Nonprofits Are Businesses, Too

Posted by: Economic Development Team on Friday, January 18, 2019

The Nonprofit Institute at CSM is Southern Maryland’s comprehensive resource for nonprofit organizations, offering programming and consultation to enhance their effectiveness and achieve success in fulfilling their missions. In our latest blog, guest blogger Cara Fogarty, Charles County Coordinator for the Nonprofit Institute, gives insight into this vital industry sector. 


"Perhaps the key difference between nonprofit and for-profit businesses lies in perception — society’s and their own," notes nonprofit consultant, Sonia J. Stamm.

When many of us think of a nonprofit organization, we conjure up images of people helping people:  people serving food to the hungry, helping the homeless find shelter on a cold winter’s night, or helping others learn to read, to name a few.

What we don’t usually envision when we think of nonprofits are things like payroll taxes, insurance, and return on investment. Those are things for businesses to think about, right? Nonprofits, we tell ourselves, simply ask others for money or perhaps write a grant proposal or two, and then use that money to help others in some way.

Guess what? Nonprofits are businesses too. Although set up differently than a for-profit business, nonprofit organizations must be concerned about the bottom line and in many cases, all those other things previously mentioned.

A common myth is that a nonprofit can’t actually make a profit.  However, to survive, nonprofits must ensure that their revenues exceed their expenses. If they don’t, the nonprofit is out of business. While the goal of a for-profit business is to see a profit from the provided service or product, the goal of a nonprofit is to meet its mission.

Some nonprofits are run entirely by volunteers and thus don’t have to concern themselves with payroll taxes and related concerns. However, many nonprofits have paid staff who are often highly experienced professionals in their field – accountants, marketers, human resources, etc. With paid staff, a nonprofit organization is subject to local, state, and federal law regarding insurance, liabilities, payroll and unemployment taxes, and much more.

It’s all about measuring success. Even though the definition of success is different, and the measurement tools may be different, the bottom line is that the same tools and practices that enable businesses to succeed also help nonprofits fulfill their missions. A successful nonprofit is run in much the same way a successful business is run. Perhaps awareness of this can help shift the perception and lead to a greater understanding of both endeavors.


From Charles County Economic Development Department

Of Charles County’s Major Employers, four of the Top Ten are nonprofits. Charles County Public Schools rank second on the list, with 3,631 employees. Our local hospital, University of MD Charles Regional Medical Center, employees 680, and La-Plata based College of Southern Maryland employs 550.  Nursing care provider, Sagepoint Senior Living Services, is also in the top ten. Our nonprofits are important to Charles County’s quality of life, not only because of the valuable programs they provide, but also because of their economic impact within our community.

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