Key Strategic Leadership Action 1: Determining Strategic Direction
Both leaders set clear directions for NKF which were communicated consistently throughout the organization. Durai defined NKF's role as providing a “full-fledged renal programme - prevention, early detection and intervention.” He believed that in order to achieve this goal, NKF needed to “raise $100 million in the next 10 years”. While it is important for an organization, whether profit or not-for-profit, to generate profits and be economically sustainable, Durai made “profit maximization its primary objective and moved the NKF further away from its altruistic aims”. As a result of Durai’s strategic direction, patients were treated like customers and not given greater subsidies since that would eat into NKF’s profits. Durai’s strategic direction was flawed as he was using a market-based approach in the context of a charity. As a charity, NKF’s main priority should not be to maximize profits, but to be accountable to donors and improve the wellbeing of patients under its charge. It also owes a fiduciary duty to its donors since they are funding the organization.
A key difference between a for-profit organization and a not-for-profit is that for commercial organizations, the company delivers a product or service in exchange for cash. At which point the company’s obligations usually end and the company is free to spend the proceeds for its business purposes. In a not-for-profit, the organization’s obligations do not end at point of donation. In fact, charities can be viewed as a trustee of donors’ money, where they have a duty to ensure that the donations have the maximum impact on the charity’s beneficiaries. Since a charity’s obligation does not end at the point of sale, charities have a duty to donors to ensure