A nonprofit organization requires a different managerial approach as is practiced in profit-oriented corporations. Probably the most important difference is the diverging notion of success. For most NPOs, success is not measured in numbers or revenue. Often, success is not directly measurable, since NPOs measure their success in impact and not in profit. Standing up to certain principles, for example, can be regarded as success, without requiring revolutionary developments, like in the fields of humanitarian help or environmental protection.
When it comes to controlling, the challenge is therefore developing measurements with which to measure success. While within NPOs, revenue streams also need to be monitored, specialist controlling is still much more important. The classic toolset of controlling therefore needs to be expanded to nonprofit organizations. This is the only way that the worth of its activities can truly be comprehended. The efficient use of the oftentimes sparse financial resources and workforce also play an important part.
Since many nonprofit organization members are not employed in their organizations, and instead work as volunteers and unpaid workers, the personnel policy is not able to fall back on bonus payouts and salary increases. Instead, the corporation must awaken the intrinsic motivation of its employees – for example by highlighting the social importance of the corporation.
In finance management, fundraising plays an essential role, since NPOs rely on donations and sponsors to stay above water, as opposed to profit-oriented corporations.