Common Misconceptions About Starting a Nonprofit Business

Have you ever thought about starting a nonprofit business? It sounds a little strange at first, but you’d be surprised at how fulfilling and exciting it can be to run a company that aims to do some good in the world. Way too many businesses these days are focused entirely on generating profit, and it can turn your products and services into soulless creations. But when you start to focus your efforts on improving the world and doing some good, you’ll find a new purpose in life that will drastically change how you feel about work.

But with that said, there are some common things that people don’t understand when it comes to nonprofit business. One could even argue that these are common misconceptions. So let’s clear up some misunderstandings and help you get a better idea of why it takes to run a nonprofit organization.

“Nonprofits don’t make any money”

With a name like nonprofit, you’d think that you can’t make any money from these kinds of businesses–but that’s far from the truth! Of course a nonprofit has to make money somehow, after all, you need to pay yourself and your employees, and services don’t come for free. What nonprofit really means is that your entire business isn’t built around the idea of solely making money. In fact, this isn’t so different from large companies like Reddit and Airbnb that have yet to turn a profit.

Nonprofits generally make money from things like donations and by selling certain kinds of products. They can also provide value through memberships and services. All of the revenue generated with these activities have to go back into funding the nonprofit’s overall mission and operational expenses, and this does include paying salaries.

“Nonprofit staff doesn’t get paid”

This is just untrue as well. When you learn how to start a nonprofit, you’ll quickly realize that you need to hire lots of employees just to run things. These employees have to get paid–including you! However, they should be in line with industry standards or else you may be flagged by the IRS and donors.

While it’s true that a lot of people work as volunteers for nonprofit organizations, a lot of the full-time staff that spend most of their day working with a nonprofit will be paid a normal salary. It’s down to the business to decide how much someone is paid and if they decide to give their volunteers any benefits, including being paid for their services.

“Nonprofits can’t compete with for-profit businesses”

You generally wouldn’t be competing with a for-profit business in the first place, but it’s not entirely true that they will overshadow you. There are many areas which can make nonprofit businesses more attractive. For instance, you could offer better salaries and benefits to workers, the products you make could be superior, or you can offer great customer service as opposed to your competitors.

Running your business well is important regardless if you’re a nonprofit or not, so you can certainly compete with others if you focus on all of the right aspects.