August 17 is National Nonprofit Day. We’d like to take this time to shine a spotlight on nonprofits and talk about their function and place in our society. Nonprofits are often thought of as charities that give and do for people less fortunate in our communities. This is a very simplistic way of describing these essential organizations. Nonprofits are the stitching that holds the fabric of our community together.
What is a Nonprofit?
There are different types of nonprofits. Agencies like Habitat for Humanity, Jackson Interfaith Shelter, Jackson County Humane Society, and others like it are nonprofits. But nonprofits also include hospitals, churches, and some universities and business agencies. To be considered a nonprofit, an organization cannot share profit for anything other than to serve its mission.
The term itself is a misnomer. A nonprofit organization is excluded from paying tax on profit and other certain things, because it is essentially serving a purpose or providing a service to the public that the government doesn’t provide. Being a nonprofit doesn’t mean earning a profit is not allowed. It just means profit must go directly back into the organization and used toward the service being provided in order to be tax exempt.
For tax purposes, nonprofits are in a tax exempt category. The tax laws related to nonprofits are beyond the scope of this article, but we’ll sum it up quickly. Most people equate nonprofits to a 501c3. Habitat for Humanity and other nonprofits like it are in the 501c3 category. Hospitals and universities, for example, are not. There is a different nonprofit tax category for them.
How Do Nonprofits Get Money to Operate?
There are various sources of revenue nonprofits earn to support their mission and sustain the organization.
Donations and Grants
Nonprofits rely heavily on financial supporters in their community. Financial supporters come in the form of individual and small business donors, corporate foundations, and grants. When a person, company, or government agency gives money to a nonprofit, they can receive a tax credit for it. This makes supporting a nonprofit an attractive option for investing in your community.
Earned Revenue
Some nonprofits sell products or services to earn income to support their mission. Habitat for Humanity, for example, has the ReStore, which is a resale outlet that serves as a source for people to donate and purchase household items like furniture, building supplies, and other home goods. The profit earned from the sale of donated products goes toward Habitat’s mission right in the county they operate in.
Service Fees
It’s not unusual for nonprofits to charge a minimal fee for the service they provide. In most cases, the fee would be much lower than a for-profit business would charge, but it helps to offset the cost to provide the service.
Speaking of service fees, it’s important to note that just because a nonprofit exists and serves a critical function doesn’t mean they strictly provide charity. Providing a service or product for free when a person is in need of it is not a bad thing. But providing the opportunity for the person to work toward their own success is an even better model.
A Hand Up, Not a Hand Out
Habitat’s philosophy has always been “a hand up, not a hand out.” Habitat believes in providing people with an opportunity to work toward self-sufficiency through housing stability. Having a safe, decent, affordable place to call home is a vital foundational need we all have. Habitat’s programs help people realize their dream of homeownership, but not by giving away houses.
Whatever the vision and mission of the nonprofit, these organizations are an important part of all communities. In one way or another, most of them help ensure everyone has access to basic needs, like food, housing, and healthcare.
Support Your Favorite Nonprofit
Donating to a nonprofit in your community is a wonderful way to give back if you’re fortunate enough to have your own basic needs met. But donating money isn’t the only way to support nonprofits. Most nonprofits need and value volunteers. Love animals? Volunteer at the animal shelter or humane society. Handy with a hammer? Volunteer on a Habitat build site.
Whatever cause is close to your heart, there is most certainly a nonprofit out there that you can plug into and make a difference.