• Joelle Gallagher

    I could not disagree more with this position. Just because “nonprofit” has become our default does not mean it is appropriate. The word profit has several meanings, not just financial. I agree wholeheartedly with Gauss and Pallotta. We run businesses, not “charities” and empowering the vulnerable, protecting the planet and enriching lives is hardly “nonprofitable.” Its our job to educate the public, not perpetuate misunderstanding for their convenience!

  • Phil Buchanan

    Thank you, thank you, thank you, Jim Schaffer for this thoughtful, reasoned, and right on contribution to the tiresome and repetitive discussion of the supposed shortcomings of the words “nonprofit” or “not-for-profit.”

    The nonprofit sector in the U.S. is the most trusted of the sectors by the public — has been and continues to be (notwithstanding erroneous and irresponsibly false assertions to the contrary). See for example the Edelman Trust Barometer.

    Why is it trusted?

    As you point out, “It may be that on some level, the knowledge that one’s donation isn’t being converted to personal profit is the threshold the public wants. Maybe it reflects the belief that some things are not best served by an unfettered free market, but rather by collective efforts where people meld their interests cooperatively with others—whether through giving cash or time or voice—and agree in so doing not to profit unreasonably.”

    Exactly!

    And, to all those who say, “nonprofits do generate profits” you remind us of the difference between a surplus that is reinvested in an organization and profit taken by owners. As you point out, “Yes, all nonprofits must produce an annual surplus to stay healthy. An endowment is also a good thing. That is not the same thing as profit. The IRS is very clear about what the prohibition against inurement of net earnings means.”

    We need each of our sectors to play their distinct, different, and (at their best) complementary, roles. To do so, we should be clear about the differences between them, not seek to paper them over.

    Again, thank you for this excellent piece.

    Phil Buchanan
    President
    The Center for Effective Philanthropy

  • GeorgeMcCully

    With respect for both Jim and NPQ, the main reason Allison’s question is timely and correct, is that this hoary and previously inconclusive discussion has now fundamentally changed—from being about rhetoric to being about sheer factual accuracy.

    The technological revolution of computers and the internet are producing an explosion of data about philanthropy and charities, and what ALL this new data is proving, is that “nonprofit” and “philanthropy” are nowhere near synonymous, and in fact wrong by a factor of 9 or 10! Far from 2.5 million “nonprofits”, there are only about 200-300,000 active philanthropies nationwide—i.e., “private initiatives, for public good, seeking private grants and donations” which is the philanthropic marketplace.

    The IRS itself has reported that in 2015 it received only 295,000 990s. FidelityCharitable, with the world’s largest charities dataset purified of confusion with “nonprofits” because based only on grants and donations, reports their cumulative total of 220,000 charities, produced over 25 years by millions of donors and of grants nationwide. Network for Good, the largest online giving platform, now keeps a running total of charities receiving gifts in the previous 12 months, and as of June 2016 over 1 million donors nationwide have given nearly 2 million gifts to only 31,295 charities—clearly not chosen from among 2.5 million eligible organizations.

    Those who still say that “nonprofit” means anything like philanthropy should just take ten minutes to look at the data—the IRS Master Nonprofit Data Files now downloadable by states. Open it up to any page in any state and what you will immediately see is that “nonprofits” include all kinds of noncommercial organizations, 75% of which are obviously self-serving—condo associations, real estate trusts, yacht and country clubs, professional and trade associations, medical doctors’ clinical practices, teachers’ retirement funds, cemeteries, the NFL (recently withdrawn on their own initiative), Blue Cross Blue Shield (which its CEO styles a “nonprofit business”, etc., etc., etc.

    The history of science is punctuated by changes in terminology to fit advances in fields. Philanthropy is now in such a period—a paradigm shift driven by technology and changed demographics of wealth. Our traditional vocabulary is changing to accommodate new data. This is not the old discussion any more, but a new discussion seeking factual accuracy and practical value. We all need to get with the program.

  • Sharon Charters

    This debate is navel gazing by people who have invested many years working in the sector. For the vast majority of people the term “non-profit” is easy to understand and for donors it is the gatekeeper term that their gift will be used by an organization whose mission is altruistic rather than profit motivated.

  • drfinlay

    Today we have naming of parts. Yesterday,
    We had daily cleaning. And tomorrow morning,
    We shall have what to do after firing. But to-day,
    Today we have naming of parts. Japonica
    Glistens like coral in all of the neighbouring gardens,
    And today we have naming of parts.
    Henry Reed