Non-Profits Can’t Make Profits | A Challenge: Rethink to see the bigger picture


Working with non-profit leaders is rewarding and invigorating. It feeds my soul.

These are my people. They are driven by their hearts and are passionate about serving others. We share many of the same values.

Over the two decades (oops, I think that is creeping up on three now) that I’ve been working with non-profits, I’ve noticed that they are focused on serving those who mostneed their help. As a result, they can fail to see the bigger picture: that their services are of value to the wider community.

In a time when most strategic plans weave sustainability into long-term goals, this tunnel vision of only serving those who need their service most is harmful.

I believe it’s time for a shift in the conversation. The focus needs to shift from serving only the needs of the most vulnerable sector to balancing the needs of our traditional clients with those who are willing to “pay” to access the heart-centred and often more personalized service that these non-profits specialize in.

As I write this, I can hear the comments that I’ve gotten in the past when I’ve suggested this mindset shift:

  • “That’s not who we serve.”

  • “Why would people pay (or pay more) for our services?”

  • “We aren’t in it for the profits.”

To those questions, I ask, “Why not?”

  • Why do all non-profit programs need to be run on a cost-recovery basis?

  • Why do so many non-profit leaders and workers have an adverse reaction to profits within non-profits?

According to the Government of Canada website:[1]

A non-profit organization (NPO) is a club, society, or association that's organized and operated solely for: social welfare, civic improvement, pleasure or recreation, any other purpose except profit.

As one can imagine the final statement “any other purpose except profit” is where non-profit leaders get stuck. However, when one examines how profit is defined, it’s easy to challenge the common mindset that non-profits can’t make a profit.

The term “profit” is linked to personal gain—where one individual receives the benefit of what is left over after all costs are covered. However, a non-profit can stay true to its mandate and re-invest what it earns into administration, new program development, more “free or subsidized” program seats without making a profit.

It is simply re-investing its earnings in meeting the needs of those who need it most, and making smart “business” decisions. Often, to ensure compliance, non-profits establish “social enterprises” to funnel the “profits” through.

And yes, I used the term “business” in reference to non-profits. At the end of the day, all non-profits are businesses. They are simply businesses with a social mandate, a desire help clients’ live fulfilling lives, and a need to become sustainable.

So a non-profit might want to ask themselves this:

If, as a non-profit leader, you were to shift your perspective in relation to profits and how profits can help you achieve organizational goals,

  • What might you do differently within your marketing? programs? operations?

  • How might you use the profits to better support your organization’s vision and mission?

I challenge you (and your team) to ponder these questions and to play with this new vision of “profits” and see how it impacts your sustainability.

After all, with the increasing competition for funding, more constricting contract parameters, and more detailed reporting requirements, wouldn’t it be great to have some income that you could re-invest in your organization without being told how it must be used?

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[1]Government of Canada website <https://www.canada.ca/en/revenue-agency/services/tax/non-profit-organizations.html> Accessed: July 20, 2018

#conversation #LessonsLearned #MakingChoices #growingbusiness

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