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2018-12-20 21:01:12Not For ProfitEnglishJust like any industry, the not-for-profit (NFP) sector comes with a whole bunch of misconceptions attached to it. Since non-profits often...https://quickbooks.intuit.com/au/resources/au_qrc/uploads/2018/12/iStock-849583250.jpghttps://quickbooks.intuit.com/au/resources/not-for-profit/6-myths-about-not-for-profit-organisations/6 Myths About Not-For-Profit Organisations | QuickBooks Australia

6 myths about not-for-profit organisations

2 min read

Just like any industry, the not-for-profit (NFP) sector comes with a whole bunch of misconceptions attached to it. Since non-profits often rely on the goodwill of other people, these can end up reflecting negatively on the whole industry. That’s why we’ve decided it’s time to clear the philanthropic fog. Here are the most common non-profit myths debunked.

1. Not-for-profits can’t make a profit

Given the name, it’s understandable that people might assume that NFPs can’t make a profit. However, this is definitely not true. Any business, NFP or otherwise, must turn a profit to be sustainable. The difference is that NFPs must invest the profit they make back into their cause and are not allowed to distribute it for private benefit.

2. They have to avoid overheads at all costs

NFPs are focused on maximising revenue to support a particular cause. Therefore, commonsense may suggest that minimising overheads – for example, rent, insurance, admin, staff, utilities – is a good way to go. And while it’s true that you shouldn’t splurge, spending only the bare minimum on the essentials isn’t always the best call. In fact, spending more on better resources can help you boost your charity’s overall effectiveness.

3. Not-for-profits are staffed by volunteers

Most NFPs are run by a team of employees who receive a salary. On top of this, volunteers (and independent contractors) are often brought in to support staff, for example on special projects, to fundraise, or to staff community events. Also, while usually passionate about the cause, volunteers aren’t always your typical tree-hugger. They can come from a range of diverse backgrounds and bring unique knowledge and expertise to your organisation.

4. They have no hierarchy

NFPs are governed by a board or committee, which usually includes the founder. They make the strategic and managerial decisions, including hiring and what activities to undertake. The board is also responsible for ensuring your organisation adheres to the rules and regulations laid out in NFP and standard law. Staff and volunteers then action their decisions.

5. They have to be big to create social impact

While being big is a benefit to some global organisations, bigger does not necessarily equal better when it comes to NFPs. In fact, there are benefits in staying small for some communities. Not only can growth be challenging, but there are other ways to increase your impact, for example through corporate partnerships.

6. Staff who work in not-for-profits have a better work/life balance

NFPs are often tarnished with the same brush as government organisations – one that paints everyone as doing the bare minimum and using ‘accrued’ flexi-time. If you are running or working in an NFP, however, you’ll soon come to realise this isn’t the case. In many non-profits, especially small ones, putting in long hours is often required to secure funds, get everything done, and contribute to the organisation’s mission.

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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