The nonprofit sector is a thriving industry, full of driven individuals working hard to improve their communities and help others live better lives. Unfortunately, there are often misunderstandings about charities from outsiders looking in. The world of charitable giving can be easily misconstrued, so nonprofit organizations need to recognize these myths and swiftly debunk them.
Myth: The nonprofit industry is oversaturated with organizations.
Fact: No, it isn’t. There are not too many nonprofits.
As Social Velocity astutely pointed out, there seems to be an endless amount of tech start-ups today, but it’s often the nonprofit sector that people consider overpopulated. This sentiment is likely based on the idea that many charities are competing for limited resources. It’s hard to achieve desired results with insufficient funding and many organizations feel like they have to compete with each other to meet goals. Sometimes, though rarely, organizations can combine forces and pool their resources, though this also takes money and time. If it seems like a charity is struggling to make a name for itself, it should take a good look at its core competencies and where it fits into the community. What problems is the organization solving and how innovative is its approach? This will help the nonprofit stand out in the crowd.
Myth: Nonprofits don’t really make money, and the funding they do accrue should only be spent on their mission.
Fact: Nonprofits sell goods and services to make money so they can invest in their futures.
First of all, every nonprofit should have a financial model that it can follow to ensure funds are spent on both the mission and overhead costs appropriately. Second, it’s not unusual for a charity to sell goods and services to finance their work. Wire Media pointed out the fact that Girl Scouts fund most of their activities by selling cookies every year.
The cost of overhead includes staff salaries, office space rent, basic supplies, benefits, and investments that ensure the continued growth of the organization over time. The economy is rarely, if ever, stable and predictable. A nonprofit, just like a for-profit business, needs cushioning to support itself if necessary. Plus, when a charity can offer more competitive salaries to employees, it’s able to recruit better staff with more training and experience in the nonprofit sector. This will eventually lead to a more efficient and well-run organization.
Myth: Nonprofits do not contribute to the economy.
Fact: Nonprofits play a large role in a healthy economy.
Between 2001 and 2011, the nonprofit sector grew 25 percent, based on a study completed by the Urban Land Institute. In that same time frame, the for-profit business industry only grew half of a percent. Today charitable institutions employ 10 percent of the U.S. workforce and makeup 5 percent of the GDP. Donations to nonprofit organizations are also investments into the betterment of society and help improve living conditions for many people in this country, not to mention around the world. Also, tax-deductible donations help this industry grow, which in turn adds fuel to the economy as a whole.
Myth: Working for a nonprofit is more like an internship than a career.
Fact: Working for a nonprofit is rewarding, educational, and requires excellent business skills.
It’s often said that nonprofits have trouble recruiting and hiring the best talent because they cannot offer competitive salaries or prestigious titles. The truth of the matter is that while compensation certainly will be less than that of a large corporation’s CEO, working for a nonprofit does not mean taking a step backward on a career path. In fact, nonprofits provide more opportunities for employees to work their way to the top of an organization and take on leadership roles sooner. It’s hard for entry-level workers at big for-profit enterprises to meet the company’s top executives, but as the Case Foundation noted, at nonprofits, the hierarchies are much less rigid and workers from all levels are participating in various capacities. Skill sets grow and change incredibly quickly, as employees have to take on multiple roles and perform many different tasks. Nonprofits also hire interesting, driven individuals who have the opportunity to actually change the world every day. Not many people can say that about their day job.
Myth: Nonprofits are inefficient.
Fact: With the right tools, nonprofits can run smoothly and resourcefully.
It’s certainly difficult to measure impact when it comes to nonprofits. Issues like poverty and homelessness are tricky to monitor. However, rather than comparing this attribute to the for-profit world, which is like comparing apples and oranges, nonprofits should invest in tools that better help them track the effect they have on their community. With donation management software, charities can develop a more reliable understanding of how well they are meeting their mission and goals, where their spending efforts are making the most difference, and what areas need improvement. It’s a strategic investment that all organizations can benefit from. That’s certainly no myth.