Defining the mission and primary outcome of a non-profit can be difficult. For there is no universal, specifically measurable bottom-line such as profit.

In his Managing the Nonprofit Organization, Peter Drucker actually provides a good measure of clarity to help overcome this challenge:

[The distinguishing feature common to nonprofits] is not that these institutions are “non-profit,” that is, that they are not businesses. It is also not that they are “non-governmental.” It is that they do something very different from either business or government. Business supplies, either goods or services. Government controls.

A business has has discharged its task when the customer buys the product, pays for it, and is satisfied with it. Government has discharged its function when its policies are effective. The “non-profit” institution neither supplies goods or services or controls. Its “product” is neither a pair of shoes nor an effective regulation. Its product is a changed human being. The non-profit institutions are human-change agents. Their “product” is a cured patient, a child that learns, a young man or woman grown into a self-respecting adult; a changed human life altogether.

From Peter Drucker’s Managing the Nonprofit Organization:

The most common question asked me by non-profit executives is: What are the qualities of a leader? The question seems to assume that leadership is something you learn in charm school. But it also assumes that leadership by itself is enough, that it’s an end. And that’s misleadership.

The leader who basically focuses on himself or herself is going to mislead. The three most charismatic leaders in this century inflicted more suffering on the human race than almost any other trio in history: Hitler, Stalin, Mao. What matters is not the leaders charisma. What matters is the leader’s mission.

Therefore, the first job of the leader is to think through and define the mission of the institution.

Nancy Lublin, CEO of the non-profit Do Something, has a good column on overhead in the latest Fast Company. I’ve turned the article into the following series of questions and answers.

Why are people so concerned about overhead?

The first question many people ask me, truly, is, “How much do you spend on overhead?” That means expenses not directly related to a group’s programs, including office rent and the electric bill. Givers want to know that we’re not spending much money on this stuff, that most of their donations go to “program-related activity.”

The assumption is that when 99% of your expenses go to programs, you are fantastic. Not-for-profits proudly proclaim, “95% of our expenses go to programs fighting poverty!” as if they’re a gazillion times more effective than those that spend a pathetic 85%. Web sites that track not-for-profit financials perpetuate the “overhead is evil” myth by lauding groups that curtail it. Perhaps they think overhead is an espresso machine. Or a new jet. Or art on our walls. (Whoops! Then we’d be a bank.)

Why does overhead taken by itself lead to a distorted picture?

Low overhead doesn’t necessarily mean an organization is awesome at fighting poverty, or that its turnover is low and its people productive. And it certainly doesn’t guarantee that the group is spending wisely.

What are examples of good overhead expenditures?

Let’s take an example from the for-profit world, which isn’t so squeamish about overhead. According to Apple’s Q4 2008 report, 78% of its expenses were sales, general, and administrative — the corporate equivalent of overhead. Seventy-eight percent! Yet nobody flinches. Keep spending, Steve Jobs! Your products rock!

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Here’s a case study from my own organization. Last year, we spent nearly $200,000 overhauling our Web site, from the content-management system to the architecture to the design. No one likes such expenses on the books: They smell like overhead. But our site no longer crashes, traffic has doubled, and we even won a Webby Award.

But some overhead is bad, right?

Obviously, not all overhead is good. I know one not-for-profit executive who flies only first class, stays in suites at the W, and has a car service schlep him around New York whenever he’s there. This guy has an overhead problem.

So what’s your main point? What should we be concerned about more than overhead?

My point: Stop obsessing about overhead. You can’t assess an organization on one statistic. Instead, focus on effectiveness. That’s a harder story to tell and a trickier thing to measure. But that effort is what everyone ultimately wants — a good investment.

In sum: There is indeed such a thing as bad overhead, and organizations should be as efficient as possible. But efficiency does not equal effectiveness. We should be concerned first and foremost about effectiveness. Focusing too much on “overhead expense” too easily rewards behaviors which may appear efficient on the surface but in actuality decrease effectiveness because they undermine the engines of growth and bold action.

Michael Gilbert had a helpful article last spring in Nonprofit Online News called Playing it Safe is a Trap: Five Syndromes in Online Marketing.

That’s a great title, and I’d say the concept applies to much of work and life — not just nonprofits and online marketing.

His five points in the article are:

1. Seeking safety in best practices
2. Seeking safety in the wrong metrics
3. Seeking safety in self-promotion
4. Seeking safety in cautious language
5. Seeking safety in control

Here are a few helpful excerpts:

When it comes to communicating with their current and prospective stakeholders online, nonprofits will often choose the path that feels the safest to them. They do this in regard to their methods, their metrics, their language, their content, and their management practices. I argue that such a choice is anything but safe and indeed is responsible for some of the most serious and common mistakes that a nonprofit can make.

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Ultimately, we seek to control things that needn’t be controlled, in our desire to avoid the uncertainties that come with the kind of communication practices that truly light a fire in people. Indeed, we are simply afraid to light that fire because at some point it will no longer be in our control. We set up time consuming approval processes, elaborate branding requirements, and many other mechanisms to ensure that the communication of our staff and our stakeholders all remains firmly managed. Even our notion of “viral marketing” tends to involve setting things up to encourage our stakeholders to do exactly what we tell them to do.

This is not the place to describe the alternatives to these fear avoidance tactics. (Indeed, I sometimes feel like all our other work is about such alternatives.) But it’s important to note that the alternative isn’t just random risk taking. That’s a straw man that we set up to justify our actions. The overarching alternative is simply to practice letting go, a bit at a time. The more we allow anxiety and fear to guide our decisions, the more power we give them and the harder it is to break free. Breaking these five patterns is a good place to start.