People who work in the nonprofit sector are constantly coming up against the same misconceptions time and time again. It could be an overshared Facebook post or during a conversation with a friend, but as we come up on peak giving season, donâ€™t be a sucker. Do your research and educate yourself on the misconceptions.
These misconceptions spread the same way as any other myth. Often, people share information with their networks because they heard or saw something and believed it to be true.Â But, for the people who choose to spend their professional careers within the sector, it’s exhausting or even insulting to hear the same misconceptions over and over again.
1) â€œI donâ€™t donate to ____, because I want my money to go to the cause.â€
â€œI donâ€™t donate to ___, because they pay their CEO millions of dollars!â€
â€œWe donâ€™t donate to ___, because only 5% of our money actually goes to help the people who need it!â€
We hear the same outraged line about different charities throughout the year. Occasionally, itâ€™s said in a slightly different way, but the statements basically mean the same thing. We donâ€™t want to fund overhead.
The overhead myth is the belief that monitoring the percent of expenses that go to operating, administrative, and fundraising costs is an accurate measure of performance. But, it is only that, a myth.
While transparency is important in both the nonprofit and for-profit sectors, it is important to recognize that â€œoverheadâ€ is an arbitrary measurement of success. And, success is whatâ€™s important. Creating impact.
Simply put, the impact an organization has on their mission will be far greater if theyâ€™re able to pay their staff and administrative costs.
This issue is an ongoing discussion and is heavily discussed. So, if you want to learn more about why itâ€™s important to pay for nonprofits to keep the lights on, pay their staff, or invest in more fundraising, I highly recommend you check out Dan Pallottaâ€™s Ted Talk.
2.) â€œYou get paid? I thought you worked at a nonprofit!â€
Personally, I find this to be one of the most frustrating misconceptions. This is because many of the positions that exist are already significantly underpaid. But, that’s an entirely different topic that the Ted Talk above also covers.Â
Within nonprofits the people who contribute their time and talents for free are volunteers. Volunteer positions can be as complex as any staff position, but they are unpaid. And, the people who fill those positions are volunteering. Studies show that volunteering has amazing benefits, but when people refer to the â€œnonprofitâ€ where they work, they can and should make money.
Nonprofits have staff positions as vastly different and dynamic as those that exist within the for-profit sector. And, the use of the word â€œnonprofitâ€ simply refers to the organizationâ€™s definition under the IRS. It does not mean that an employee wonâ€™t make a wage.
To help clear up any additional confusion, letâ€™s discuss nonprofits.
What is a Nonprofit Organization?
A nonprofit organization is an entity in which the profits and earnings are not distributed to private shareholders or individuals.
There are many different 501(c) divisions. But, most commonly, the nonprofit organizations that you see and hear about fall under the Internal Revenue Code 501(c)(3). These organizationsÂ provide a public benefit. And, more commonly referred to as charitable organizations or charities, they do not serve private interests.
The IRS tax code,Â also, restricts these organizations in the scope and amount of political and legislative/lobbying activities they are able to conduct.
Mia is an impact-driven consultant who partners with nonprofits and cause-driven businesses to grow their impact. She believes in their power and ability to solve the most challenging problems and is committed to giving them the support they need.