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Monday, June 24, 2013

Those wonderful "profitable" nonprofits.

Profit is a four letter word, for some, in the world of non-profit management. However, the best non-profits businesses are profitable businesses that benefit the public, not private individuals.

They understand that there should be a large difference between the cost of supplying their social good and the value that both donors and the people they serve get out of it. This difference in cost and value is profit, and at least in those IRS fearing, and law abiding non-profits that "difference" doesn't profit individuals, but the public.

Great non-profits understand that they can make money and have surpluses, they can pay reasonable wages to their employees, and they can build a reasonable nest egg. They understand that their success and profit benefits the public, not their founder, donors, or private interests, and they can be successful. It seems silly to say this, but if non-profits can cut costs intelligently, spend money wisely, and create value from donations rather than be a middle man, they can benefit the public without being a charity case themselves.

It isn't about shaving (or gouging) money off the top of donations to line your pockets. It isn't about expecting unreasonable sacrifice from your employees (and making them donors or in need of help). It isn't about ignoring your business plan (and being unsustainable). It isn't a out expecting good will to mitigate fraud, abuse of power, personal wealth maximizing, or bad management (or to be a reason for illegal or immoral activity). It is about being greedy on the behalf of the public about doing good and being good. That greed should translate into good governance, transparency, discipline, profit for the public, and non-profit for those donors and founders.

Rather be smart on how you, the non-profit, use donations. Build an infrastructure that delivers value to the public by planning for lean or sporadic donation periods, and maximizes profit to the public no matter the circumstances. Make your non-profit scalable and adaptable. Plan for how you are going to get money (by donations) and sustain that flow of money. If you can cover your costs and have reasonable monetary profit a.k.a. surpluses, you can plan for a better future for the many, not just the few.

We help non-profits (and others) in business and employment matters. Tell us your problems, and you may be surprised how we can help you.