Nonprofit organizations occupy a unique position in the business world. Unlike for-profits, they tend to operate under a mission centered more on impact. However, this doesn’t mean that nonprofits and for-profits look nothing alike; in fact, they share plenty of similarities once people look beyond the surface.
Despite the availability of information on how nonprofits work, certain myths continue to circulate and persist. To help both insiders and outsiders gain more perspective, 14 Forbes Nonprofit Council members share one common misconception about nonprofit work they wish would stop being perpetuated and the truth of the matter.
Members pictured from left to right.
Photos courtesy of the individual members.1. Nonprofits operate differently from other businesses.
Individuals working in the nonprofit space are often driven by a passion to create change in the world. This leads people to think that nonprofits are to be managed and run differently than any other business. This could not be further from the truth. A real nonprofit should have the organizational management akin to the greatest companies in the world. - Yisrael Abisror, Daily Giving
2. Nonprofits are easier to run.
Running a nonprofit is very much the same as running a for-profit business; I would argue it is even harder. We are constantly managing resources and expenses, and although we may not have shareholders, we must generate a margin to create new programs that meet the needs of the communities we serve and have at least six months of expenses covered in the event of an unforeseen emergency. - Lisa Rusyniak, Goodwill Industries of the Chesapeake, Inc.
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3. Nonprofits are flush with resources.
It's commonly believed that nonprofits are large organizations flush with resources. The reality is that the majority of nonprofits are small organizations with small staffs that must compete for limited pools of resources from donors and grantors. An organization does not need to be large in order to be effective in achieving its mission, but it must have the resources necessary to do the work well. - Jose Luis Castro, Vital Strategies
4. Nonprofit staff should be paid minimally.
The most harmful misconceptions can come from our own leadership. There is an idea that staff should be paid minimally or are "overpaid" when compensated well. Investing in talent is mission-critical. As leaders in the industry, we must stop perpetuating this idea, invest in our teams and seek to reward their talent with adequate compensation. We need to be on par with other industries to succeed. - Jennifer Thompson, National Association of Social Workers New Jersey/Delaware
5. Nonprofits with lower overhead are better.
The misconception regarding overhead is illogical and harmful. Some organizations may have 5% overhead that reach few people and some that impact 10 times as many people with 30% overhead expenses. Somehow folks have been programmed to think 5% is better, yet the organization with higher overhead has a greater impact on lives. Let's reexamine the harmful myth around overhead. - Jono Anzalone, The Climate Initiative
6. Nonprofit employees are the same as volunteers.
Because many nonprofits rely on volunteers to assist in delivering their missions, a common perception is that nonprofit employees are also volunteers. In fact, these employees are no different than those at a for-profit. They are looking for and deserve professional development and growth opportunities as well as fair and attractive salaries and benefits. A shared vision can't be the only motivation. - Jessica Pelletier, FitMoney
7. Nonprofits focused on missions are low-quality.
Mission-driven nonprofits are misperceived as lesser than in almost every way—including quality of staff (who are thus paid less), financial rigor and the value of services. In fact, those of us working in nonprofits keenly understand a more-than mentality where dedicated staff members work longer hours at lower wages, maintain rigor over operations to ensure bottom lines and provide a more passionate delivery of services. - Deidre Lind, Mayor's Fund for Los Angeles
8. Nonprofits must all run in the same way.
One of the most surprising things to me coming into the nonprofit leadership space is the overall lack of openness to innovation. There is this huge misconception that all nonprofits have to be run in a similar way to be impactful. Most funding foundations put boxes around priorities, making it difficult for innovative leaders to show other ways of delivering impactful results. - Christopher Dipnarine, 4MyCiTy Inc.
9. Nonprofits don't have competitors.
Many believe nonprofits don't have competitors. That is the farthest from the truth, and it can be a challenging reality for nonprofit leaders. In order to compete, we must differentiate our work and stay different by not allowing funders to persuade us to do things that others seem to be doing better. The idea is to collaborate with complementary skills and assets rather than compete. - Joy Burkhard, 2020 Mom
10. Nonprofit employees can't make it in the real world.
A common misperception is that nonprofit staff could not make it in the real business world. Nothing could be further from the truth. Nonprofit teams are highly skilled, competent and often there because they care about being excellent in their career as leaders and changemakers. They also love having a social impact. - Maureen Sedonaen, Habitat for Humanity Greater San Francisco
11. Nonprofits should prioritize inputs over results.
For far too long, nonprofits have been perceived (and rightfully so) as organizations that prioritize inputs over results. Success was determined by prioritizing fidelity of the process. Successful nonprofits today are all about results and outcomes. To be good stewards of our dollars and to have the impact our supporters dream of, we have to prioritize impact or suffer the consequences. - Patrick Riccards, Driving Force Institute
12. Nonprofits have easy access to funding.
A common misconception is that nonprofit organizations that are doing impactful work can access funding easily. The process of accessing funding is a deliberate one that involves relationship building and an active process of searching and applying for grants. These efforts sum up to ensure that a nonprofit has enough grants to be able to run its interventions and truly make an impact. - Oladiwura Oladepo, Technology for Social Change and Development Initiative (Tech4Dev)
13. Nonprofits are not competitive.
One misconception is that the nonprofit sector is not competitive. In reality, nonprofits battle fiercely for media attention, recognition, funding and sponsorships in a world of scarce resources. Competition between groups with similar purposes can often work against the pursuit of a common mission, but it can also be healthy and a driving force behind the adoption of more successful initiatives. - Dr. Sherry McAllister, Foundation for Chiropractic Progress
14. Nonprofits aren't 'real' businesses.
One myth is that nonprofits aren’t “real" businesses. In reality, we have all the same business concerns, if not more, due to overhead restrictions like a 70% program to 30% administrative ratio. That ratio continues to be used as a measurement of impact and effectiveness, but it is outdated. For-profit companies use 100% of their resources towards running their businesses. It’s time for nonprofits to do so, too. - Dawn Reese, The Wooden Floor
