Episode #14: Understanding the Goal of Nonprofit Organizations

Updated: Apr 15, 2020

In this episode, I discuss some of the common myths and misconceptions regarding nonprofit organizations compared to for-profit businesses. I encourage you to investigate truths instead of accepting some of the common myths that surround the topic of nonprofit organizations to gain a deeper understanding for your own benefit. I also encourage you to explore career and volunteer opportunities within nonprofit organizations, as well as any ideas that you may have had regarding starting a new nonprofit organization to serve the population that you are passionate about helping.


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Included in this episode:

Distinction between nonprofit organization and for-profit organization

For profit companies have a goal of maximizing profits and passing those profits along to the owners and shareholders of the company.

Nonprofit organizations have no owners. They are governed by a board of directors or trustees. They focus on meeting the needs of society. The nonprofit organization is most interested in making sure that the revenue is greater than the costs of operation so that the nonprofit organization can best meet the needs of the population it serves.

Common Myth about Nonprofits: Nonprofit organizations can’t earn a profit

Nonprofits can and should try to achieve a level of positive income. However, they cannot distribute those profits to private investors like a for-profit company is able to do. Instead, any surplus is used to further the mission of the nonprofit organization (e.g. benefit the public or population it is serving).

Considering working for a nonprofit organization?

Sometimes there is misconception that nonprofits are less professional or less rigorous, but this can be true of both nonprofit organizations and for-profit businesses. Working for nonprofits organizations can be fast-paced and demanding, and you’re often multitasking.

Nonprofits are made up of paid professional staff and volunteers. Along with the more popular named nonprofits, like The American Red Cross, there are often many nonprofits around you that you deal with on a regular basis but just don’t realize that they are nonprofit organizations (e.g. credit unions, community and recreational centers).

If you are thinking about starting a nonprofit organization, I recommend the following tips:

  1. Do some research on your ideas

  • Investigate the different business designs and determine if a nonprofit is your best option

  1. Consider all of the legal requirements and steps for starting a nonprofit organization

  • It varies depending on your state

  • There are federal regulations as well

  1. Develop a fundraising plan

  2. Began to build a board of directors or trustees

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