Means to an end inverted

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 A significant difference between for profit and not-for-profit sectors is what I call ‘Means to an end inverted’ where in the for profit sector, the thing you do is the means to an end which is money, and in the not-for-profit sector, money is the means to an end which is the thing you do. For those in the latter, not-for-profit is a business when you are being paid for a deliverable, and even more so when there are other organizations competing against you for the funds.

Schools, service organizations, sporting clubs, emergency services, and social welfare programs all have two things in common: they are mandated to provide a service, and they are accountable to those who fund them. Whether the program is paid for through federal, state/provincial or local taxes, or through donations, service fees, or membership dues, the

concept is the same.


The inversion of means to an end is important to understand for those who operate in the not-for-profit and publicly funded sectors, as the reason you do what you do is different than those who are in the for profit sector. Entrepreneurs are there to make money - period, and it does not matter how good the widgets they produce are, or how great a service they provide, if they are not making money, they are out; and not just making money, they need to make a given amount of money called Return on Investment (ROI) because if their efforts only generate a return of 2%, they will put their money into a Guaranteed Investment Certificate (GIC) and receive 4% while they sleep until noon. Not-for-profit and publicly funded organizations are different than for profit in you are provided money to deliver a service, and your endgame is what you do or provide not the money itself. However, as simple as this sounds, generating the funds to start the not-for-

profit organization will be the first challenge.


All this being said, most not-for-profit employees and servants of the public are being paid to deliver the services they provide therefore to believe you only do what you do just for the good of others is not entirely true. However, setting aside the fact you do need to earn a living, if you do what you do for the wrong reasons, it will not be done with the

required passion therefore will not likely achieve the same results as those who do if for the right reason. Unfortunately, I have witnessed those who do what they do for the wrong reason, which makes me question why they are in the business they are in.


As this article is about not-for-profit and publicly funded financial management, let me illustrate the two different philosophies with an example: 


You operate a family support program, have been given a budget of $1,000,000, but only spend $900,000. In the for profit sector, you would be hailed a hero and probably be given a bonus; however, in the not-for-profit sector this surplus most likely means a number of families did not receive the support they desperately needed, and the excess money will

be returned to the funder.


Unfortunately, there is a myth where some believe servants of the public are unmotivated and do not have accountability for their actions which is why they enter the perceived safe and secure environment of public service. First, as indicated earlier, serving the public is a business if you are being paid for a deliverable, and if you do not achieve the established

goal, you could find yourself unemployed. Second, soldiers, police, firefighters, border patrol, prison guards, search and rescue, and medical responders are servants of the public, and willingness to die for us is anything but lacking accountability. Third, counsellors place themselves in situations where their actions or lack of, can have extreme consequences for their client, the public, and themselves, including being in harms way.


On the other hand, there are cases where politicians and bureaucrats are in the game of serving the public for the wrong reasons, often to influence policy which will further their own personal interests, or to fulfill other personal shortfalls or needs. In addition to this, there are endless situations where politicians and public servants spend funds frivolously with no concept of whose money it really is.


When it comes to government spending, a system of taxation to fund security and common essential services, as well as support those legitimately in need, is essential in a civilized world, if those who are charged with the responsibility do so with care.


Regarding bureaucrats, while many are genuine and pleasant to work with, there are as many who are not as they treat contractor organizations poorly, especially if they are not-for-profit versus for profit. While it may seem like I am generalizing based on a bad experience, I am not as I have seen much of this during my career working for various

levels of government and in the not-for-profit sectors both as an employee and as a contractor.


For private clubs such as sporting groups, they are accountable to their membership versus an investor. You could look at the public sector as being similar in you are accountable to the taxpayer; however, there are many recipients of public services who are not taxpayers therefore it is different. For accountability to membership, the expectation is you deliver programs with due care to financial management, and should you sway from this responsibility you could have unhappy members therefore risk losing them to the One exception to being accountable to members is professional associations such as accounting bodies, law societies, and engineering associations who are there to protect the public from the professional versus serving the member; with these organizations there is no competition therefore members either put up with the fees imposed and how they are managed, or find another profession to work in. This is different from labour unions who are being paid by members to represent their interests regarding their employment.


Finally, there is an important distinction between a not-for-profit society such as a sporting club, professional body, or homeowner’s association, versus a charity who offers services to the public such as social service organizations. While the former is expected to exist indefinitely to serve its members, the ultimate goal of charities is to one day no longer be required. While it may appear strange to wish for the demise of a sector you work with, in a perfect society no one would be homeless, addicted, abused, or undernourished therefore achieving this you will have accomplished your goal. However, attaining this is unlikely.


I hope you appreciate what I am saying by ‘Means to an End Inverted’ and you have adopted this philosophy as I believe it is essential to be successful in the not-for-profit and publicly funded environments. Furthermore, I trust if you are new to this sector you have to this point, become intrigued with how diverse and complex this industry is, and you are excited to learn more



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