Organisational culture is the foundation that shapes how people work, interact, and commit to a shared mission—yet in many for-purpose (aka NFP) organisations, it is more an afterthought than a strategic priority. Culture is not built through mission statements, vision workshops, or the occasional staff retreat; it is embedded in everyday behaviours, leadership decisions, and accountability structures. When culture deteriorates, no amount of rebranding, values posters, or employee engagement surveys can reverse the damage. True cultural transformation requires confronting uncomfortable truths about leadership, governance, and the systemic habits that keep organisations stuck. However, when leadership fails to provide direction, financial discipline, and accountability, there is invariably one result: poor staff sentiment.
Left unchecked, negative sentiment within an organisation leads to talent attrition, declining efficiency, and reputational damage. In extreme cases, the whole enterprise can unravel in a spectacular mix of social media scandals and legal entanglements. Faced with this, some leaders double down on the wishful thinking that employees will somehow self-organise their way out of a leadership failure. Spoiler alert: they won't.
For these reasons, rebuilding organisational culture in NFPs presents a unique challenge: leaders must balance mission-driven passion with financial pragmatism, all while fostering a workplace environment that attracts and retains competent professionals. Unlike their for-profit counterparts, NFPs often operate with constrained budgets, complex stakeholder demands, and a high degree of emotional investment from employees. The result is an organisational culture that, if poorly managed, can become a liability rather than an asset. This article examines some of the core challenges facing NFPs in cultural reconstruction, drawing on research from business ethics, organisational behaviour, and leadership studies.
I prefer for-purpose over not-for-profit (NFP) as it better reflects these organisations' mission-driven nature. Unlike the misleading implication that they cannot generate profit, for-purpose entities can and should make a profit—they just reinvest it into their social purpose initiatives rather than distributing it to stakeholders. This financial sustainability ensures long-term impact. However, since NFP is the more widely used term, I will use it throughout this article for clarity while acknowledging its limitations in capturing the sector's true purpose.The Accountability Deficit
One of the most significant cultural issues in NFPs is a pervasive lack of accountability at the leadership level. While accountability mechanisms in for-profit enterprises are reinforced by profit motives and shareholder pressures, NFPs often rely on self-regulation and governance structures that can be ineffective. Boards of directors, typically composed of well-meaning volunteers, may lack the expertise or willingness to challenge ineffective executives.
Furthermore, the sector's reliance on grant funding creates a perverse incentive structure. Leaders are often judged on their ability to secure funding rather than their effectiveness in executing the organisation's mission. This has led to a culture where maintaining donor confidence takes precedence over addressing internal inefficiencies. When success is measured by money raised rather than outcomes achieved, misaligned priorities can erode organisational integrity.
The Passion Problem
Passion for a cause is often heralded as the driving force behind NFPs, but it can also be a double-edged sword. The assumption that employees will accept lower pay and subpar working conditions in exchange for a sense of purpose has led to widespread burnout in the sector. While for-profit businesses compete for talent with market-driven compensation and career progression, NFPs often rely on intrinsic motivation alone. Over time, this leads to disillusionment, particularly when employees witness managerial inefficiency and profound lack of accountability in senior leadership circles.
Moreover, when passion eclipses pragmatism, decision-making can become irrational. Research has demonstrated that organisations with high levels of emotional investment from employees often struggle with critical self-evaluation. Leaders who believe too strongly in the moral righteousness of their mission may resist change, dismiss criticism, and reject necessary but unpopular reforms.
This phenomenon is compounded by the tendency of NFPs to develop insular sub-cultures where dissent is not tolerated. Employees who question leadership decisions risk being labelled as not being committed enough to the cause. As a result, organisational inertia sets in, and the very mission that initially inspired employees becomes a source of frustration.
Leadership, Governance, and the Competency Gap
Another fundamental challenge in rebuilding organisational culture in NFPs is the prevalence of under qualified leadership. While the for profit sector is far from perfect, with people appointed based on prior job title rather than situational capability, NFP leaders are often appointed based on their passion for the cause rather than managerial competence. Passion is undoubtedly important, but it is no substitute for strategic planning, operational efficiency, or financial acumen.
This lack of executive competency has real consequences. Studies show that ineffective leadership is one of the primary reasons for organisational decline—particularly in the NFP sector. Because weak leaders struggle to enforce accountability, develop coherent strategic plans, or make tough personnel decisions, they often resort to vague inspirational messaging and statements devoid of substantive policy.
Additionally, boards of directors—tasked with overseeing NFP leadership—are often ill-equipped to provide effective governance. As Karin Kreutzer and Claus Jacobs found, many NFP boards function more as ceremonial bodies—approving decisions rather than shaping them, leading to organisational inertia and weak cultural foundations— rather than fulfilling their role as an active governance structure. Furthermore, board members may lack the capabilities needed to challenge executive decisions or may be too socially intertwined with leadership to enforce meaningful oversight.
In short, tone may be set from the top, but without competency, capability, and clear accountability, that tone will sound a discordant note with stakeholders.
Fixing a Culture Without Breaking the Organisation
Despite these challenges, cultural renewal in NFPs is possible—but it requires a deliberate and often uncomfortable process of reform. First and foremost, leadership competency must be prioritised over ideological commitment. Hiring practices should emphasise managerial skills and experience rather than passion alone. Successful organisations are built on a balance of idealism and realism; neither can exist without the other.
Second, accountability structures must be strengthened. This includes empowering boards to actively oversee executives, implementing transparent performance metrics, and fostering a workplace environment where dissent is not penalised but encouraged.
It is crucial to emphasize oversight—not management or meddling in daily operations. A board that overreaches into operational matters not only frustrates executives and undermines the CEO but also creates unnecessary friction among directors who should be focused on governance, not execution. When directors start playing at management, they're no longer steering the ship—they're in the engine room causing chaos. The board's role is to govern, not operate. For a deeper exploration of this distinction, see The Three Hats of Governance.Lastly, players in the sector must abandon the myth that passion alone can sustain an organisation. Employees must be compensated fairly, given clear career progression opportunities, and supported by leaders who understand that commitment to a cause does not preclude operational efficiency or delivering a profit which can be reinvested in the social mission of the organisation.
Rebuilding organisational culture is not an easy task, but for those willing to confront the entrenched weaknesses of the NFP sector, the rewards are substantial: more effective organisations, a more engaged workforce, and, ultimately, a greater impact on the communities they serve.
Good night, and good luck.
