Implementing and switching towards Revenue Performance Management is very tricky, especially when it comes to non profit entities. Like profit maximizing corporate firms, nonprofit entities generate revenues too. These revenues are either in the form of donations or revenues generated from supporting communities. However, it is complicated to use revenues as performance management tool.
When a nonprofit entity is established, like any other organization it has a mission. However, unlike other organizations all income of nonprofit entities is not necessarily directly from mission related activities. There might be a number of support businesses that a nonprofit entity might be running. The revenue generated from those support businesses is incorporated in the nonprofit entities at large to scale up the organization, however, many of these support businesses might not be directly linked to the mission of the organization.
Say for example, a nonprofit art school can charge tuition fee from students in order to generate funds to educate and groom a new breed of artists and promotion of different forms of art. The art school may have a book store, an arts and craft supplies store and a cafeteria that also generate revenues. The school further holds various art exhibitions for which tickets are sold which further generate revenues. The art school in this case is generating revenues from a number of sources. However, not all of these supporting entities are directly related to the mission of the art school. For this reason it would be very tricky to use revenues to gauge the performance of the organization, although not impossible. In this case the core service and the target audience for non connected businesses such as the cafeteria are different and it will require a different set of resources. Managing a disconnected business along with a directly connected one can result in loss of focus for the non profit entity and the organization can have managerial efficiency issues.
While nonprofit leaders have the skills and expertise relevant to their respective fields, there are many areas where they lack the required acumen. For example when it comes to incorporating automation technology and integrating new models such as revenue performance systems, they may not have the required skills and expertise to ensure success. Moreover, in most cases there is a lot of resistance to change in such organizations as they are more comfortable in working with the old systems. It is therefore important that new knowledge workers are recruited and are given the creative freedom to integrate contemporary tools in the organizational structure and design. These knowledge workers acquire the right kind of expertise and acumen and be more responsive to change. It is critical the nonprofit leaders know exactly how the organization design and structure needs to be altered so that Revenue Performance Management can be incorporated in the organization.