Words are powerful and have a way of evoking an immediate emotional response to the reader or listener. When you hear the references “nonprofit” organization or “for-profit” corporation which one gives you a:
· Stronger sense of competency?
· Stronger sense of viability?
· Feeling of strength?
· Sense of longevity?
· Sense of management prowess?
There is this myth that private sector businesses (for-profits) are better managed, pay their employees better, have less worker turnover, attract better talent and are more motivated to succeed than are third sector organizations (nonprofits). I have been on this planet long enough to know that this is a myth without basis. The incompetence and indifference I experience from private sector businesses of most stripes staggers me at times. And while some third sector organizations have their shortcomings as well, the two sectors offer a distinction without a difference in most categories.
What if we change the conversation and call it what it is? Let’s call the organizations we work for “stakeholder” corporations and make it our duty to describe our distinctions from “shareholder” corporations. Both are, indeed, corporations (501 c3, 501 c9, s-corp, c-corp, LLC etc.). Both types of corporations work hard to generate net revenue (profit). Both have customers and constituencies. Both have to work with banks and manage finances. Stakeholder corporations are certainly mission driven, and increasingly shareholder corporations claim to be mission driven…albeit at their core – to be profitable. And both have people and institutions “invested” in the corporations’ success…stakeholders and shareholders.
As advancement professionals, we immediately start from a deficit in our conversations and interactions with donors, donor candidates and the public, because we work for a “nonprofit” organization. Think of the opportunities when interacting with your stakeholders and others when they ask “what do you mean you work for a stakeholder corporation?” Helping them understand the distinctions between stakeholder and shareholder corporations can lead to further engagement and support. It is not about profit, it is about delivering on your promises to those holding you responsible.
The reference of “charity” to describe your organization does not cut it either. The first three definitions of charity in the Merriam-Webster dictionary are:
1. the act of giving money, food, or other kinds of help to people who are poor, sick, etc.; also : something (such as money or food) that is given to people who are poor, sick, etc.
2. an organization that helps people who are poor, sick, etc.
3. the organizations that help people in need
By these widely accepted definitions, most stakeholder corporations are not “charities” and by using that reference for your organization, if you don’t do 1-3, you are doing a disservice to those that do.
Let’s be honest, there are plenty of unprofitable shareholder corporations and many stakeholder corporations that have very healthy balance sheets. Let’s get past this fundamental and self-fulfilling label of being a “nonprofit” organization, and call it the way it is…you work for a stakeholder corporation that has thousands of individuals who are invested in your very important work and mission.
1. Be able to describe your organization in terms that donors can understand and that reflect reality.
2. Build your communication strategy around mission and the roles of your stakeholders in fulfilling the mission.
3. Do not let your institutional self esteem be diminished by the myth of private sector prowess.