Non-Profits are Not Businesses

Posted on March 15, 2008. Filed under: Fundraising, Leadership, Non-profits | Tags: , , , , , , , , |

Non-profits are not businesses. That simple fact is being ignored in the vast majority of economic mumbo jumbo currently written about non-profits. Non-profits can, of course, be businesslike in their operations: they can have efficiently run organizations and a well-trained staff, and they can certainly deliver superior results.

Non-profits are not businesses in that people give money to non-profits with no possibility of getting it back. Donating to a charity is not the same as investing in the stock market or putting money in a savings account or money market fund.

Non-profits are not businesses in that people volunteer to work at non-profits. Volunteers at a non-profit are actually making a double contribution. Not only are they working for free, they pay a personal “opportunity cost,” missing out on money they could be earning and time they could spend elsewhere if they were not donating time and talent to the non-profit. Most importantly, for many non-profits, if the volunteers were not there to help deliver the services, the non-profit simply could not exist.

Non-profits are not businesses in that people care so passionately about the non-profit’s mission they willingly donate time, money and energy to help the charity succeed. When was the last time you went to your local supermarket and said, “Hi, I’m here to work for you for free, where do I start?” Or, “Since you only charged me $80 for my groceries, let me give you an additional $20 just because I’m glad you’re here.”

When you apply the norms of non-profits to businesses, it becomes immediately apparent that non-profits bear little resemblance to typical businesses.

Non-profits are not businesses in that they are more complex than businesses, needing to satisfy many more stakeholders and constituencies before they are able to say, “Yes, we are successful.” Businesses really only need to satisfy their owners (and their customers), and yes, of course, they need to operate within the law. It’s also true that many businesses are good corporate citizens and donate lots of money to various charities; indeed, some of the best encourage volunteerism in their employees, and I applaud all of them.

The point, however, is that non-profits are more complex entities than businesses, and have many more constituencies than owners or shareholders. Non-profits must also satisfy the community; their board of directors; their service recipients; their donors; their volunteers; and their professional staff. Some that provide services on behalf of government contracts have many additional sets of requirements for service delivery, reporting, and government auditing regulations for contractors. Non-profits must also meet the legal requirements of being a non-profit (as defined by law and IRS regulations).

Some of the current efforts to come up with the dollar value of donated time or count the hours that one donates cheapen the whole concept of the non-profit sector. These efforts are doomed to failure because they miss the fundamental point of “Why?” Why does someone volunteer? Why does someone give money? I believe that the short, truthful, and unifying answer for all donors and volunteers is the response, “I care!”

Donors and volunteers naturally want recognition, and to know that their gifts (monies or personal effort) are being used effectively; they may give more because of the tax codes at certain times of the year. But the first and fundamental response is always, “I care, that is why I give,” or “I care, that is why I donate my time to this great non-profit.”

That is to be absolutely applauded and celebrated, and it is one of the unique and unifying qualities of being an American. We are the most generous people on earth, with Americans giving more than $260 billion in 2005 according to Giving USA. That fact should be recognized, celebrated, and applauded.

What Do All Non-profits Share?

So if non-profits are not businesses, what are they? All non-profits share a common purpose, and it is actually a very simple concept. They exist to make their community and the world a better place. Now granted, the exact definition of what constitutes “a better place” is not easily agreed upon, and differs widely among these non-profits. That’s fine. There are more than 1.4 million non-profits in the United States, and there are probably 1.4 million different answers to that question. I have decided to not list all 1.4 million mission statements from these organizations, but even without having read all of them, if you look for the common ground you’ll see that they believe that accomplishing their mission would make the world a better place.

To learn more about the ways that workplace giving can promote the common good, as well as provide leadership development opportunities, please go to http://www.cfcfundraising.com and request my special report about the Combined Federal Campaign (CFC).

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    Fundraising and Leadership Development through workplace giving, CFC = Combined Federal Campaign

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