Tax Status vs Business Model


Are you running your non-profit like a business? Because it is one!

This topic continues to be a hot topic among students, colleagues, and the nonprofit community and I decided I would take a minute to share about why non-profit is your tax id status and should not also be your business model.

Do you know anyone who would want their business model to encompass no profit?

I don’t.

If I knew my business would make no profit, or even generate a ‘balanced budget’ at the end of the year, I would no longer want my own business.

It has always blown my mind that there are still boards out there and directors of non-profit organizations who think the term non-profit means they can’t make a profit.

That is not what it means at all!

Elizabeth Brazas of the Community Foundation of Western NC said this:

I wish more non-profit folks would start grasping this concept and implementing diversified funding streams that would help sustain them and generate revenue to help them grow, build capacity and stay fully funded.

This is possible. Organizations are doing it every year and so can you!

Check out the following article How Is a Nonprofit Different from a For-Profit Business? Getting Beyond the Myths  | By Joanne Fritz.  I found this article and it spoke to all the points I wanted to make, so instead of reinventing this wheel, I’m sharing her article.

Hopefully, you have some great conversation starters within this article that will help you begin to change the culture of nonprofit budgeting and development planning, as well as the idea that tax id status should determine profitability. It would be great to see the creation of a stable and thriving non-profit sector. It is doable. But some of the myths that are still around need to be retired and more business-like structures need to emerge.

How do you think this concept could help you and your organization grow for good?

“It’s astonishing that one of the most frequent questions about forming a nonprofit comes from business owners who wonder if, since their business is not profitable, they can turn it into a nonprofit. The term “nonprofit” is unfortunate because it leads to a vast misunderstanding of what charitable organizations do, and the role they play in our society. It’s not about having or not having a profit.” – Joanne Fritz
Check out the whole article. It is excellent.  Click Here To Read More