April 12, 2017 - Blog 1
Myth vs. Truth: Nonprofits Can Be Profitable
A Blog from the Series: Breaking the Poverty Mentality, Nonprofits Can Be Profitable
By Denise Lawrence, CEO, Charity Consultants
Calling any business a nonprofit is perhaps a set-up for failure. I prefer to call organizations that are developed to help people by the more positive name of charities. I believe that you are what you say you are and if I say I am a nonprofit then it is so easy to fall into a poverty mentality - a place of less or not profitable. In January 2017, I hit a major milestone of 30 years of working in the charitable industry. Sadly, I have worked with more charities over the years who operate from a poverty mentality than those who operate from a place of abundance. Whether the money in the bank is enough or not - thinking that its okay to not have enough is the issue. It's better to walk in expectation that your situation will and must change because you have work to do that is bigger than your bank statement than is is to walk in the expectation that being in lack is the norm.
My goal over the next few years, as I prepare for retirement, is to shatter the myth that because a business is a nonprofit that it should have limited resources. The truth is: nothing in the IRS code that governs and legally directs a charity says it can't end the month or the year in the black, with reserve funds and investments to protect it during down economic times or to prepare it for growth. So, why do we hear phrases from nonprofit Executive Directors and Board members such as: "We just don't have enough money to pay you what you are worth. You know we are a nonprofit." Hogwash.
This phrase and its many versions occur because it is deeply rooted in habits propelled by its very beginning. Nonprofits came about during the great depression when wealthy people looked for a way to help the poor and help themselves - the 501(c)(3) tax code was the result. The wealthy gave just enough to help and not necessarily transform the situation of the poor. The organizations learned early on to make do with what they had and the saga took hold.
Staff turnover continues to be an ongoing problem of charities today. The number one reasons are low pay and overwork, which is perpetuated by low-pay and not enough people. If anything else, nonprofits should pay their staff what they are worth because people are one of the most critical assets to making a nonprofit's mission successful. Those valuable staff serve the people and meet the needs of the community. Unlike other businesses, where a product is designed, packaged and sold to make a consumer's life easier or more entertaining, nonprofits rely on the hearts, hands and intentions of its people.
All of this is really preaching to the choir. I haven't met a nonprofit executive yet who wanted to just make do. What I hope to do is share ideas, tools and opportunities to shift thinking and application into profit-centered charitable practices. It will require some hard choices like initial budget and service cuts, and new processes like cash-flow projections, investment choices and increased fundraising budgets. But, through dedication and commitment - an abundant expectations - the industry can be transformed.
Through this blog series, I hope to create an exchange of ideas and testimonies to keep an active discussion going and the realization of real profitable changes. Give us your feedback at email@example.com. Stay tuned!
CEO, Charity Consultants, Inc.
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