Myths About Nonprofit Organizations

The nonprofit sector is steadily growing, yet there are still a lot of misconceptions surrounding it that can negatively impact the way they work.

Nonprofit organizations face tough challenges. Often, they have to go through difficult situations as they work towards their objectives and fight for their causes. Aside from these, the nonprofit sector is also hounded by various damaging myths and misconceptions that make it hard for them to secure talented people, or get volunteers and donations. It is important to debunk these inaccuracies so they won’t get in the way of achieving these organizations’ noble goals.

Myth #1: Nonprofits do not and cannot earn revenue.

Reality: While the primary focus of any nonprofit group is the success of their mission, whether it is promoting health and well-being in the community or upholding human rights, this does not mean that they are not allowed to generate revenue. Contrary to popular belief, nonprofit organizations do make money. In fact, according to the National Center for Charitable Statistics (NCCS), public charities reported over $1.74 trillion in revenues in 2013. The truth is that nonprofits need to make money in order to sustain their needs. The difference between nonprofit groups and traditional for-profit businesses is that nonprofits cannot distribute their revenue to any private individual, such as the founder/s or their families, shareholders and other designated individuals. However, nonprofits can provide reasonable compensation to employees or contractors providing service.

Myth #2: Nonprofit organizations can only get volunteers to work and can’t employ people.

Reality: It’s true that nonprofits rely on volunteer work and consider the role that they play in the success of a program or the entire mission as hugely significant. However, the fact of the matter is that nonprofit groups can and do hire people. A 2012 report by the Center for Civil Society Studies at Johns Hopskins University revealed that nonprofit employment represented 10.1 percent of total employment in the U.S. in 2010, with a total of 10.7 million employees. The NCCS also states that in 2010, nonprofits accounted for 9.2 percent of all wages and salaries paid in the United States.

Myth #3: Nonprofit groups cannot afford to pay competitive salaries.

Reality: Most people commonly assume that you need to be willing to take a significant pay cut when it comes to working for nonprofits, and while this may be true for some organizations, it is quite possible to earn a decent salary and enjoy a lifelong career in the nonprofit sector. Not for profit organizations are becoming influential to the economy and are expected to provide more incentives for employees. Aside from this, the opportunity to work on important issues that can affect society, and possibly the world, provides employees in the nonprofit field with a level of job satisfaction that cannot be equaled.

Myth #4: Nonprofit groups achieve good results, but they do nothing for the economy.

Reality: As stated above, the nonprofit sector generates trillions of dollars in revenue. The NCCS reports that the nonprofit share of the GDP in 2014 was 5.3 percent. Nonprofit groups are also contributing to job growth, with employees numbering in the millions.

Myth #5: Nonprofit organizations should spend all of their money on their cause.

Reality: It would be unrealistic to believe that 100 percent of the money you donate to nonprofits will be spent directly for their cause. The truth is that just like any other business, nonprofits also have overhead expenses, such as salaries for employees, office space rent, utility bills, and marketing and fundraising costs, among others. Think about it: it will take no time at all for a nonprofit group to dissolve if they are not able to sustain their needs.