I wrote The Business of Nonprofit-ing at the start of the pandemic. Shoes That Fit was growing, and we had recently opened a second office, which now sat empty. Schools closed. The whole world seemed to stop, including several of our funding streams. What didn’t stop was the need. Or people wanting to make a difference in the world—especially in the lives of children.

Out of that time came ideas on ways to scale our programs. We pursued new models of operating. We worked on internal projects that had lain dormant—including a logo rebrand funded by a new donor! I had many conversations with supporters about the impact of the pandemic on our organization and found myself face-to-face with many misunderstandings about how nonprofits actually operate and why.

Nonprofits are indeed businesses—but they are not manufacturing a product and looking for a market. We have a service that we are providing, often for the most vulnerable in society, and we are asking a different set of people to fund the work. Our business model is asynchronous. Simply importing a business model into the nonprofit world ignores this important difference.

Nonprofits play a large and crucial role in our society. There are more than 1.5 million tax-exempt organizations in the United States (National Center for Charitable Statistics), and recent estimates indicate that about 12.3 million people work in the nonprofit sector. That is roughly 10 percent of the nation’s workforce—ahead of manufacturing, transportation, construction, and finance. (Note: these figures are prior to COVID-19, which is continuing to take a toll on the sector, as well as the people it serves.) Nonprofits are a significant part of our economy.

However, there are several myths about nonprofits that can interfere with success. I want to address the two primary misconceptions, which I believe provide the foundation for many misunderstandings about nonprofits, and explain why these they are so disruptive:

  • Myth #1: Nonprofits should not make a profit.
  • Myth 2: Having low overhead is a good metric for a nonprofit’s effectiveness.

Read the full article about nonprofit myths by Amy Fass at Stanford Social Innovation Review.