How to make a “non-profit” profit

Are you one of the many accountant firms who won't deal with non profits because they don't have money - or there is too much red-tape? Maybe there is a different way to view this.

Monday 29th August 2016

We recently exhibited at Xerocon in San Francisco and many accountant firms told us that they don't deal with non profits because they don't have any money or because government has put too many regulations in place and so its not profitable.

As the charity sector or non profit sector is one of the fastest growing sectors and we have set up our business dealing solely with non profits this got me to do some thinking. There are over 1.5 million non-profit organisations in the US, 2 million in india, 1.3 in France, 700K in Australia. There is estimated to be over 10million non-profit organisations around the world.

From an accountants perspective “profit” means making financial gain or financial advantage and benefit, a return on investment. Gaining more then what was spent. But profit has another meaning. Just drop the word financial and you are left with gain, benefit, advantage. For a non profit helping their cause is profit. For example if your non profit’s mission is to feed the homeless of New York and last year they feed 10,000 and this year they feed 20,000 then they are profitable.

In this blog I want to make 2 points; 1. Non -profit organisations need to manage their finances in ways as to be profitable, or perhaps sustainable is a better word. They still have to pay for staff, services and carry out their mission and 2. Carrying out their mission is also profit.

Non-Profit and Charities still need to run profitably, they need to have systems in place so they manage the funding, paying for services, staff, taking care of volunteers and still carry out their mission. The focus is not necessarily just about how many dollars are in the bank at the end of the month but with those dollars how many meals can we prepare for the homeless of New York.

According to in 2014 an estimated $358.38 Billion dollars was donated to charities in the USA. The Highest in 60years and in 2015 total giving to charitable organisations was $373.25 billion (2.1% of GDP). This is an increase of 4.1% in current dollars and 4% in inflation-adjusted dollars from 2014. The argument there is no money to be made in working with non profits holds no water. There are many larger organisations that you would be familiar with like Red Cross, World Vision, Medicine san Frontier, Tear Fund etc, These organisations are able to run sustainably other wise they would have folded. But there is a greater percentage of charities that are smaller then the big guys, the same with profit business there are way more small businesses then large corporate businesses and each small business still needs accountants, lawyers etc.

The fact that governments and councils put more regulations and restrictions around non profits means we need smart accountants, lawyers with experience to get involved. We need to use smart and innovative technologies and software solutions xero and infoodle so less time is spent on administration not more, releasing the workers to carry out their mission. We need to learn to work smarter not necessarily harder. We need systems that are transparent and give accountability.

The rewards for working with non profits are not always financial. As mentioned above Profit is gain, benefit and advantage. There is gain and benefit to the donor whether they are donating time or resources. “Give, and you will receive. Your gift will return to you in full—pressed down, shaken together to make room for more, running over, and poured into your lap. The amount you give will determine the amount you get back.” Luke 6.38 NLT

People who work with non-profit organisations tend to be people who care about something or someone outside of themselves, people who are compassionate, who want to make the world (maybe just a small part) a better place. So there is satisfaction and contentment knowing you are contributing to something bigger than yourself.

We are given clear instructions through the scriptures to “Give justice to the poor and the orphan; uphold the rights of the oppressed and the destitute. Rescue the poor and helpless; deliver them from the grasp of evil people”. Psalm 28.3-4 NLT

Of course the largest profit is for the recipient the person who is fed or clothed, housed or given medication, given some more quality to life, or support through difficult circumstances. There is great profit working with non-profits.