Nonprofits are an often misunderstood industry that falls under a large amount of scrutiny for the good work they do. If you are interested in running your own nonprofit, take a look at some of the most common myths about nonprofits and why they’re wrong.
- All nonprofits are the same.
Sure, with over 1.5 million nonprofit organizations in the United states alone, there can be only so many ‘unique’ social and educational outreach programs. But despite the many duplicates out there, they only scratch the surface of the nonprofits industry’s’ diversity. Not all of these organizations primarily make their money through fundraising either. You probably know of a few huge organizations that you didn’t even realize were nonprofit; some of these include IKEA, the NHL and the Greenbay Packers. Isn’t it shady that these obviously profitable organizations are classified as ‘nonprofit’? It’s no doubt a gray area, but some of organizations such as IKEA use it for good.
- Nonprofits don’t make money.
As you’ve seen in the last myth we busted, it’s pretty obvious you can make money as a nonprofit. So that we can focus on organizations dedicated to a helping a cause, we’re going to pretend companies which use ‘nonprofit’ as a tax loophole don’t exist.
A common misconception is that nonprofits aren’t allowed to make money because, well…it’s in the name. The reality is that these organizations are indeed allowed to make a profit, they’re just obligated to reinvest those earnings back into their organization. That’s not to say all of these organizations are swimming in revenue. The fact is that only 2.25% of nonprofits account for 90% of total nonprofit revenue.
- You get your hands dirty.
When the word ‘nonprofit’ comes to mind, we picture a busy soup kitchen or sports program for kids. While there are a lot of organizations for this model, there are many more which hire for jobs much like the private sector. As the industry with the third largest workforce, nonprofits hire all sorts of back-end jobs like accountants, web designers, HR staff, you name it. It just proves that you don’t need to be on the frontlines to make a difference.
- Foundations account for most of their funding.
Contrary to the belief that these organizations make biased decisions in order to secure some generous donations, foundations only account for 16% of total nonprofit revenue.
The majority of funding comes from individual donations totaling a whopping 72% of annual revenue. When raising money, It’s much more important to care about public opinion than score the favor of a few private and corporate foundations.
- Nonprofit careers are a graveyard.
Some might think of these organizations as the resting place for uninspired workers who aren’t sure what to do with themselves. The truth is that this industry has its own breed of professionals just like anywhere else. Nonprofits hire workers from many different areas of study and experience. Those who choose the nonprofit path are driven by their passion to work for something bigger than them and they enjoy the demanding challenges unique to this environment. And fun-fact, nonprofit job growth has been outpacing the private sector for years.
These are one of the few harmful misconceptions about the noble profession of working in nonprofits. It is a prosperous industry with plenty of job growth, talented professionals and a business model that is dedicated to work to help others.