Ten Nonprofits that Function Like For-profits

May 17, 2011; Source: The Street | Exactly how “nonprofit” some nonprofits are is an increasing issue in multiple arenas. NPQ has written about the Massachusetts AG’s questioning the “nonprofitness” of purportedly nonprofit health insurers, purportedly nonprofit college football bowl games, purportedly nonprofit hospitals (here, here, and here), and even purportedly nonprofit recipients of House Appropriations Committee chair Hal Rogers appropriations decisions. That doesn’t even include NPQ’s attention to “hybrids” such as L3Cs and B corporations, which earned NPQ the sobriquet of being loyal to “charities”, how awful!

The Street’s Joe Mont shows an awareness of all of these issues and compiled a list of ten nonprofits that seemingly have a lot of for-profit DNA in their charitable chromosomes. His list includes:

  • The College Board that issues tests such as the SATs that students need to attend college and test prep materials students need to study for the Board’s exams. Its 2009 Form 990 revealed $623 million in total revenue and a $53.3 million surplus after operating expenses;
  • The Mozilla Foundation, which promotes the Firefox web browser competing with Microsoft and Apple;
  • The National Geographic Society;
  • The $1.1 billion American Cancer Society that like many of the other large national disease charities has “expertly cultivated corporate partnerships to keep the money flowing, collecting donations from their conceptual partners in the pharmaceutical industry;”
  • The PGA Tour;
  • The YMCA, which critics charge has shifted from its core programs “to focus excessively on promoting its gyms to more affluent clientele;”
  • And, as NPQ has written, colleges and universities (because of the billion dollar endowments of some, their “asset holdings far beyond books and professors,” their big business sports teams, and the $50,000 annual tuitions some charge), hospitals that pay their executives as much as for-profits do, and health insurers, like Blue Cross/Blue Shield of Massachusetts that paid its CEO $8.6 million last year (though his predecessor had a compensation package of $16 million in 1996).

The surprise inclusion on the list is the Public Broadcasting System/National Public Radio. Why is it on the list? Maybe its $472.5 million in 2008 revenues? Or maybe it was their PR and lobbyist campaign to fend off proposed Capitol Hill budget cuts, it isn’t clear.

Mont seems fixated on size and executive compensation that may be converting legitimate charities into nonprofit/for-profit organizations. Our feeling is that we have seen nonprofits of significantly small revenue and compensation size that behave with a for-profit ethos as well.—Rick Cohen