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Nonprofits Seeing a Shift to Functioning as Businesses

Salt Lake City—When you fund a nonprofit, where do you want to see your money go? For many donors, the answer to that is simple: they want to see their money going toward funding programs. But the simple truth is that nonprofits have plenty of other expenditures not related to their programs, for which they still badly need donations.

“All of the costs that businesses have, nonprofits have,” said Chris Bray, vice president of collective impact and operations at United Way Salt Lake. It’s common sense—but many donors to nonprofits forget that nonprofits are still businesses, even if their mission statements and goals are all service-oriented.

Thursday morning, nearly 20 nonprofit industry professionals met to discuss the state of nonprofits in Utah, with topics ranging from how the business community can better assist and integrate with nonprofits to what the world would look like without nonprofits. That nonprofits are more and more tasked with their own sustainability was often front and center in the conversation.

“Sometimes, culturally, as nonprofits, we get into our own way. We carry around this ‘change the world’ mentality—people come to us for these jobs to help them make a difference. That’s great. That’s energy you want to capture and skills you want to use,” said Shawn Jimerson, executive director at the Urban Indian Center of Salt Lake. “But it doesn’t always mesh very well with the expectation of proper time management, handing down responsibility, handing up responsibility, finance, and all those things that make a business function well for the sake of the business. … If you’ve ever had an executive director that’s been a social worker—that doesn’t make the best business mind. Now, we’ve shifted to a place where it’s about making the business work. That’s created a huge culture clash.”

Like any business, reducing employee turnover and hiring bright, passionate, driven people is paramount to success. But as most nonprofits can’t afford to pay competitive wages for their talent, they are forced to “depend, to an extent, on people feeling the passion of what [the nonprofit is] doing,” said Andrea Alcabes, executive director at the I.J. & Jeanne Wagner Jewish Community Center.

As Mircea Divricean, president and CEO of Kostopulos Dream Foundation stressed, nonprofits are often held to a double standard in the community. Those that use their services want the nonprofit to offer the best possible services for free or at low cost, but donors expect that nonprofits can easily function on shoestring budgets, with volunteers as labor. The result, said Divricean, is a difficult situation for any nonprofit.

“It is a survival game, at some level,” he said. “You have to figure out how to educate your donors and supporters to give you the support you need to provide those services.”

For nonprofits to thrive, attendees said they would love for the business community to come forward to offer expertise—be it by educating a nonprofit on business acumen by serving on a board, or donating tech or IT help—and see nonprofits as businesses in need of investment.

“If you look at successful businesses, they have seed money, they have investment. If all you’re getting is that money comes in, money goes out—because you’re just paying for the processes—there’s no ability to grow, to find the niche you need or the expertise your need,” said Cathy Barnhart. “Like business, we need investment. Not just a one-time thing.”

The roundtable was moderated by Utah Nonprofits Association CEO Kate Rubalcava. The full roundtable report can be found in the August issue of Utah Business.