Non-profits have been in the news lately. There are some myths with them we need to demolish. Number one: The myth that they don’t need to make a profit. They do. The difference is what they do with that profit. And the only difference with that, is when the organization ceases to exist. Non-profit’s, just like a business, goes out of business for one of two reasons. One being the owner decides to stop doing business and the other is they can’t afford to be in business any longer. IF a business goes out of business because, all money gotten form that sale goes to him/her. If a non-profit goes out of business, all money gotten from the sale of any property (buildings, land, office supplies, etc) has to be given away to another charity or non-profit. That is the only difference. A non-profit still has to make a profit if it wants to expand. It can pay employees any amount it wants, buy whatever it needs, or doesn’t really need but would like, just like a for-profit business. Yes not all non-profits pay employees. I happen to be the vice-president of a small community theater group. Nobody gets paid, we all are volunteers. Many of your small local non-profits work this way or maybe a few people who work there as their full time job get paid while most are volunteers giving some time when they can. I’m going to say it again. Non-profits need to make a profit and run just like any other business. THE ONLY DIFFERENCE IS WHERE THE MONEY GOES WHEN THEY GO OUT OF BUSINESS!!!
The next myth, is that all non-profits are automatically good and honest just because they are non-profits. WRONG!! Non-profits can be just as corrupt as for-profits. They can pay crazy salaries, buy overpriced things from friends, and do things for political reasons. The idea that dishonest people don’t do non-profits because they want to make a profit is crazy. I will argue that they can make more money as a non-profit because they don’t get scrutinized as much. Well, with the exception of right wing organizations the last few years.
There has been a lot of talk the last few years about non-profits not spending much on the actual cause because most of the money goes to administration costs. Up to 85%. And remember that is non taxed money. The idea for a non-profit is that it helps an organization that is trying to help people or do a public service. If they paid taxes they wouldn’t have enough money left to do any good. The theater I work with couldn’t make it if we had to pay taxes. (Now the argument about high taxes could come in here but i will leave that for another blog). Churches also fall into this category. Many will struggle to survive if the government takes away their tax exempt status. There is enough of an debate to be had about churches that i will save that for another blog also. The bottom line here is that non-profits, for to often, especially when they get too big, are not the good, honest and caring organization we automatically think they are. They need to be looked at closely. Often.