Friday, November 30, 2012

Guest Blog: Nonprofits

Ever wanted to really know what a nonprofit, like us, is really all about? Check out this guest post below by Lani Hanson. She gets down to the nuts and bolts as to how we operate.

Profit From Knowledge of Non-profits:

Green is all the rage right now: community gardens, co-ops, farmer’s markets.  But what about it’s do-gooder predecessor and now compadre, the Non-Profit?  With the world’s citizens going the way of eco-conscious, kale-wielding composters, it’s about time the myths of non-profits are debunked.  Find out how to maximize your contribution to your community by understanding how the non-profit and other associated organizations work.

Let’s start with our very own San Antonio B-cycle:

San Antonio Bike Share is striving to provide citizens and tourists the ability to maximize the environmental, economic, cultural, and social benefits of bicycling. The nonprofit organization provides an efficient, sustainable mode of transportation, while also promoting health, quality of life, and preservation of the environment for San Antonio residents, commuters, and visitors.  

They say they’re trying to benefit the environment and people, but is this just another green-washed program?
No.  As a 501c3, San Antonio B-cycle is legally obligated to operate not for a profit (hence the name), but for its constituents, meaning you the residents and visitors of San Antonio.  There are no incentives to non-profits to deceive the public.  Non-profits by definition are there to provide for the community they have professed to serve, upon receiving the 501c3 tax exempt status.

What does green-washed mean?

Wikipedia’s definition says: Greenwashing, or "green sheen", is a form of spin in which green PR or green marketing is deceptively used to promote the perception that an organization's aims and policies are environmentally friendly. Whether it is to increase profits or gain political support, greenwashing may be used to manipulate popular opinion to support otherwise questionable aims.

What does 501c3 tax exempt status mean?
A non-profit is a charitable organization.  Non-profits are not operated for the benefit of private interests, private shareholders, or an individual, and they are not allowed to influence legislation.  Basically they are here to do good and serve the community.  Since they are operating for the good of the community, they are given benefits by the government.  This is to offset the fact that without an aim for income generation, non-profits have to rely on charitable contributions to keep their doors open.  Benefits non-profit’s receive include being able to incentivize contributions by offering tax deductions, are exempt from some state and federal taxes, and are eligible for lower postal rates.

If I donate to a 501c3 non-profit organization, will I receive a deduction on my taxes?
Maybe.  When doing your taxes, you either itemize or take the standard deduction.  If you are a freelancer who can “write things off,” or are someone who makes a lot of donations throughout the year then most likely you will itemize your taxes and would benefit from your charitable donation.  If you have a regular wage or salary job, most likely you will take the standard deduction where the deduction for a charitable donation will not benefit you tax-wise.  If you plan to itemize, you must obtain a receipt from the organization for your donation to show the IRS if you are audited.

Philanthropy is important, but do your research before allocating those hard-earned resources.  I recommend volunteering for the organization you are thinking about donating to.  Find a personal connection to a few organizations that touch your life.  Be aware that the smaller the organization and the better you know them, the more impactful your donation will be.  Although larger organizations have their merit, they tend to have more bureaucracy and less transparency as to what your money is going toward.

San Antonio B-cycle charges for their services, isn’t this illegal for a non-profit to do?
No.  Some non-profit’s do not charge for their services, and some do.  They always, however, try to make their services as affordable as possible.  San Antonio based their prices on how much income they need to generate to stay open, and keep providing their stellar service to you.  Non-profits have to pay bills just as businesses do: rent, utilities, equipment, staff, etc.

Where does the money come from to operate a non-profit?

Organizations can generate money in many different ways.  They can charge a small fee to those using the services.  The most common revenue streams include grants from foundations, individual contributions made by you or a wealthy community member, and fundraisers.  Give 501c3’s some props because not only do they have to do the job of a business – provide the service, but also fundraise on the side.  Some, but few, organizations qualify for governmental funding, which usually provides more funding stability to organizations than other funding streams.  Most likely organizations have all of the above income streams, not just one.  Every penny counts.

Do non-profit’s give money to anyone in need in their community?
Unfortunately not.  It takes a lot of alignment to receive funding for a 501c3.  The non-profit has a mission statement which outlines the aim of their services, but so do foundations and government grants.  So only if the organization’s own mission statement fits within this mission are they eligible for funds.  If the agency is lucky enough to receive a grant, they essentially enter into a promise to only use the funds as they have specified through their mission and services.

What if after all this, a non-profit does have a profit at the end of the year?
They inject it back into the programs and make them bigger and better, able to serve more people or make their services even more affordable.

What is the difference between a non-profit and a co-op?
A non-profit is not owned by anyone or any group of people.  It is ultimately governed by its board of directors, and run by an Executive Director + staff.  A co-op is owned by its members.  Let’s use the example of a grocery store co-op.  There are essentially two types of co-ops: member-owned (the people that shop there for groceries) and employee-owned.  You buy a share of the co-op to become a part-owner, have voting rights at meetings and general influence how the co-op is run.  Organic and fair trade products are usually the hallmark of co-ops because the people shopping also decide what is available through their ownership, and naturally want the healthiest possible products.

Photo Credit: Lani Hanson, Let’s all do what we can to contribute.

And lastly the most frequently asked question…

Do people get paid to work at a non-profit?  You’re a volunteer right?
Yes, the staff at non-profits are paid.  Non-profits run like a business in this sense.  There is an Executive Director and other support staff, depending on how large the organization is.  Please bear in mind though, usually staff at non-profits are paid 10-20% less than their business counterparts.  The quality of service is not lower, these staff members have consciously taken a pay cut in order to participate in a project they believe in and to ensure these services are available to you.  Ways that you can contribute to make sure your community organization stays open include getting on their mailing list for volunteers, making a donation according to what suits your situation, bringing your talent to a non-profit staff, or just giving a big smile and a word of gratitude to those already staffing the organizations in your community. 

Author and guest blogger, Lani Hanson, worked at 3 social service non-profits in Minnesota, Texas, and California.  She was also a volunteer staff member at the San Francisco Bike Kitchen non-profit co-op.  She now is the Communications Manager for a start-up in Berlin. 
Follow her on twitter @lanihanson.
*This article brought to you by Andrew from bikesnbits





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