Rethinking the Nonprofit Model
Nonprofits have traditionally operated with a mindset of caution, focusing primarily on mission-driven work while avoiding financial risk. While this approach promotes stability, it often limits growth and long-term impact. On a recent episode of the Nonprofit MBA Podcast, host Stephen Halasnik, co-founder of Financing Solutions, discussed this topic with Barb Clapp, CEO of Dwyer Workforce Development. Together, they explored how nonprofits can grow faster by taking strategic risks similar to for-profit businesses.
For over 15 years, Financing Solutions has been the largest provider of lines of credit to small nonprofits across the United States. Lines of credit help organizations manage predictable ups and downs in cash flow. Halasnik explains, “If you think your cash flow is unusual, it is not. Many nonprofits experience fluctuations, and a line of credit can be a lifeline.”
Summary
Lessons Nonprofits Can Learn from For-Profit Businesses
Barb Clapp offers a unique point of view. Before founding her nonprofit, she spent 18 years leading a national communications company. The difference in risk tolerance between for-profit and nonprofit organizations was significant.
“This is where nonprofits can learn from for-profit strategies,” she says. “You have to be brave. You have nothing to lose if you start running it like a for-profit and thinking like a business leader.”
By adopting entrepreneurial thinking, nonprofits can pursue bigger opportunities, secure more funding, and expand their mission with greater confidence.
Taking Calculated Risks Instead of Avoiding Them
Many people believe that for-profit businesses take reckless risks, but Halasnik and Clapp explain that the opposite is true. Successful companies take calculated risks. They test new ideas, evaluate results, and pivot quickly when needed.
Nonprofits, however, often avoid revenue-generating opportunities because they fear failure or feel uncomfortable experimenting.
Clapp explains, “You have this product, this great idea. But how do you tell your story, who do you tell it to, and where will you get the biggest return.”
She emphasizes that fundraising is essentially a sales process. To take smart risks, nonprofits must:
Understand their product
Identify the right audience
Communicate clearly
Close by securing commitments and support
Why Revenue Generation Must Be a Core Priority
For both nonprofits and for-profit businesses, revenue generation is essential. Halasnik notes that the most successful nonprofit founders spend 90 to 95 percent of their time on fundraising, grants, partnerships, and revenue-related activities.
Organizations that avoid this responsibility often struggle even when their mission is compelling.
Clapp encourages nonprofit leaders to overcome any bias against for-profit behaviors. She explains that a nonprofit leader must think like a business owner to secure the funding needed to grow their mission.
Diversifying Funding to Reduce Risk
In the corporate world, no successful company relies on a single customer for more than ten percent of its revenue. Yet many nonprofits depend heavily on one donor or one grant. This concentration creates significant vulnerability.
Halasnik encourages nonprofits to diversify their funding sources to build stability and reduce financial risk. This includes cultivating multiple donors, expanding grant opportunities, and generating additional income streams.
Purpose-Driven Culture as a Competitive Advantage
Although nonprofits face challenges with revenue generation, they enjoy a powerful advantage that many for-profit companies do not. Their purpose-driven culture provides employees with a deep sense of purpose.
Clapp explains that her nonprofit staff, who train individuals for careers in healthcare, understand the impact they make every day. “Every one of those people comes to work knowing they are changing lives and that what they do has value.”
This culture strengthens morale, deepens engagement, and improves retention, making it easier for nonprofits to scale effectively.
Why Strong Communication Drives Growth
Communication plays a central role in both growth and fundraising. Nonprofits must clearly express their mission, values, and impact to donors, partners, and the media.
“Press brings opportunity,” Clapp says. Media coverage increases visibility, helps attract donors, and strengthens credibility.
Within the organization, clear communication reduces confusion, supports collaboration, and helps employees understand how their work ties to the mission. Strong communication also supports the mental and emotional clarity leaders need to guide their teams effectively.
Tracking Metrics to Support Better Decisions
Data-driven decision-making is just as essential in nonprofits as it is in for-profit companies. Halasnik recommends tracking two critical metrics:
Revenue growth
Employee retention
High turnover, particularly above ten percent, often signals cultural issues. Weak fundraising performance may indicate unclear messaging or poor positioning.
“Numbers help make decisions less subjective and more actionable,” Halasnik explains. Organizations that measure performance consistently see stronger fundraising outcomes, better retention, and more sustainable growth.
Leadership Development and Empowerment
Leadership growth is ongoing. Halasnik reflects on early challenges in his career and credits coaching, education, and intentional development for strengthening his skills.
Clapp notes that leadership also means empowering team members. “I do not have all the answers. You are in the trenches. Tell me what you think we should do.”
This collaborative approach sparks innovation, boosts morale, and increases ownership.
Scaling Operations Strategically
Nonprofits that grow quickly must shift from doing everything themselves to leading strategically. Halasnik notes that organizations approaching three million dollars in revenue often benefit from hiring managers to run operations. This allows leaders to focus on fundraising, partnerships, and long-term strategy.
Clapp shares that her organization has grown from zero to 48 employees across seven states and has supported 10,000 people pursuing healthcare careers in just three years. By setting ambitious goals and managing growth thoughtfully, nonprofits can scale their mission dramatically.
Final Thoughts: Why Taking Risks Helps Nonprofits Grow Faster
The conversation between Halasnik and Clapp reinforces a clear principle. Nonprofits can grow faster when they adopt proven for-profit strategies such as calculated risk-taking, revenue diversification, strategic communication, and leadership development.
Nonprofits already enjoy the advantage of a mission-driven culture. When combined with entrepreneurial thinking and smart risk-taking, the result is stronger financial stability and more profound community impact.
About The Experts
Barb Clapp is the CEO of the nonprofit Dwyer Workforce Development (DWD), which is disrupting the traditional approach to solving the healthcare workforce crisis and creating a new paradigm for healthcare workforce training. A successful entrepreneur and nationally recognized business leader, Barb has always been committed to giving a voice to the voiceless.
Stephen Halasnik is a Managing Partner at Financing Solutions, which is the largest provider of lines of credit to small nonprofits in 48 states since 2012. Mr. Halasnik has hosted the popular The Nonprofit MBA Podcast since 2018. The podcast brings experts together to discuss fundraising, nonprofit grants, executive director leadership, nonprofit boards, and other essential topics. You can learn more about the nonprofit line of credit program here or call 862-207-4118.
