Years later, after having countless conversations with Board members, Executive Directors and even funders during which they express the belief that a ‘nonprofit’ is legally and morally obligated to refrain from making a profit, it’s a lot less funny.
The language we use to talk about our work sabotages our ability to create change and have impact.
To be clear: 501(c)3 organizations, commonly known as ‘nonprofits,’ are legally permitted to rack up as much profit as they’d like. The principle difference, legally, is that they must fulfill a mission that benefits the community and do not pay out investors or board members from their profits.
And yet the belief that nonprofits should aim for break-even budgets and refrain from generating surpluses or profits persists to the detriment of the entire sector.