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the profit behind non profit  RSS feed

 
paul wheaton
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Jocelyn was pointing out a cool non-profit. They had a four color brochure - really fancy. And pointed out the cool things they advocate and the number of people they reach. I think it said they had something like 40 employees.

Each of the things they advocate make up about 4% of the things that we advocate on permies.com. They were proud that their site reached something like 20,000 people last year. Permies.com reached 12 million.

As Jocelyn brought this up to me, I mentioned another organization that has some eco level 3 messages with 200 employees. And she mentioned another with about 20 employees.

I remember I once saw a presentation where they listed good organizations and they scrolled the list of names. It was something like 20,000 organizations. To appreciate the number, the list was in three columns and scrolled really fast for a really long time.

I remember about 20 years ago I enjoyed going to the Missoula "out to lunch" on wednesdays in the summer. Mostly because my friend Marilyn went and worked there as a volunteer and made it lovely. Granted, there were a lot of people that made the event happen. On the last "out to lunch" for the season, the MC thanked the people that made it possible. What bothered me was that the MC thanked about 20 different people/groups who were all paid to be there. And then at the very end, a quick thanks to the volunteers - en masse and not named one at a time like the others. But from what little I knew about what was going on, that group of volunteers did 85% of the work.

I remember being really angry on behalf of the volunteers. But the volunteers got what they wanted: a seriously cool event.

I have met people that work for non-profits. And I have an odd mix of feelings. On the one hand, the people will only do the work for the non-profit as long as they are getting paid to do that work. The seem to barely understand the topic(s) at hand. So they are getting paid, and at the same time most of them fly the hoity-toity, superior-to-you-little-people "non-profit".

Getting paid. "Non-profit"

Says "non-profit" - but they won't do it unless they are getting paid... so that they personally profit.

So there would be no "non-profit" unless there is profit.

So then I think about the volunteers that keep these forums going. And the volunteers at coderanch. And the people that volunteer to be in my videos and podcasts. For nearly all of them, they have something that needs to be done, or needs to be said. Or they need to see a certain type of community built - something that will accomplish good things.

I think there are super passionate people that are working at the core of many non-profits. And I think there are some really excellent non-profits - and the non-profit machine is a good and proper contraption.

At the same time, I think a lot of the stuff being presented here at permies is ignored by most non-profits for the simple reason that it is not presented by a non-profit. And many non-profits wish to not develop a relationship with us because we are not a non-profit. Plus, organizations that promote causes or publications, won't promote our stuff, because we are not a non-profit.

I guess I don't have a really clear point to make here. I suppose I just wanted to express my weird, squishy, twisted thoughts in the space of non-profits.

 
Tom OHern
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This seems like a common issue with "non-profits". But the designation isn't really so much about the fact that there are people who get paychecks and personally profit, but more about the fact that it is a specific type of business that is set up to take money while the corporation it self doesn't make a profit. Many 401(c)3 organizations have both paid employees and non-paid volunteers. Sometimes it makes sense when there is a job that can't be done in a person's spare time as a volunteer, so an organization might decide that it is worth the cost ot pay a person to do that work. For instance, I once worked for an organization as the Volunteer Coordinator. I spent my days recruiting and training people to do the majority of the work of the organization. I was one of three paid staff but we had over 50 people who regularly did work for us. What I did was not something that could have been done part time or easily split up among several people, so paying me to do the work full time was actually a very effective use of the organizations money.
 
Tom OHern
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As a follow up, would you be comfortable naming the organizations that have refused offers of cooperation with permies because a lack of non-profit status? There are probably a lot of us here that potentially give time or money to those organizations and we could use social pressure to get them to change their ways...
 
John Polk
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For me, I see a problem with many of the larger non-profits.
In my opinion, many grow so large that they become 'top heavy'.

To become effective about carrying out their mission, they begin hiring experts in many fields.
They need a real 'shaker' to be the CEO. Then somebody to manage contributions, somebody else for training, publicity, events, advertising campaigns, etc. Pretty soon, they have a staff that looks like General Motors or Firestone Tires. At this point, they need accountants and lawyers, plus a Board of Directors. Once they have reached this plateau, the 'corporation' is now consuming 80-90% of all the contributions, leaving only a small fraction to steer towards their mission.

The infrastructure becomes its own entity which must be preserved. There is huge competition for benefactor's dollars, and the corporation becomes obsessed with its own survival. The mission becomes secondary, merely a reason for existence.

 
Jocelyn Campbell
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John Polk wrote:For me, I see a problem with many of the larger non-profits.
In my opinion, many grow so large that they become 'top heavy'.


There is truth to this. I've worked with a non-profit that I think was 'top heavy' largely from spinning their wheels trying to find good admin people and being able to manage their data in cohesive ways. Far too much in the way of duplicated efforts, wasted effort and lost information - spinning, spinning wheels.

The accounting and legal requirements for a non-profit are onerous and difficult for some people to understand. Good people and good systems are needed to make sure these things are handled in a streamlined, effective and efficient ways.

John Polk wrote:They need a real 'shaker' to be the CEO. Then somebody to manage contributions, somebody else for training, publicity, events, advertising campaigns, etc. Pretty soon, they have a staff that looks like General Motors or Firestone Tires. At this point, they need accountants and lawyers, plus a Board of Directors. Once they have reached this plateau, the 'corporation' is now consuming 80-90% of all the contributions, leaving only a small fraction to steer towards their mission.


If the admin of the nonprofit corporation consumes 80-90% of all contributions, I think their 501(c)(3) status can be revoked. This is a big part of nonprofit reporting. The programs - the actual work of the nonprofit such as the music in the park Paul mentioned, or providing education, etc. - must be the majority of the expense. It's an important thing to research before giving money to any organization.

You might think it would be easy to lie about this or cover up a skewed allocation, but most larger non-profits are audited every year to produce reviewed financial statements. As we all know, audit firms are by no means perfect, yet in my experience, most audit firms truly are ethical and diligent in their reviews.
 
Glenn Ingram
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If the admin of the nonprofit corporation consumes 80-90% of all contributions, I think their 501(c)(3) status can be revoked.

This might explain some of the very odd practices that I have seen with non-profits.  My wife was on the board of a local non-profit that provided mediation often as an alternative to civil court.  The strange part to me is they did not charge anything at all to anyone.  Why not?  They were often working with people who had money.  Why didn't they do a sliding scale?  Then they would not have had to spend as much time or pay the fundraiser and grant writer as much for all the money-raising they had to do.  It seems like an organization like that could charge people a reasonable fee for their services, still provide a great service, still serve the poor, still be MUCH cheaper than going to court, and possibly become self-funded.  Why would that not be a goal in this particular non-profit?  It seems like some non-profits would be more efficient if they would be a for-profit business.  Non-profits have to deal with having a board, more complex accounting and legal requirements to the point that it can severely limit the ability to provide the service they started out to provide.  As others said, there are great non-profits and the system seems like it's about as good as you can make it.  But I think too many people believe they are some sort of holy organization especially within the non-profit community. 

I remember an incident in which I was asking if I could use a church space to run a health class for my business (for-profit).  They refused because I am running a for-profit business.  It makes no sense to me.
 
                                                        
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John Polk wrote:For me, I see a problem with many of the larger non-profits.
In my opinion, many grow so large that they become 'top heavy'.

To become effective about carrying out their mission, they begin hiring experts in many fields.
They need a real 'shaker' to be the CEO.  Then somebody to manage contributions, somebody else for training, publicity, events, advertising campaigns, etc.  Pretty soon, they have a staff that looks like General Motors or Firestone Tires.  At this point, they need accountants and lawyers, plus a Board of Directors.  Once they have reached this plateau, the 'corporation' is now consuming 80-90% of all the contributions, leaving only a small fraction to steer towards their mission.

The infrastructure becomes its own entity which must be preserved.  There is huge competition for benefactor's dollars, and the corporation becomes obsessed with its own survival.  The mission becomes secondary, merely a reason for existence.



This is a problem that is faced by all organisations that require some form of bureaucracy to survive.

Add in the "monkey-politics-behaviour" problem, and you get patterns of behaviour which are both, toxic, and all-too-human.

Try to have the Minimum-Viable-Bureaucracy in an effort to stave off this problem as much as possible.
 
                                                        
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Jocelyn Campbell wrote:
John Polk wrote:For me, I see a problem with many of the larger non-profits.
In my opinion, many grow so large that they become 'top heavy'.


There is truth to this. I've worked with a non-profit that I think was 'top heavy' largely from spinning their wheels trying to find good admin people and being able to manage their data in cohesive ways. Far too much in the way of duplicated efforts, wasted effort and lost information - spinning, spinning wheels.

The accounting and legal requirements for a non-profit are onerous and difficult for some people to understand. Good people and good systems are needed to make sure these things are handled in a streamlined, effective and efficient ways.

John Polk wrote:They need a real 'shaker' to be the CEO. Then somebody to manage contributions, somebody else for training, publicity, events, advertising campaigns, etc. Pretty soon, they have a staff that looks like General Motors or Firestone Tires. At this point, they need accountants and lawyers, plus a Board of Directors. Once they have reached this plateau, the 'corporation' is now consuming 80-90% of all the contributions, leaving only a small fraction to steer towards their mission.


If the admin of the nonprofit corporation consumes 80-90% of all contributions, I think their 501(c)(3) status can be revoked. This is a big part of nonprofit reporting. The programs - the actual work of the nonprofit such as the music in the park Paul mentioned, or providing education, etc. - must be the majority of the expense.  It's an important thing to research before giving money to any organization.

You might think it would be easy to lie about this or cover up a skewed allocation, but most larger non-profits are audited every year to produce reviewed financial statements. As we all know, audit firms are by no means perfect, yet in my experience, most audit firms truly are ethical and diligent in their reviews.


One approach to the Minimum-Viable-Bureaucracy that was attempted in the UK, was the One-Click-Organisation. http://www.oneclickorgs.com/

It was set up as an attempt to find an acceptable MVB for our local hackspace, https://london.hackspace.org.uk/  by automating as much of the admin as possible.

It's still a work-in-progress, so if you see ways we can improve it, then feel free to dive in.

This was created and set-up by volunteers who donated their time and skills to put it together.

It has a specifically UK flavour, as that is the legal environment where we are based, but there's enough information there to help people develop templates for the specific legal environments.that are found in your countries.

Please contact us about adding and extending the templates that we provide.

 
K Putnam
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I've been on the board of a couple of nonprofits, though neither of them are related at all to permaculture.

If you want your nonprofit to be sustainable, at some point the organization needs actual paid staff.  When organizations rely entirely on an all-volunteer workforce, the leadership eventually gets unappreciated, tired, burned out, and implodes and takes the organization out with it.  Paying staff is the best way I have to serve the community. 

Now, in my orgs, the people getting paid aren't getting paid because they are some sort of guru that the organization is built around.  Organizations like that inevitably fail when they realize they are serving the guru instead of the community.  My people are getting paid because they have important, hard tasks to get done that are necessary to make the whole thing work, and I need them there day in, day out, not subject to the vagaries of volunteer hours. 

I do think there are some very valid criticisms of permaculture / eco / sustainability nonprofits where one person has built a nonprofit around themselves so, frankly, they don't have to get a job like the rest of us. They want other people to fund their pre-existing personal projects.
 
paul wheaton
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I think the thing I wish to emphasize is that calling it "non-profit" is horribly misleading.   There is oodles of profit within a non-profit.  And there are a lot of people that hear "non-profit" and they somehow think that the organization is more noble because nobody is making a profit.  But somebody can work at a non-profit (like the red cross) and receive millions of dollars per year.   Or a person can work for a for-profit entity that is hired by a non-profit, and that person makes millions per year. 

I respect that the organization needs paid people.   I just feel that calling the organization "non-profit" is inappropriate.  Maybe instead it should be called "licensed-to-pay-less-taxes-but-has-to-be-complicated-and-have-open-books"?
 
r ranson
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What's the difference between "non-profit" and "not for profit" organizations? 
 
K Putnam
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100% agree.  There are a lot of businesses providing more good than a lot of non-profits.  I could write a book on the frauds in animal rescue.  I love profit.  It lets me run non-profits.
 
paul wheaton
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Another point:  non-profits will ask us for help all the time.  When we ask for a link or something on their site, they tell us that they cannot link to us, because we are not a non-profit.   But they do link to facebook and twitter. 

I remember a few years ago there was local permaculture convergence coming up.   I was handed a dozen posters and asked to post them around missoula.   I go the library a LOT and so while i was there I wanted to post it there.  A note on the board said I had to get permission.  So I asked.   "Only non-profits are allowed."

 
Jenny Nazak
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paul wheaton wrote:I remember a few years ago there was local permaculture convergence coming up.   I was handed a dozen posters and asked to post them around missoula.   I go the library a LOT and so while i was there I wanted to post it there.  A note on the board said I had to get permission.  So I asked.   "Only non-profits are allowed."



ARGH - major pet peeve of mine, this "nonprofits have a halo around their head" type double standard thing.

Another peeve: A lot of nonprofits depend on huuuge armies of volunteers to get their work accomplished. They aren't providing employment, but to a select few (well-paid) folks at the top. They make their livelihood on the backs of volunteers, and then get to have holy halo status in ways such as you pointed out.
 
K Putnam
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Another point:  non-profits will ask us for help all the time.  When we ask for a link or something on their site, they tell us that they cannot link to us, because we are not a non-profit.   But they do link to facebook and twitter.  


Now this is just BS on the part of whoever you're working with.  We link to the businesses that support us ALL THE TIME.  We have an entire page of links to our business supporters.  We share information about them on the website and in social media.  We would never think of asking for help or a sponsorship without trying to offer some kind of positive exposure in return.   There is absolutely no reason a non-profit cannot thank its supports.  None.
 
John Weiland
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One of the best examples of a small, for-profit (if I recall correctly) company I recall seeing was built upon the sale of nursery stock.  The company was made up of a group of laboratory researchers who wanted to continue lab research into retirement, but could not fund the research on their own retirement holdings.   So they created a business selling nursery stock, the merchandise of which was purchased not only by the public but through contracts with municipal and state governments.  What income that was not pocketed went to fund the lab research that continued to be of interest, the products of some of which may have been patentable.

But agree with other observations here....many large medical non-profits (Blue Cross Blue Shield, Mayo Clinic, etc.) pay out handsomely at the higher end and plow the extra income into campus/entity infrastructure, which at the very least permits retention of the non-profit status.
....................................................................................................................................
"For Profit vs. Not-for-Profit Organization

by Christopher Carter, studioD

A nonprofit organization is formed for the common good of the public. Nonprofit organizations are usually formed for some specific religious, charitable or educational purpose. A for-profit organization may be formed to conduct any number of lawful business activities. The primary reason to form a for-profit organization is to earn a profit for the owners of the company.

Since a not-for-profit organization is formed to accomplish a specific task, the profits raised by the organization must be recirculated back into the organization so it is able to fulfill its mission. This means that all the money raised by the not-for-profit organization will be retained in the organization. However, funds raised by a not-for-profit organization can be used to pay salaries to employees and to address any other administrative needs. In the case of a for-profit organization, the profits of the company may be distributed to the owners of the company. Establishing a for-profit organization allows a business owner to realize gains from the organization if the business becomes successful."

--from http://smallbusiness.chron.com/profit-vs-not-for-profit-organization-4158.html
 
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