WayQuest navigates the challenges nonprofits face while applying established business practices to enable these organizations to best serve their constituents.
Nonprofits face unique challenges which commercial, for-profit, companies do not experience. Both types of companies are required to be in compliance with some type of regulations and to report on its financial activities. Boards of directors in both types of companies are responsible for establishing strategy and overseeing operations. The products and services distributed by both types of companies benefit their recipients in some way.
One significant difference is that nonprofits are established to serve the public good in some way. Because of this, they are not required to pay income taxes while conducting business which fulfills the defined public-serving, charitable mission.
A second difference nonprofits face is they have two customers. The value exchange is not reciprocal. The beneficiary of the product or service offered by the nonprofit is not the one exchanging something of value to receive the product or service. The one providing the resources (or means of acquiring the resources) to then create and distribute the product or service is broadly viewed as a donor, supporter or patron. Responsibilities, messages communicated, and ways of interacting with these two customer sets must be considered in concert with each other.
A common misunderstanding promulgated by the name “nonprofit” or “not-for-profit” is the idea of spending all of the money that is brought into the organization within one calendar year. This does not make sense to assign such a burden of spending on an arbitrary calendar line in the sand (a topic for deeper discussion).