraising comes in.

2. Governance

Before you got into leadership, you never had engaged much with the board – although you had definitely heard about them. You knew that they had the money, met in closed-door meetings, and approved budgets, and that was about it. 

Now, it’s like a curtain was pulled aside. You’re shocked to find that they’re not all the elite businesspeople you imagined. Some are, but there are a lot of others, too. It’s also clear that many give substantially of their time, and some make those major gifts you’ve heard about. But you had no idea that there were so many committees!

You were also surprised that so many of them knew so little about your mission. It’s not that they don’t care. They care a lot. But they’re just not experts. Yet they’re the ones, you’re told, who set the strategic direction of the nonprofit. One of their biggest jobs? Hire the nonprofit’s leadership (such as yourself!), so that the professional leaders can make the tactical decisions to carry out the strategy set by the board.

3. Accounting

You know all about accounting, right? You had a budget, which you spent less than, which means all was good. Well, you’re finding out that there’s lots more. 

When you asked your corporate accountant neighbor about accounting at your organization, you were surprised to find that he didn’t know much. “Nonprofit accounting is a specialty,” he told you. You had no idea. 

You also didn’t know that those grant applications you’ve been helping with require their own accounting processes, especially if you’re getting government money. What about that building you need? How’s that getting paid for? And what is bookkeeping, exactly? Then there’s cash flow. You find out that you have a line of credit with your nonprofit’s bank so that you can cover payroll consistently. Ah, that’s why the banker is on our board! 

The pieces are starting to come together. The bottom line is that when you make the move to nonprofit leadership, there’s probably a lot to learn about your organization’s accounting practices.

4. Human Relations

This one scares you. You likely had an initial meeting with a human resources representative to fill out all of those forms when you were first hired. But now, whenever you see HR come down the hall, it’s when someone says or does something stupid – and it’s time to take the consequences.

Yet now you’re starting to learn a lot more. You had no idea that besides recruiting and collecting performance reviews for their files, they created the review system and analyzed the results to look for trends concerning the board. They also did the legwork to hire new staff, and served as counselors to managers who were having problems with others. 

There were also nuances for working in the HR department of a nonprofit. For example, there are specific rules about volunteering for your nonprofit if you work for them, and faith-based organizations can’t be forced to hire someone outside their faith, even if they meet all of the job requirements. Nonprofit HR, just like many other aspects of the nonprofit sector, takes a special touch.

5. Volunteer Management

Another specific area that you needed to learn more about was your volunteers. You heard someone say that “volunteers are the lifeblood of our nonprofit.” It sounded good, but what does it mean? 

Starting at the top, nearly all board members are volunteers. Then, as you explore other aspects of your nonprofit, you start to find out that volunteers are everywhere – from helping out in the office to carrying out key programs. 

It also shocked you that it costs money to have volunteers. They need training, resources, and special clearances to work with clients. And don’t forget the importance of saying thank you! 

Quickly you figured out that without volunteers, your nonprofit wouldn’t get nearly as much done. They really are the lifeblood! But that means it’s critical that you invest in volunteer management solutions as well.

6. Marketing

Of all that you are learning about nonprofit leadership, the biggest surprise is the importance of marketing. You always figured that your good work spoke for itself. Well, it does—but only to a point. But marketing goes further than that, and it’s a key consideration for getting your name out in front of new donors and constituents.

Marketing is how much we charge our clients (if at all), how our facility looks, and even how we answer our phone and end our emails. Oh, and our brand? It’s not just our logo. It’s also the way we interact with constituents and supporters on social media and the way we maintain a unified message across multiple channels.

As you considered all there was to nonprofit leadership, you were overwhelmed—but excited. It’s clear that you need a lot more than passion for your cause and skills in your mission. But the good news is that there are lots of resources to get those skills, and plenty of people who went down the path before and saw success for their nonprofit. Good luck!

Author Bio

Matt Hugg is an author and instructor in nonprofit management in the US and abroad. He is president and founder of Nonprofit.Courses, an on-demand, eLearning educational resource for nonprofit leaders, staff, board members and volunteers, with hundreds of courses in nearly every aspect of nonprofit work. 

He’s the author of The Guide to Nonprofit Consulting, and Philanders Family Values, Fun Scenarios for Practical Fundraising Education for Boards, Staff and Volunteers, and a contributing author to The Healthcare Nonprofit: Keys to Effective Management.

Over his 30-year career, Hugg has held positions at the Boy Scouts of America, Lebanon Valley College, the University of Cincinnati, Ursinus College, and the University of the Arts. In these positions, Matt raised thousands of gifts from individuals, foundations, corporations and government entities, and worked with hundreds of volunteers on boards and fundraising committees, in addition to his organizational leadership responsibilities.