What does not for profit really mean (Associations Evolve)
“A language is not just words. It’s a culture, a tradition, a unification of a community, a whole history that creates what a community is. It’s all embodied in a language.”
Noam Chomsky
When I talk to someone from the Associations world, we share a language regarding the context in which we work. We use words like member communication, stakeholders, governance and renewal campaigns, and we know exactly what the other person means.
Language shapes the way we perceive the world and our reaction to it. And yet, one of the most important phrases we use in the sector, is one I believe could be holding us, our teams and our communities back from reaching our potential: not-for-profit.
The term is often used to describe our organisational culture, the way things are approached and a reason for the prioritisation of our activities. For some, it has come to mean we put people ahead of profit and is often synonymous with charity.
However, I’ve worked with 74 ‘not-for-profits’ in my career and I have heard the term mean everything from we can’t charge a lot for our services, we aren’t able to be commercially minded, we don’t expect to be paid well, and we can’t afford new technology, all the way through to accepting bad behaviour from volunteers, and worst of all not holding people accountable for their actions or the fulfillment of policies and procedures.
But in fact, not-for-profit only refers to how the profits of an organisation are distributed. It is merely a financial term, not a moral judgement.
At the core, the main difference between a not-for-profit and a for-profit organisation is how the profits get directed, whereby a not-for-profit cannot distribute profits to members, a for-profit gets to keep the money they make, share it, reinvest, or spend it as they wish.
According to The Australian Charities and Not-for-profits Commission a “not-for-profit can in fact make a profit, but any profit it does make must be allocated towards its purpose.”
“An organisation can still be a not-for-profit if it provides a benefit to a member while genuinely carrying out its purpose.”
“A not-for-profit is generally an organisation that does not operate for the profit, personal gain, or other benefit of particular people.[1]”
The Case For Purpose
Whilst it may seem innocuous to use the term, I feel it is holding us and our organisations back from fulfilling our potential. Why? Because it is often used in the very first sentence of our organisational description, positioning us in the world and eyes of our people and communities.
In strategic communications our 25-word sentence describing our organisations, which is all over our websites, documents and press, is the equivalent of the first smile and handshake.
It leaves an impression. Is it the right one?
In recent years, we have seen a big push in the not-for-profit space to change organisational mindsets to being for-purpose instead.
When we say we are ‘for-purpose’, I instantly want to know – how are you wanting to change the world, and what role can I play to help? For staff, it can be inspirational, and links more directly to the intrinsic motivation to make a difference. Working towards a purpose is working towards impact, however, working in a not-for-profit can be stunting of energy and drive.
Will shifting one or two words in our organisation really make a difference?
When I’ve recommended to organisations to make the shift in their positioning and describe themselves as ‘for-purpose’, it seems to hit a nerve. If it didn’t matter, I wouldn’t get that response. Is it because people don’t like change? I believe it is because for purpose widens the ambition and drive and hangs a sign out that says, we stand for something that matters, and we are passionate about achieving it. It certainly raises expectations and drives impetus for results.
For Association leaders who are managing their organisational (including membership) cultures, saying you are for-purpose, gives us language to better discuss the reason we are all there in the first place – which supports consensus decision making; it helps us work out if our programs are appropriate, worthwhile and valuable, and it aids us in evaluating our combined efforts.
From a communication perspective, in a very noisy world it helps us clarify the message – tighten the delivery of the brand, galvanise a community, stir emotion, inspire action, attract staff, keep talent, sell tickets, market better and raise funds.
Profit is not a dirty word
All organisations must be commercially viable. Things, people, programs and places all cost money, and we need more and more to do things well. In a for-purpose, we are given more freedom to make money to fulfil our mission. It drives a more commercial mindset as we understand why we are doing it.
Not-for-profit is merely a description of where the profit goes. It’s got nothing to do with how we should drive and inspire and connect our communities and the value of the work that we do.
A for-purpose organisation is deliberate, self-determined, explicit and thoughtful in its actions, it is a call to action and a call to arms, and it is focused on achieving its goals.
I would encourage any organisation who calls themselves a not-for-profit to really think about the impact of that language on its culture and the behaviour of its people. Listen out for the conversations about money in your Association and the value people place on it. What could be harnessed from ditching a tax status as your positioning statement and instead having front and centre at every conversation, board meeting, and decision being made, your purpose. This is the change we need to see. The time for not-for-profits is over. The time for-purpose organisations had their time.
[1] https://www.acnc.gov.au/for-charities/start-charity/not-for-profit
