Putting Profit into Nonprofit

If I start calling names like Goodwill, YMCA, Boys & Girls Club of America, everyone is familiar with these names, and agrees that these nonprofit organizations are great resources for the community. But have you ever seen their financial reports? Millions of dollars are generated as profits for large nonprofit organization, because they realized that everything should not be free! They created streams of income to help with the cost of free services.

Habitat for Humanity started building homes for families with donated building materials, and now you see Habitat Resale Stores popping up everywhere. Notice I said “resale store”, instead of giving everything away, why not open your own resale shop. If you can’t afford the space right now, start by having yard sales, some nonprofits generate $5,000 in one day with yard sales of donated items.

I personally know of a nonprofit organization that asked me to help them find extra storage space because they nonprofit need more storage for all the donation of clothes, shoes, you name it! Instead of a storage space, they needed a resale shop. One local nonprofit has a 5,000 sq ft space used as a resale shop, and for the first year, the nonprofit did not pay a single penny for rent. Why? Because they ask that landlord if they could have the space rent-free for one year since they were a nonprofit- he said YES, and the rest is history. You have not because you ask not!

Just because the nonprofit has three letters “NON”in front of it, don’t forget the words after non -“PROFIT”. Nonprofit doesn’t mean you can’t make a profit, and even charge a fee for services. I know it feels rewarding to do good, but it’s much more than that. It’s how you take the fundamental concept of doing good using your vision, talents, knowledge, and money – and apply them to make a difference in your community.

How does the IRS feel about nonprofits making a profit? It’s perfectly legal for nonprofit organizations to sell products and services to generate income as long the income benefits the nonprofit’s tax income purposes. In others words, when you setup your nonprofit organization as a transition home for women, and five years later, you open a re-sale/thrift store. After you pay expenses (rent, salary. etc.) all the money that is left must benefit the nonprofit organization.

So what ideas do you have to put some profit into your nonprofit? Write down your ideas and make sure they are feasible, and can be accomplish on the budget you create. I personally believe, every nonprofit should have a for-profit business. Your nonprofit and for-profit business will be two separate businesses; however, the for-profit business can support the nonprofit business when its needed, but you cannot take funds from your nonprofit business to support your for-profit business. This type of transaction would be considered a conflict of interest. Need ideas or have questions- email me and I will answer your questions in an upcoming article.