Blog Post: Nonprofit Myths that can Destroy Your Business

Nonprofit Myths that can Destroy Your Business

If you’ve ever spoken with any business owner, you know that starting a company is not a trivial task. When I first started my nonprofit, Celebrate Everyday, I had no idea what a nonprofit organization was, which lead me to make numerous expensive, difficult, and time consuming mistakes. I have taken full responsibility for every mistake I made, but if allowed, permit me to shift a tiny bit of this blame to the general misunderstanding of what a nonprofit is shared by the public, and possibly you.

To be completely honest, as I already confessed I had no idea what a nonprofit was, even when I was trying to start one! Armed with an idea, passion and a desire to succeed, I jumped in head first. I wish I could say that I figured stuff out quickly, but I didn’t. It took me months to figure out that a nonprofit is a business, and (duh) should operate like a business. When told by friends, family, school mates and even professors that Celebrate Everyday is “kind of like a real business”, I initially believed them, but that all changed in a big way.

Celebrate Everyday’s mission was to make any girl feel like a million bucks on her special night. I thought that I could help girls who didn’t have access to expensive prom and dance dresses find them for free through Celebrate Everyday’s inventory of dresses and my connections in the community. While CEO of Celebrate Everyday, we went from serving a handful of girls to hundreds of girls, from hosting 2 proms a year to hosting 10, from advertisement by word of mouth to Social Media content, from passing out flyers one at a time to being featured on Utah statewide news programs. I was the CEO of a real business, which just so happened to be a non-profit organization. Here is the big change I was talking about, as CEO I had to understand my own business enough to know how to iterate, what steps to take next, and how to stay ahead of the competition in order to survive. Make no mistake, Celebrate Everyday was a non-profit business facing all the challenges all business owners face.

When I was first starting out, I wish there were articles or some other form of information that would have put me on the right track, day one. I think of how much wasted time, energy, and resources that could have been used to serve more young ladies.

As a former CEO of a non-profit I want to address the three most destructive myths about nonprofit businesses:

A nonprofit is not a business myth.
Nonprofits are run by volunteers only myth.
You can’t gain any personal value starting a nonprofit myth.

1. A nonprofit is not a business myth

When entering different business competitions and talking about Celebrate Everyday, I would often say, “Oh, I just run a nonprofit.” Or even more often, I would be told “You only run a nonprofit, that’s not like a real business.”

No, no no… that is not the case! Looking back, I am so sad that I talked down what I was doing. I also feel badly how prevalent the notion exists that a nonprofit isn’t a “real” business. I want to destroy the “A nonprofit is not a business myth” so badly.

If you have ever said that a nonprofit isn’t a real business, go wash your mouth out with soap and vow to never say that again. Not only is a nonprofit a real business, but I would argue that the challenges of running a nonprofit organization are as complex and difficult as those facing a for profit businesses.

I figured out that Celebrate Everyday was a real business, when I finally understood the nature of the donations we were receiving. When Celebrate Everyday was in its early days, I was terrified to spend any of the donation money. Many of the donations, were from the community we were trying to serve! Imagine that! It was a surprise to me to learn that the low income young ladies and communities were so grateful for the service Celebrate Everyday provided that they would donate what little they could. I never saw that coming. These small donations quickly added up! I puzzled over the right thing to do. How do I responsibly use these donations, especially when I understood the nature of where they came from?

My initial reaction was to be extremely frugal with donations. I would find a way to do everything without spending a cent, literally. I would spend my own money (Not recommended), skip school to replicate DIY YouTube videos, and message complete strangers to beg for favors and donated talents. I can’t tell you an exact day when I changed my views, but after months of being probably the leanest business ever, I FINALLY realized, spending money responsibly is actually the best thing I could do with these donations. I spent donations to increase Celebrate Everyday’s profile in the communities I was trying to serve. This was the only way I could reach and serve an increasing number of young ladies to allow these humble donations to fulfill what the donors intended.

2. Run by volunteers only myth

Any charity understands that volunteers are the life and blood of the business. However, volunteers aren’t the only sources of labor available to a nonprofit.

As I thought through the Celebrate Everyday mission, I realized paying the people most important to the business was the way to go. This decision was hard. I didn’t want anyone to think that Celebrate Everyday was using donations other than to serve young ladies in need. However, I quickly learned that hiring employees allowed Celebrate Everyday to be more reliable in our daily operations, retain our amazing talent (training new volunteers is just as expensive as training new employees), produce more content, and most importantly streamline many of our processes. Adding a payroll to our expenses ultimately saved Celebrate Everyday money by streamlining business operations and adding productivity.

3. You can’t gain any personal value starting a nonprofit myth.

This myth needs to die! It could be the biggest reason why more people aren’t starting nonprofits. In the most technical of details, it is true. You can’t sell a nonprofit, you can’t pay yourself dividends. You don’t even technically own any part of the organization, it is owned by the state, and just ran by you. However, this doesn’t mean that you can’t gain any personal value. In the modern world, where everyone has an online profile, your personal brand is an important part of your career. I would argue that a nonprofit is the best way to positively build your personal brand and reputation.

But wait, there’s more! I’m sure you’ve heard the saying “It’s not what you know, it’s who you know.” Disregarding any moral implications of this statement, your network is worth something. Building a network while running a nonprofit is an amazing byproduct of all your efforts.

Selling people on a nonprofit is much easier than selling people solar panels. Complete strangers and entire communities are willing to volunteer their time, money, connections, and talents, to see the positive effects of their contributions through your nonprofit, flow into the lives of members of the community. This experience is very rememberable for everyone involved. As the person running the business, you will be remembered for this experience and your service. When you start your next venture, are looking for a job, moving across the country, your legacy will follow you. This large network of people and communities will go out of their way for you after watching you go out of your way for so many other people through your nonprofit. This network will help you get a jump start into whatever you do next. I have experienced this as I have started my next business and next chapter in my life. I have witnessed this happen over and over for other amazing women I know, who have also started and built incredible nonprofits, and have gone on to build other successful businesses. Your personal brand and legacy will grow more than you’ll realize when creating a nonprofit. Your service will be remembered, and people will be willing to help you because you have helped others.