Nonprofit, For Profit: Mission and Money
Our business is a mission driven organization. We teach kids from all walks of life how to code. We are also structured as a for profit organization.
We’ve received a wide array of responses on this. Some people love that we went this route. They associate a for profit business with stability. Other people can’t comprehend that we could possibly be mission driven while being a for profit business. After doing this for a few years and working closely with both for profits and nonprofits, I don’t think that either end of the spectrum is right.
At the end of the day, it all still comes down to your mission and how you put money in the bank in order to serve that mission.
The truth is, you can’t run a good nonprofit without cash in the coffers and that truth is exactly the same for a good for profit business. You’ve heard the saying cash is king, and that is true no matter which route you take.
If you are for profit, you better be thinking of a valuable product or service for which people will exchange hard earned dollars. You live and die by the quality of what you sell. If your product sucks, you aren’t going to get paid. If you aren’t great with customer service, you won’t keep customers around for very long.
If you are nonprofit, you better be thinking of how you are going to pitch your mission in order to win over donors or how you are going to sequester members of your team from day to day business functions to write grants and pull in dollars from foundations, government entities, or other sources.
Both types of entities still require dedicated staff and dollars to make more money.
Ethics are often what people are most concerned about when they hear about a for profit business in comparison with a nonprofit business. The assumption is that those in nonprofit businesses are being held accountable by granting entities or government entities that provide funding or tax breaks for those businesses.
Sure, there are safety measures in place as well as metric tracking checkpoints, but that still doesn’t eliminate the risk for unethical practices. As a matter of fact, in some of the better run nonprofits we’ve seen, these measures and checkpoints actually hinder progress because the organization in question is usually executing at peak performance and these factors slow them down or take valuable staff time away from the true mission of the organization.
From the perspective of running an effective business, it is important to make a decision that will best suit the mission. If that mission lends itself to funding opportunities that look like grants exclusively available for nonprofits, then maybe its a good idea to go the nonprofit route. If the mission is to sell a surefire product that will make people’s lives better but doesn’t fall in the traditional classifications of the nonprofit realm, then it’s probably a good idea to spin that business up as a for profit and figure out a way to make that product.
Both types of businesses work hard to make money. It is simply the way they make the money that differentiates them.
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Alex Sejdinaj is a cofounder of South Bend Code School, GiveGrove, and Code Works. He loves building cool stuff that helps people.
