What Is A Nonprofit For?

March 11th, 2013 § 2 comments

Nonprofit? Not-for-profit?

Do you have a preference between the two? Do you use them interchangeably? Has your company determined a “house style” for the use of one over the other?

This may seem a semantic game, but I would argue that it is vastly more important than the “er vs. re” argument that rears its head over the spelling of theatre every so often. That silly debate is largely etymological and cultural, while this one is about meaning and understanding.

To get the simplest issue out of the way: hyphens are primarily a style issue. It may stem from the country you live in, or what manual you use as a guide. The hyphen is, basically, irrelevant, at least in regards to meaning.

Legally, there is no real difference between “nonprofit” and “not-for-profit.” Numerous resources confirm that they are essentially interchangeable, save for the Internal Revenue Service. Our friends at the I.R.S. say that “not-for-profit” is an activity which does not undertake to produce revenue, like a hobby, while “nonprofit” is an organization that doesn’t seek to make a profit from its activities, and does not consist of individuals or shareholders who personally benefit from the revenues of the company. You can find helpful descriptions of these terms at Idealist and Grammarist; the Merriam Webster online dictionary is caught in a endless loop, merely defining one as the other.So for organizations’ fine print on fundraising solicitations, since that’s about tax benefits for donations and status with the I.R.S., “nonprofit” appears to be the correct term. But we don’t speak in strict I.R.S. language on a daily basis, and that’s where my interest lies.

Although numerous sources say nonprofit and not-for-profit are interchangeable, I think they carry different connotations. On a purely anecdotal basis, I have arrived at a preference between them; it would be fascinating to test them to see if this bears out.

Over the course of my career, I’ve had a number of occasions where I have been asked to explain what a “non/not-for” company is (for the moment, before I explain my conclusion, I’d like to hedge and call these “N/NF”s). While it has always been second nature to me, and to the people I talk with on a daily basis, it’s actually not something, apparently, that comes up in a lot of people’s education, institutionally or practically. It almost seems anomalous for those working outside of fields where the status is prevalent (social service, health, religion, arts).

My friend Michael, who has an engineering degree, summed up the confusion best when, years ago, he said to me, “So your company can’t make a profit, right? What’s with that?” And that’s where my semantic preference was born, after what was a very lengthy conversation.

While N/NF’s are focused on generating profit, they are not forbidden from ending their fiscal years showing one. Certainly many N/NFs struggle to get out of the red and into the black, but it is hardly unheard of for these organizations to yield a surplus (a more proper term than “profit” in this context). Where they differ from commercial enterprises is that the funds stay within the company; they’re not distributed to partners, workers or shareholders. In fact, when these groups seek funds, donors often like to see that they’ve had a surplus: not so small that it looks like bookkeeping shenanigans, not so large that it looks like they don’t need support or are operating too close to a for-profit mentality.

Consequently, I have developed a strong resistance to “nonprofit,” because it seems to suggest that any company operating under that status is prohibited from showing a surplus. Secondly, I think it also suggests that the organization is the opposite of profitable, which to many businesspeople, would indicate failure. Without profit, how does a business survive? While those who travel in the significant universe of N/NF organizations may have no confusion, those we seek to cultivate and secure as donors may experience significant cognitive dissonance when they encounter “nonprofit business.” To some, it may be an outright oxymoron.

I think that “not-for-profit” suggests a mindset, rather than an operational stricture. It does not seem so hard and fast as to preclude profit or, again, surplus. It intimates that the company has something else on its mind, whether it be fostering the creation of art or assisting those in need. It doesn’t mean we can’t succeed financially beyond breaking even, and that exceeding that goal is wrong; it means that when we do, we use the funds to further the organization’s goals. I think “not-for-profit” is less likely to prompt people to an immediate conclusion, and while it may open up a conversation, that can only be to a company’s benefit.

Yes, perhaps it’s just the English major in me that invests “-for-“ with such meaning, but coupled with my real-life experiences, I’ve come to believe there’s more to it than that. I don’t expect you to just take my word for it; at least have a conversation with the key communicators in your organization about it, test it, make a decision. This may be a question of degree and nuance in the words we choose to speak and write, but to everyone fighting the good fight in not-for-profits, every little advantage helps. Even if that advantage is simply two hyphens and three letters.

P.S. For those in the arts, god save us all from “charitable.”




Print page

  • jcravens42

    Once again, you’ve written a blog that reads my mind! I came to the preference for “not-for-profit” for exactly the same reasons you did – I got tired of explaining that, in fact, a “nonprofit” could, indeed, make a profit. The term “not-for-profit” seems to not cause nearly so much confusion. I’ve also taken to using “mission-based” more and more, and that also seems to help people understand the difference of such organizations from for-profit/profit-based companies.

    • “Mission-based” is good, but there are corporate missions as well. Just two days ago, we watched Christine Baranski and Josh Charles on THE GOOD WIFE trying to write a mission statement for Lockhart-Gardner. Missions are not the exclusive purview of not-for-profits.

%d bloggers like this: