How Do Nonprofit Organizations Function?

If you pay much attention to the news or advertisements, you are very likely to, at some point, come up against the concept of the nonprofit organization. Typically, these are organizations dedicated to a specific cause, but how do they work without profit as a motive?

They Have a Vision and Goals

For-profit companies typically have a mission statement, but the profit motive will always be at the center of their operations. Nonprofit organizations aren’t in it for profit, so they have to have other motives.

For instance, the motivations of the Haiti Children Project is to help children in Haiti gain the access to education that they need, such as by paying tuition and fees for elementary and secondary school kids, as well as for running the Generation Haiti program to assist children in obtaining higher education.

They are Tax Exempt

Nonprofit organizations spend money and hire staff to help carry out their projects. However, without the profit motive driving their efforts, they often rely on other methods to keep more money in the organization so that it can be spent on these efforts.

For one, nonprofit organizations are tax-exempt. This means that they do not have to pay any of the money that they make, be it through selling merchandise, raising donations, or otherwise. Similarly, they can claim many of their expenses through tax deductions, allowing them to keep spending more on their projects.

Fundraisers and Donations Help the Non-Profit Organization Serve Others

Nonprofit organizations do have some methods of making money like other businesses. Several will sell branded merchandise, for instance. However, for many nonprofits, the vast majority of the money that they spend on projects and their efforts will come from fundraisers and donations.

Nonprofits, especially charitable organizations, will typically accept donations for any reason, but may also run specific fundraisers for certain events or causes, like how the Haiti Children Project runs fundraisers for its Next Generation Haiti project, while still accepting more general donations for the other initiatives that they operate.

They Rely on Volunteers to Help Operate the Business

As mentioned, there are nonprofit organizations that are able to hire staff. However, nonprofits rarely make the money necessary to be able to hire very large teams or, at least, can’t hire everyone they need to provide the labor that keeps their projects going. This is because they’re not built for profit, so they’re not selling products and services maximized for profits.

As such, nonprofit organizations need to harness the power of volunteers on a long-term basis to help keep them sustainable. Volunteers do much of the hard work that keeps nonprofits running, often out of a dedication to the shared mission of the whole team.

Nonprofits of all shapes and sizes exist. While profit may not be their motive, however, they still rely on money and on labor, often from donors and people who are behind their cause. If there’s a nonprofit organization that you wish to support, then they could likely use your help.