Finance / Workplace

The Dangers of Non-Profit

Money by Junior Libby

Many of us who work in the non-profit sector don’t feel confident with money or numbers. We go into social work, community development, or any number of social fields due to their soft-science nature and relegate hard financial considerations to other professionals. Perhaps we were told or assumed we weren’t good at math early in our education. Or we simply assume the term non-profit means we can’t derive any personal financial gain from our work, apart from warm fuzzies. Unfortunately, many of us carry a no profit mindset, which can put us in personal situations where we’re only one paycheck away from being in our clients’ shoes. We depend on others – spouses, employing organizations, grant-making institutions – to provide for our own financial wellbeing, instead of taking responsibility to develop and manage it for ourselves.

Those who approach social entrepreneurship from the non-profit perspective can have a difficult time establishing a program, service or product that is actually financially viable. They either don’t monetize the service, or they are stuck in a model of simply giving away the goods. There are at least two things wrong with this:

  1. Giving away service without income generation prevents the organization from maintaining a sound financial standing. Think of it this way: a flight attendant instructs airplane passengers on the proper sequence of putting on the oxygen mask – you put the mask on yourself first, and THEN assist the person next to you. If you don’t help yourself first, you’ll potentially black out before or while helping the other person. Then you’re of no use to anyone – yourself or the one relying on you. By making sure that covering the costs of the service or goods to the extent that their provision helps keep the organization afloat, you can continue to provide a needed benefit to the community for years to come.
  2. When something is received for free, the client’s perception of its value is usually lessened. If they have to pay or work for it, they will be more willing to use it wisely. If it is easy to obtain, it will be easy to dispose of. And then easy to get more of it without changing one’s own impoverished situation. How many people come into the agency year after year with the same issue?

The no profit mindset can spill into our personal lives as well. “I want to do good in the world, (now how can I get someone else to fund me?)”. We believe that focusing on financial considerations is something we’re not good at and thereby divest ourselves of the responsibility. But what happens when whomever has been supporting you says, “times up”? Is there any real difference between you and the person who returns year after year for energy assistance? Unless you’re proactively working on establishing your own financial independence, then you too are living the life of dependency. And when that honey pot dries up, you’ll find yourself in a sticky situation.

Sometimes, all that’s needed is a shift in mindset. We can start by dropping the term “non-profit” (a self-damaging idea) and become civil society organizations, or community building organizations. If social entrepreneurship sounds inviting, leave the non-profit term and no profit mindset at the door, because it will only undermine your successes. We need to REALIZE that financial considerations in our personal and professional lives are important, and to BELIEVE that we can learn and practice financial independence. Then, we have to educate ourselves – if only on the basics. Finally, put it into PRACTICE. This will never succeed unless we drop the no profit mindset. Is “profit” too loaded a term? Try “prosperity”. As you realize the significance of this prosperous mindset for yourself, you’ll have much more confidence about discussing its importance and can work with clients to help them achieve financial independence too.

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