Our favorite nonprofit guru is David Norgard of OD180 which is a nonprofit consulting firm specializing in board training, development assessment, and strategic planning.  Visiting his website will provide you with many valuable insights. So from David, here is the essential foundation for understanding – and successfully leading – a nonprofit organization.

There are four essential functions of every NPO.  Board and staff must attend to all of them continuously for the organization to remain stable and grow.

Program
The program of the organization is its raison-d’etre. It is how the organization fulfills its mission. Components of the program function include not only the management of current programs but also new program design and development and program evaluation. The program function is best evaluated by measures that indicate both efficiency (the relative productivity for the investment made) and effectiveness (the outcome or result of the project).

Development
Development involves all those interactions and communications which cultivate, solicit, maintain, and track the resources necessary for fulfilling the mission.  It is how the organization supports the program it offers and advances itself in order to pursue new opportunities.  The components of the development function include: communications, fundraising and donor relations, marketing, public relations and community affairs, and volunteer relations.  Evaluate development efforts in two ways.  First, look at the amount of support and the number and diversity of supporters.  Then, also look at factors which contribute to successful cultivation, such as increase in name recognition and strategic allies.

Administration
Administration involves all those activities which provide the organization with the capacity to operate as an organization.  It is how the organization supports and enables the work of both the development and program functions.  The typical elements of the administration function are: budget and finance, facilities and equipment, information technology, and personnel administration.  Evaluate administration according to how well it serves program and development.

Governance
Governance pertains to those activities through which an organization’s leadership articulates its mission, vision, and values.  From this foundation, boards of trustees/governors can then plan strategically, monitor implementation, and evaluate performance.  From time to time, governance also involves preparing and revising articles of incorporation and by-laws and establishing or reorganizing structures.