What happens when you stop being a nonprofit?
Last week I wrote about how it's time we stopped using the term "nonprofit" because it strips our work of its value -- and it' s just bad marketing.
So what happens when we stop seeing ourselves as nonprofits and start identifying as for-purpose, for-impact or social profit organizations?
Firstly, we stop asking for donations and start asking for investments instead.
Anyone who invests in the market sense of the word will expect to see a long-term return. Having to prove the impact their investment has yielded will not only make organizations more accountable and innovative -- it will also change the public perception of the sector.
Secondly, we stop getting gifts and start earning income instead.
That might sound confusing, but let me explain what I mean. When a donor writes you a cheque, are they investing in you personally, or the organization you represent?
They might make the investment because they trust you or believe in what you're doing, but they are writing the cheque to a child, or a farmer, or a family, or a village they will never meet. Just like with any other purchase they made that week, they will have what business people call an expectation of outcome.
But instead of expecting a good meal they paid for at a restaurant or an entertaining movie they paid for at the mall, they will expect their money to change a life.
Which means that you earn all the money you get -- it is not given to you.
You earn it by achieving your mission, you earn it by connecting donors to the cause and you earn it by proving the impact you're having.
If we keep thinking of our income simply as gifts, we become stuck in the mentality that we can only survive by the benevolence of others.
But when we adapt the language and mindset of an organization that seeks to maximize the return of every philanthropic dollar earned, we start acting like a mission-based business.
Whether it's improving health outcomes, ending generational poverty, providing clean water, lessening the education gap or preserving the environment, we are in the business of achieving our mission.
And without a profit, we can't achieve our mission.
Financial profits are essential for any nonprofit organization. Instead of being passed on to its shareholders, profits are re-invested into the organization to grow, innovate, recruit and retain excellent staff and take certain risks to improve mission.
By changing our language and creating a culture of entrepreneurship, we stop being a nonprofit and start being a mission-based business that focuses on both financial return and mission return.