Nonprofit Myth Busters
Who doesn’t like a story where you root for the brave woman or man to defeat the evil creature in a fairytale? But nonprofits are just like businesses where facts guide their journey to success.
Myth: a traditional story, usually with a hero on a quest, typically involving supernatural beings.
Fact: something that is known to be consistent with objective reality and can be proven to be true with evidence.
As much as it may seem like nonprofit professionals work magic against the evils of poverty, illness, and abuse, the reality is we are dedicated, experienced, hard-working individuals who are passionate about our work and believe that we can make a difference. Especially during our current economic landscape and the world-wide health pandemic, nonprofit professionals work without the benefit of superpowers or fancy capes.
As you consider starting a nonprofit or work to build your organization, here are a few myths and the real facts about the nonprofit world.
Myth: Nonprofits are easy to run; anyone can do it.
Fact: Running a nonprofit organization takes more than passion for the cause to be effective. Do you have a plan to achieve your goals? Have you taken care of the necessary applications and other paperwork required by the IRS and the State? What financial resources do you have at your disposal? The ability to raise money to support the programs that serve your community is imperative.
Myth: Nonprofits can’t make a profit.
Fact: A nonprofit status is a tax structure, not a business model. The difference between a nonprofit and a for profit organization is that a nonprofit may not distribute its “profits” (positive cash flow) to private individuals. Nonprofit charities are established to benefit the public in general, not private individuals.
Myth: Nonprofits should have low or no overhead costs.
Fact: This myth is rooted in an outdated belief that charities only serve the poor and therefore, should operate in poverty. Nonprofit organizations pay for utilities, rent, supplies, equipment, salaries and hopefully benefits for staff. Funders are starting to realize that a healthy, well-run nonprofit is more than an overhead ratio.
Myth: Staff should not be paid well or should be volunteers.
Fact: This myth goes hand-in-hand with the myth about low/no cost overhead. Yes, volunteer work is invaluable, but nonprofit organizations are complex and sophisticated organizations that require well-educated, well-trained professionals.
Myth: Fundraising is all about events and grants.
Fact: Research over decades tells us that donations from individuals are the biggest and most consistent source of funding for nonprofits. Private and corporate foundations rarely fund brand new nonprofits. They want to see a track record. They want to see support from individuals. The same is true for events; they take time to become big fundraisers. Successful events are well-attended events. You still need individuals to support your cause. People give to people and people give to people they trust to do the good work.
Myth: We need more nonprofits.
Fact: In 2018 the Center for Nonprofit Management (CNM) published The State of the Sector Report: North Texas Public Charities by the Numbers. Working with the North Central Texas Council of Governments, they identified 23,436 public charities in sixteen North Texas counties. This reflected a 26% increase since 2011. While we love to help new and emerging nonprofits, if you believe there are societal needs are not being met, please do your due diligence before creating a new nonprofit.
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching and fundraising services for our nonprofit clients. We specialize in startup and smaller nonprofits because we understand your challenges. Please contact us for more information.