We know that because you’re here, you know the value of a strong nonprofit partnership. When executed well, cross-sector partnerships have the potential to generate sustainable solutions to some of the world’s greatest issues. But what do we collectively know about the nonprofit in its environment? Most of us have worked adjacent to the sector, but we lose visibility regarding their limitations in achieving their desired impact.
What exactly is a Nonprofit?
The nonprofit sector is crucial in addressing a wide range of social, cultural, and environmental issues. Nonprofit organizations have a long and rich history of serving their communities and making a positive impact on society. These organizations, which are also known as non-governmental organizations or NGOs, are typically formed with the goal of addressing social, cultural, environmental, or other issues of public concern. They operate independently of government and are not motivated by profit but rather by the desire to make a difference and create positive change.
To be considered a nonprofit in the U.S., all U.S.-based organizations must be recognized by the Internal Revenue Service (the IRS) under Section 501(c)(3) of the U.S. Internal Revenue Code or as an instrumentality of a federal, state, or local government as provided by Section 170(c) (1) of the Code.[1] In addition to the federal tax code, nonprofits are also subject to state laws and regulations, which can vary significantly. For example, some states have specific laws governing charitable trusts or charitable solicitations, while others have more general provisions governing the formation and operation of nonprofit organizations.
There are roughly 1.8 million nonprofits in the U.S. alone, with California, Texas, New York, and Florida hosting the most significant number.[2] The nonprofit sector has historically held onto its status as the third-largest employer in the U.S. economy and the most popular types of nonprofits support religious and education efforts, many of which we know are not eligible to receive corporate funding.[3] Globally, there are more than 10 million nonprofits or equivalent organizations, and that ebbs and flows. Nonprofit viability is connected to their ability to fundraise and resource availability, which international affairs, climate disasters, or political volatility can easily disrupt (hello, COVID-19!).
All that sounds official, but what does it mean?
As a counterbalance to thriving capitalistic economies, nonprofits offer companies and wealthy individuals a way to give back to society. Obviously, the reasons for this have varied throughout history, but the idea of giving back to those less fortunate is tied deeply to our humanity. Nonprofits offer a framework in which we can trust that our funding, time, and efforts are being used for the betterment of society. And volunteering is a deep part of what makes us human.
Nonprofits are mission-driven organizations, meaning everything they do has to tie back to their mission and their organization’s Theory of Change and strategic plan. A mission statement is a call to action; it’s their role in working toward their vision or the desired future state. Like for-profits, nonprofits also have a board of directors, but in the nonprofit sector, these folks typically volunteer alongside the CEO or President to ensure risk mitigation, appropriate fiduciary responsibilities are met, and that the organization is avoiding mission drift or straying too far away from work mandated by that organization’s Theory of Change. Ideally, boards will ensure that all work done by that nonprofit supports the entire ecosystem surrounding the issue they’re working to solve.
Nonprofits have often been limited in their ability to compete for a more significant percentage of market share – they are expected to tackle seemingly insurmountable problems, with many elements out of their control, while not receiving the same opportunities to generate profit as their for-profit counterparts. They are criticized for spending money on more strategic marketing, taking risks on innovative impact programming, providing more livable wages and benefits for employees, or harnessing new technology.[4] These investments in the operations of a nonprofit are essential if we’re to see these organizations make a marked impact in the communities they serve. Nonprofits must attract top minds, strategists, and funding to achieve their mission. Imagine if a nonprofit could hire two more employees to tackle the implementation and administration of a new program strategically positioned to increase the number of communities that finally break that relentless cycle of poverty. Most of us would say, yeah, absolutely, do that! But historically, nonprofits are graded on the percentage of a dollar that goes directly to programs – not to any overhead or fundraising efforts. Anything less, you are branded as too risky or poor stewards of that donation. But this type of thinking will limit growth, and the nonprofit sector has much work to do.
So how can we, as volunteer leaders, intentionally support our partners in impact?
It starts by understanding the value of these partnerships. Imagine what you can help achieve by serving as that bridge between your company’s values and the nonprofit staff, working with authorized power from the communities they serve. You are the representation of those values in the community.
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It’s also important to consider who the nonprofit and community organization you’re working with supports through their programming and to ensure that community leaders heavily influence solutions. To serve rather than to tell. Solutions from a think-tank that advises communities on what we think they need are not sustainable and will not scale at the rate we need them to.
We, as volunteer leaders, need to consider our role in this structure and how it has traditionally come from a place of saviorism and nonauthorized power. This is especially true for organizations that support communities thousands of miles away, with an entirely different set of variables (like culture, history, social constructs, and economies) that we from our corporate offices may never encounter. When we show up to our volunteer experience ready to receive a new perspective and a challenge that may not always fit into our carefully constructed box of solutions, we open ourselves up to change, too, leading to growth for us, for the nonprofit, and the communities we hope to impact with our work.
[1] “Exempt Organization Types,” Internal Revenue Service, accessed January 4, 2023, https://www.irs.gov/charities-non-profits/exempt-organization-types.
[2] Howarth, Paige, “Health of the U.S. Nonprofit Sector 2022.” Independent Sector, accessed October 24, 2022. https://independentsector.org/resource/health-of-the-u-s-nonprofitsector/#:~:text=Our%20report%20provides%20data%2C%20analysis,%2C%20public%20policy%2C%20and%20advocacy.
[3] Ibid.
[4] Pallotta, Dan. Uncharitable: How Restraints on Nonprofits Undermine Their Potential. Medford, Massachusetts: Tufts University Press, 2008.