What Happens When Nonprofit Business Plans Stray from an Organization’s Mission?

by | Oct 7, 2022 | Strategic Planning

If you happened to read the New York Times’ exposé about Providence, a major national nonprofit hospital network, you were likely as shocked and disappointed as we were.

The gist: despite a mission to serve the “poor and vulnerable,” in 2018 the Providence hospital chain implemented a new income-boosting strategy to pressure low-income patients to pay sky-high hospital bills—even if they were legally eligible for free care.

The human toll is heartbreaking. The Times interviewed patients who had to choose between paying medical bills they never should have received and buying food or heating their homes.

As a nonprofit Providence clearly lost its way. They strayed from their mission. But how did they get there?

Providence’s approach is a clear example of business planning gone terribly awry. Which leads us to ask:

What happens when you create nonprofit business plans that are not anchored in an organization’s mission? And how can you avoid doing this?

Let’s take a look.


Nonprofit Business Plans Should be Grounded in Mission

As Funding for Good has explored before, nonprofit is a tax status, not a business model. Like all businesses, nonprofits need to keep an eye on their bottom line—their income vs expenses—to be sure they can maintain critical functions. That includes things like meeting payroll for staff, paying insurance and office rent on time, and serving their community.

That’s where vision and mission come in. Everything an organization does should be guided by its vision and mission statements.

On paper, the Providence hospital network’s mission seems clear enough. As a nonprofit healthcare provider, they sought to be:

steadfast in serving all, especially those who are poor and vulnerable.

But a few years ago, Providence decided they needed to increase revenue and cut costs in order to fund recent expansion. So they hired McKinsey & Company, a global strategy firm to help out.

According to the Times’ investigation, McKinsey’s task was to:

maximize the money that Providence collected from its patients. …Training materials instructed administrative staff to tell patients—no matter how poor—that “payment is expected.”

Putting these two “missions” side by side is striking.

Providence actively set out to create nonprofit business plans that violated its own mission.

This is the opposite of what Funding for Good recommends. We believe that vision and mission should drive your nonprofit business plans every step of the way.


Sustainability is About More than Money

We often hear nonprofit leaders talk about sustainability, particularly in the context of grant funding and business planning. Usually, the first topic that comes up is financial sustainability. Which, of course, is vital to ensuring you can keep serving your community.

As leaders, we sit down and start analyzing our nonprofit’s revenue. We explore how to diversify revenue streams, which is always important. But too often the conversation stops there.

This is what Providence seems to have done. They forgot that sustainability isn’t just about dollars.

It’s about sustaining your nonprofit’s impact. Sustaining your organization’s vision. And sustaining programs that make a difference in your community.

That’s why nonprofit business planning conversations about sustainability need to consider not just money, but mission.


Nonprofit Business Plans Are Your Mission in Action

While Providence’s example is explosive—and their behavior clearly illegal—most nonprofit leaders are confronted with seemingly small choices that, over time, could potentially pull an organization away from its mission. For example, pursuing a grant not because it advances a nonprofit’s mission, but solely because it strengthens the bottom line.

Mission drift is a common challenge for organizations.

That’s why a successful business planning process is designed to assess all of your nonprofit’s programming—including internal operations—and ensure that your activities align with your mission.

The business planning process should also bring together stakeholders and create space for challenging, consensus-building conversations. Engaging diverse perspectives in creating your business plan can ensure you aren’t missing key gaps.

The result will be a clear roadmap for your organization to achieve its vision and mission—and an engaged and unified leadership team committed to keeping each other on track.

Now that will benefit any organization.

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