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Mar 9, 2022
Posted Under: President's letter

Our nonprofit economic impact report is ready for you to use when you speak with policy makers, or do your own planning, or understand the world around you, and our goal is to create ways for you to use it as if it were your own. We’ve found that sometimes when we share our report we run straight into myths about our sector and our work. It can be hard to know how to respond in a way that feels strengths-based, relationship focused, and at the same time informative so the conversation can shift to a more productive place. To that end, below are five of so many myths about nonprofits followed by possible responses to get you unstuck in these sticky conversations.

  1. Myth: Nonprofits are all the same.
  2. Myth: There should be fewer nonprofits – or the “Why don’t you all merge?” conundrum.
  3. Myth: Nonprofits only show up to ask for money, time, or people. We are “takers” not givers.
  4. Myth: Nonprofits shouldn’t make money.
  5. Myth: Everyone should be a volunteer – or “I can’t believe that person makes a livable wage.”

Let’s take them one-by-one.

  1. Myth: Nonprofits are all the same.

Many people assume that all nonprofits are direct service organizations – and they typically think of health and human service organizations as being the “real” nonprofits. In our report, we explore the rich diversity of Alaska’s nonprofits. We point out that houses of worship are nonprofits just like charitable organizations, or that when most Alaskans roll out of bed in the morning and switch on their lights, they are engaging with a nonprofit. We often need to explain that because Alaska has no county system of government, nonprofits provide services associated with counties in the Lower 48. We are the electric co-op, the economic development agency, and the CDQ. We are healthcare and ambulance services. We are about the environment, pets, and schools. We are so many things that many people don’t consider.

We invite you to follow our lead when you meet a policy maker for the first time. In our meetings, we lean into this myth as a way to start a conversation. We talk about what the person loves about their community, and then we connect the dots to a nonprofit. The dots are always there, and the connections bring interest and new understanding. From there, we can explore what’s next.

  1. Myth: There should be fewer nonprofits – or the “Why don’t you all merge?” conundrum.

What is more important than the number of nonprofits in any community is how they are meeting the goals they set out for now and the future. In other words, is the community well served? Nonprofits fill the void created when government either can’t or won’t provide for a community or when the marketplace doesn’t sustain the services through earned income.

Few understand how nonprofits in Alaska are formed. There are five distinct ways: (1) Alaska’s legislature has the power to create nonprofits, which is rarely done in other states – think regional aquaculture or oil spill cleanup organizations; (2) Congress has the power to create nonprofits, which also is rarely done – think the American Red Cross and the Boy Scouts; (3) National organizations create statewide or regional versions of themselves – think the American Heart or American Lung Associations; (4) All Alaska tribes are incorporated as nonprofits; and (5) Individual initiatives create and fill a community need. This latter form is the most widely used and spawns many small grassroots organizations. It is also the source of many organizations that are confronting injustice, inequity, and disparity on the ground. Is there duplication and overlap as a result of individual initiative – yes, sometimes. But we don’t tell McDonald’s and Wendy’s to merge because they both serve fast-food – we like choice. And in the nonprofit sector, choice often means more access, more on-the-ground community presence and focus, and more place-based engagement of volunteers and donors. It can also mean more local employment.

Are there times for merger – as when a community is better served because groups are working to make sure there is a clear path to access their services? Or when there is efficiency on the back-side of managing the business? Yes, of course. Are these endeavors time consuming and expensive? Yes. Are other options like fiscal sponsorship available to help people with new ideas nurture them before actually creating a nonprofit? Yes! We support all these efforts and so should the person who is asking. Interestingly, when you speak with a person who believes there should be fewer nonprofits, notice what is on their list and what is not. This is often the next place to take the conversation.

  1. Myth: Nonprofits only show up to ask for money, time, or people. We are “takers” not givers.

If you have been in a meeting with a legislator or a local or national policy maker, chances are you have found yourself on the receiving end of a conversation that is filled with either the perception or the reality of a power imbalance. This can result in you, the nonprofit representative, feeling “less than” during the interaction. And it can lead to a conversation in which the other party assumes that you have nothing to offer when, in fact, you have much to give in local knowledge and on-the-ground understanding of the complexities of the issue being discussed. Additionally, you can point out that nonprofits have the ability to make the best use of resources by leveraging private funds and volunteer hours for every dollar they receive from government.

This means starting the conversation with transparency. If you are there to ask for something – give something in return. Share information, knowledge, experience. If you never get in the room because they don’t know your value and what you bring, start with your own invitation. Also, be ready with your own data – how you are saving government money by simply doing your work or how a public/nonprofit partnership actually works. Spell it out. Play it out. Show the leverage. Share the opportunity. Celebrate how it could work better, faster, or deeper when we see each other as partners. There is not one taker and one giver. There is only how we make it work together.

  1. Myth: Nonprofits shouldn’t make money.

We are fond of saying that “nonprofit” is a tax status, not a business model. The “C” in our nonprofit status is a constant reminder that the IRS thinks of us as corporations. Sure, many essential aspects of our nonprofit status make us different from a for-profit business, but making money is not one of them. More money means more mission. Our highly regulated environment means all money must be spent on mission, and we can achieve little mission over the long term without money. No other type of business operates with the assumption that money is a bad thing and that too much of it is even worse. No other type of business receives money with so many strings attached that most days making money is the least of their concerns.

As nonprofits, we generate our unrestricted money, which is usually the only money we can save for a rainy day, from one of two sources: either we earn it through mission-related business income – think tuition, or concert tickets, or membership dues – or we raise it with donations from individuals, foundations, or businesses. Every nonprofit needs a mix even within these parameters and make no mistake, ending the year in the “black” is often nothing short of a miracle. But when we figure it out, when we can build savings, when we can generate stability for mission-based programs that people and communities depend on – that should be a cause for celebration, not defense. And it certainly should not be a reason for a donor or government agency to say “no” to a group because they “don’t need it.”

The time is now to invest in nonprofits as key partners in every community’s effort to recover from the pandemic while maximizing the infrastructure money and other relief dollars. Because at the end of the day, more money translates into more mission-based services for us all.

  1. Myth: Everyone should be a volunteer – or “I can’t believe that person makes a livable wage.”

As we confront the persistent gender pay gap, and we talk about nonprofit jobs making up 12% of Alaska’s workforce, we risk a conversation that starts with “I can’t believe that person gets paid so much money.” Interestingly, inside our sector the opposite conversation is happening and it is “why do I have to choose between a meaningful professional career that makes the world a better place and a living wage?” It’s difficult to respond to the disconnect between the experience of workers struggling to pay college loans, earn a living, and become proficient in their chosen career and the incredulity of potential donors and others who likely have not had to make this choice without appearing defensive or self-serving.

So, we might respond with the story of staff who often work two jobs to do the one job they love. Or we can turn to the impact of the “Great Resignation” and talk about the need to stay competitive in the market to ensure continuity of services. Or we could cite their own business experience that shows staff retention as the biggest cost savings in the largest line of most business budgets and discuss everyone’s reality that recruitment is far more expensive than any other alternative. If we can move past the specifics of an individual’s pay, we can turn our attention to inequities in the way most of our BIPOC led and serving nonprofits are understaffed, under resourced, and underpaid and instead focus on the opportunity to make a significant adjustment. Or we can talk about how it will take every employer to change their practices, and even a change in state law, to see an end to harmful hiring practices that perpetuate the gender pay gap. Let’s move to these conversations – that is where public policy advocacy will do its best work.

More Nonprofit Myths?

Are you regularly confronting a myth about the sector that you want us to help reframe? Maybe it is the overhead myth  or how nonprofits only favor one side of the political spectrum. Let us know. We are happy to dig in.