• Kendra Butler

Essential Businesses & Busting Nonprofit Myths

Updated: Apr 30, 2020

This is an unprecedented time. The demand on World U.P. and our organizational partners is at max capacity. In the time of a pandemic, the only thing that matters is the safety of our neighbors and ourselves. Businesses are closing, virtual living is the new normal, and we are all on house arrest. It is also a sad time for our generation, which has left a lot for me to reflect upon.

One thing has become abundantly clear - Nonprofits are essential businesses/services. We are not optional - we provide resources that are necessary for the survival and continued growth of the world.

I think that this new revelation surprised us - this isn’t what we were taught and it’s not the way society operates. Since engaging with the nonprofit community, there have been a number of myths that have continuously been debunked in my mind - so I thought it would be best to share them now, as we rethink our way of living, and our impact locally & globally.

Myth # 1: Nonprofits don't need to make a profit.

I really wanted to tackle one this one first because it is so critically misunderstood. Nonprofits are businesses too. Legally, we are a non-stock corporation that had to go through several nuanced steps to have the IRS deem us worthy and charitable enough to receive a 501(c)(3) status. It can take up to 2 years to complete the process.

The only thing that truly distinguishes us from a business is the direct exchange and connection of payment to services. Nonprofits have two customers: our donors and those in the communities we serve. We must make more money than we spend to place money back into our communities rather than in the pockets of shareholders. We have employees, we have overhead, and we have strategic plans and dreams to build upon; to do so we need all of the same resources as businesses do. In fact, for us, a profit isn’t optional - it's essential for our growth, sustainability, and to ensure we provide livable wages to our Social Servant employees.

Myth #2: Nonprofits don't pay taxes.

Yes, we’re tax-exempt under the IRS, which may sound as if non-profits don't pay taxes. The truth is we file a yearly tax return just like anybody else! We have to disclose every dollar that comes in and every dollar that goes out. In fact, we are liable for taxes in two key areas: First, we must pay employment taxes for all employees - state, federal, medicare, and social security. Second, we must pay taxes on all income received from activities that do not align with our mission. This means, if my mission is focused on securing community Wellness and we sell a t-shirt with our logo on it, we must pay taxes on any profit made from the sale. The only thing we don't get to pay taxes on is donations we receive from the public and grants received to create programming in alignment with our mission.

Further, we are held to a much higher standard than normal businesses. We are evaluated by our mission, our programs, and our finances to make sure the money we collect directly supports our mission. Additionally, all of our tax returns are public. Anyone may choose to visit guidestar.org and pull up our tax returns. We are under the watchful eye of the IRS and the public around every turn. As a nonprofit, using public funds, World U.P. specifically aims to be as transparent as we can to ensure our community knows their funds are being used as best as possible.

Myth #3: Giving doesn't benefit me/my bottom line.

This one especially stands out, because there are so many benefits to giving. Not only are you doing good, but you are eligible for a tax break by doing so. If you give on behalf of your company, your company gets a tax break. Here's something to keep in mind: non-profits, including World U.P., can provide tax receipts for the services or goods you willingly provide - a donation doesn’t have to be cash.

If you're supporting a non-profit make sure they are a 501(c)(3) company or an IRS designated organization that can give you a receipt for services, goods, or cash donations. Not only does this assist you, but it keeps them accountable for the goods and money they receive. Giving can save you money and indeed makes good business sense for your bottom line by minimizing your taxable income.

We live in a time where seemingly everything is public knowledge on the internet - you are your likes, your favorites, and your social support - this is especially important for businesses. As a business with an online presence, there is an entire world of consumers wishing or actively aiming to support companies with a measurable impact on their communities. Many are so eager to help they will pay premiums on products sold by those companies. Think about how much more you pay for organic products, because you know they follow sustainable farming practices and are likely void of additives that could harm you or others.

People pay for better products from companies that make a difference. along that line, employees want to work for companies that make a difference and improve their communities. You will attract better talent and more passionate people to your business if you positively impact your community.

Giving differentiates you from your competition. If you have the same product at the same price but you follow better business practices, that's a game-changer! Moreover, when you support your communities and nonprofits you open yourself up to A Whole New World of customers. A website and social media are forms of currency for non-profits. We have already invested in both, and it costs nothing to promote you on it. In fact, we would love it if you promoted us on your social media - which also costs you nothing.

Last but probably not least, when you give to your community and supporting causes that make a positive impact, you will be seen. The public relations opportunities are endless and benefit both parties. This may sound disingenuous because we don't want to do things merely for the applause, but non-profits want and need that exposure as well. We are willing and happy to talk about our wonderful partners in the community!

Myth #4: Only large donations matter.

What could $5 do to improve somebody's life? Well let’s break this down: $5 is about the cost of a cup of coffee. Someone who visits a coffee shop 3-5 times a month generally spends at least $5 each time, which translates to spending an average of $20 a month on coffee, or $240 a year!

What if I told you that for the cost of one cup of coffee a month World U.P. can feed over 100 families in a single year? It's true. If you give $5 a month in 12 months that's $60. Sixty dollars is the food cost for us to bring the Mobile Produce Pantry into a food desert once a month where we feed over a hundred families.

It sounds insignificant, but if 12 people gave $5 a month for a year we could continuously run a program without fear of financial insolvency. If that's what $5 a month can do just think about what $10 or $15 or $20 a month can do on a recurring donation basis.

It's nearly effortless to set up a recurring donation. Virtually every nonprofit has this option when you click on “make a donation.” You complete the set up once and an automatic deduction is taken out of your bank account every month. For you, that's one cup of coffee - for World U.P. it's a significant addition to our budget - for a family that’s food security. All donations matter. All donations matter. Give it a try on our World U.P. giving page ;-)

Myth #5: I can't give you a check, I can't help.

There are two main categories nonprofits generally struggle with developing within their first few years: financial resources and human resources. In both areas nonprofits are forced to be social entrepreneurs, needing to come up with creative solutions, be especially mindful of our expenses, and share the burden with other organizations. There are multiple avenues of support you can provide without spending a single penny:

  1. You can host a World U.P. fundraiser: just reach out and we’ll provide you with the resources you need, such as our logo & other branding materials, to start raising money! By using social media you can market to customers, friends, and family online. Your business platform and your influence as a business leader in the community raise awareness of the World U.P. cause, and aides us in funding impactful programs. You can even guide people directly to our website; you needn’t have to collect & manage the cash donations. In fact, Facebook will collect the cash for you and automatically deposit the funds into the World U.P. bank account.

  2. You can create/sponsor a limited product: just split the proceeds with World U.P. for one month, a year, or more; it’s entirely up to you! It’s a win-win, you receive sales and we obtain funds. Additionally, we will actively market your new product at no cost to you. World U.P. will diligently promote your name on our social media platforms and website directly into the hands of the people who care.

  3. You can provide pro bono services: said services can be provided selectively to World U.P., such as offering mentorship opportunities to help us build our business. This will supply you with a tax write-off, but more importantly you'll foster new business partnerships.

  4. You can provide free marketing and advertising on your platform: get creative, we want to hear your ideas. These ideas are just the tip of the iceberg!

These are the key myths we've found. What are some things you have experienced that contradict what you originally believed?

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