One of the most significant differences between for-profit and not-for-profit organizations is in how each measures organizational achievement. In the corporate world, the organization’s stakeholders often measure success by looking at the “proft” generated. For publicly traded companies, the measurement of success is often related to the share price of the firm’s stock. While many would point to serious flaws with both methods of measuring performance, they both continue to be used widely in the corporate world.
In NPOs, however, where there is no share price and “proft” (also known as “surplus”) is not the purpose of the organization, the measurement methods common in the corporate environment are both unusable and even inappropriate. This is why strategic planning is vital in governing, managing, and monitoring an NPO’s performance.
Many books describe how to complete an NPO strategic plan, and consultants may readily assist in creating the plan. Nevertheless, whatever method you use to complete the strategic planning process, the roles of the board directors and the staff are generally constant.