Misconceptions about nonprofit

Correct your Misconceptions about Nonprofit

Five Points You need to know about Nonprofit and How it is associated with Profit

Planning to Start a Nonprofit Organization? Know these points first

I’ve heard some fake news as of late about nonprofits, and I want to educate you on the literal cash in your nonprofit.

Let’s talk about nonprofits and about the thing that nobody wants to talk about when discussing nonprofits, and that’s profit itself.

This isn’t about organizing your 501 (c), how to find board members, how to incorporate tax filings or your IRS paperwork. I’m not getting into all that because I’m not a tax advisor, a lawyer, or a lobbyist. Although, if you do open or start a nonprofit, I recommend you have all of those in your back pocket.

I will discuss the information that’s floating around about a nonprofit profiting, and what that means to your organization.

With one of my businesses, My Business Buddy, I have casual yet targeted coaching conversations with entrepreneurs and soon-to-be entrepreneurs trying to start a business. We discuss reaching their goals, increasing their reach, scaling, income, starting over, and recently speaking with the client who wanted to start a nonprofit.

She wanted to help the disadvantaged youth in her neighborhood and wanted to do so by starting a community garden. It was a great idea and I loved it! What I didn’t love however, was her focus on not making a profit. It came up multiple times.

She was worried. She was nervous. She was making comments that she didn’t want to take a salary. She didn’t want to hire anyone. She only wanted to have volunteers and no one would be on payroll. She even thought she knew what pro bono meant, which she didn’t.

She was wrong, because pro bono is when a professional offers their service for a free or reduced rate. If she did have volunteers for this business she wanted to start, they would be working pro bono. If she needed to start her organization and needed it to be a fully running business, she can’t do that pro bono.

I’m telling you all of this because it wasn’t the first time. I’m sure it’s not going to be the last time that I hear someone confuse nonprofit status with not making any profit. 

Look at your average megachurch. That’s a nonprofit organization. Does that look like it’s not making any profit?


So, let’s break down the five points you need to know about starting your own nonprofit and making some profit along with it. Let’s get one thing out of the way, there’s nothing wrong with making a profit. There’s nothing nasty about it. There’s nothing we should shy away from, even in a nonprofit status.

Don’t confuse your mission with money. The two have to go together, but they don’t have to get all jumbled up and make you feel bad.

1. Income

First, let’s talk about income. You can, should, and must have income in any business.

Your nonprofit must make a profit to remain solvent and be sustainable. No business can thrive without it. If your expenses exceed your revenue, then you have no profit, and your business will fail, even in it’s a nonprofit status.

In a nonprofit, that profit can come in the form of donors and grants, but it can also come in revenue because you will be buying and selling services or products. That’s going to create revenue, which is going to make income, which should generate profit.

2. For the benefit of the Public

Second, your nonprofit must be for the benefit of the public and not private interests.

However, private interest doesn’t mean paying yourself a salary and paying the people that work for this salary. Those are private individuals, but they’re working in support of your nonprofit, so they need to get paid.

3. You should take a salary.

Third, let’s talk about salary. You can and should take a salary.

If you really want to give your all and you want to hire people that are giving their all, you have to pay them a living wage and something that keeps them there.

The best of the best aren’t going to join your organization if you’re not paying anything. Pro bono sounds nice, but it doesn’t pay the bills and it doesn’t keep the good people around.

4. Operating costs

Fourth, operating costs. You will have operating expenses.

No business can run without this. Your utility bills, your expenses, your phone bills, your electricity, your leases, your equipment, all of these cost something, and will be the operating costs.

How will you pay those operating costs if you’re not bringing in any revenue or income? 

That is the point of having profit, so you can pay for those things. You should have a substantial amount of profit so that if you hit a bad patch, you can still forward your company along through those hard times.

5. You are selling something.

Finally, the fifth, no matter what your nonprofit organization is, you are selling something.

Even if it’s yourself, even if it’s the idea, even if it’s the mission, even if it’s the passion, you’re still selling it. If you want donors to donate tens, hundreds, thousands,  you have to sell yourself to them.

They have to believe in your organization, so they’re buying your dream. They’re buying the mission. They’re buying the passion. 

The woman I mentioned earlier wants to open up her garden. She can sell the fruits and vegetables that aren’t used and give those out to the community at the farmers market, helping sustain the business.

You see how My Business Buddy works? I help give you those kinds of ideas.

Don’t be afraid to sell and don’t be scared to talk about it even when you’re talking about your nonprofit.  

Now let’s go to the other side real quick. Let’s talk about for-profit companies that are doing charitable things. A few examples of this are Bombas socks, Tom shoes, Fig scrubs, all three of those companies run a get one give one mentality.

You buy one of their items, they give one away to someone in need, a country in need, a social-economic class in need, etc. They are giving away half of their earnings, half of their product, half of their revenue to charity. However, they’re still a profit organization and for a profit organization they’re doing wonderful things. They’re not afraid to be for-profit and even live their charitable mission.

Why do you want to start a nonprofit? Maybe it’s just for the tax status? That’s really all nonprofit is. 501 (c) is the tax status.

Think about your why. Find your why.

When you’re opening this or starting this nonprofit, get back to the root if you want to do great things. You can still do great things in a for-profit organization. 

Know your why. Know your mission. Know your passion. Know what’s driving your decisions and know that all those things align with reality.

Don’t make up stories. Read about it. Learn about it. 

I want to help pull you along. I want you to reach your exponential greatness.

Invest in yourself just one percent a day, and you’ll have phenomenal results at the end of the year.