Saturday, September 26, 2009

Fundraising & Nonprofits = Business

When just "doing good" does "nobody" any "good"

by Dr. Stephen L. Goldstein,

"The Fundraising Guru"

Before I say anything about people who do nonprofits no good, let me underscore how much I respect the many men, women, and even children who give tirelessly of their time, money, and energy to help worthy organizations and their causes. The world is undoubtedly a better place because they are enlightened--empathetic--enough to think and act beyond their own personal interests and work for the greater good. I can't imagine where we would be without such individuals.

That said, I am genuinely troubled by a persistent mantra that I hear from too many people who work, volunteer, and fundraise for nonprofits: It's that they occupy some rarefied air, above the dog-eat-dog world of business, where high-minded ideals prevail. Recently, someone involved with a community organization told me that her friends "are more spiritual oriented and less business oriented" and that she's "not interested in doing business anymore," which is presumably why she's involved with a nonprofit.

I told her a truth she probably didn't want to hear: You cannot excape doing business; it is not a dirty word. Community organizations doing good must operate like businesses, for without a steady flow of money, they will not survive.

Unfortunately, she's not alone in thinking unrealistically. The first question I ask participants in my workshops is: What is a nonprofit? And invariably, people answer with variations on the same theme--that it's an organization that works for the common good. In an incredible number of instances, people say that "it's an organization that, because of what it does, cannot make money."

Eek! That response sends me up a tree. At that point, I pass out copies of the IRS regulations on 501(c)3 charitable organizations. I've underlined the section dealing with surplus funds. It's then for the first time that it registers on some people that their organization(s) may indeed "make" money. But what distinguishes them from for-profit businesses is that excess funds are reinvested in the organization, not distributed to shareholders or owners. In other words, there's absolutely no escape: Nonprofits are businesses.

Dr. Stephen L. Goldstein's websites are:

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