The United States has a lot of nonprofits, approximately 1.5 million, in fact. Little Falls has its share of nonprofit organizations, all of them set up to meet some need at the time of formation.
I happen to work at one of them and have served on the boards of others, so I have a solid background in nonprofit management. I also have experience in operating a couple of businesses. In comparing nonprofit management to business management, hands-down, running a nonprofit is more complicated. When it comes to business, you need to please your customer with the product or service you’ve promised and money is exchanged as part of the deal. Meet the need and your customer is happy.
Because of its tax-exempt status, a nonprofit must meet the mission it promised within its Articles of Incorporation and follow a number of other IRS rules in order to keep that exemption. These rules can be complex, so it is no easy task to keep up with them all. Nonprofits have to please a variety of stakeholders, including grantors, foundations, governmental units, members, donors, volunteers, clients/customers, and the general public.
In addition, while it might seem that tax-exempt organizations don’t pay any taxes (it’s in the definition of being tax-exempt, right?), there are occasions when they do pay taxes. If they have employees, they are kicking in the employer portion of payroll taxes. When making purchases at local stores, if they don’t have an exemption form on file with the store (a royal pain for an occasional purchase), they pay sales tax too.
Due to all the requirements and rules involved with running nonprofits (not to mention regular organizational duties, fundraising, and the perpetual state of having more work to do than people to do it), it should come as no surprise that many people don’t know much about what it takes to run a nonprofit.
One of the trends I’ve seen among nonprofits in Little Falls is the drop in the number of people available to volunteer, whether as a member of the board of directors or on tasks related to daily operations or special events. This tracks with societal trends mentioned in “Bowling Alone: The Collapse and Revival of American Community” by Robert D. Putnam. Fewer Baby Boomers or Gen Xers are volunteering than the generation prior to the Boomers.
Couple this drop in the volunteer pool with the general lack of knowledge of what it takes to operate a nonprofit and you’ve got a serious problem developing among local nonprofits. Who is going to be around to run them as people age out of them? (Understand that many people who are currently volunteering are retired from the workplace and are using their retirement years to fill these roles in the community.)
Nonprofits in Little Falls need to consciously work to address this issue, finding ways to transfer knowledge of how to run nonprofits to younger generations.
The public, too, has a role to play in this. Members of the public need to know how to judge the effectiveness of a nonprofit organization. Understanding that nonprofits are required to be transparent in their operations and are not allowed to provide private benefits to specific individuals or organizations with their resources are crucial aspects of being able to judge that effectiveness.
If a nonprofit won’t provide its annual IRS Form 990 upon request or explain how its board is elected, those are red flags that show the organization lacks the required transparency. (If you’re at all interested in seeing a nonprofit’s Form 990, sign up for a free account with Guidestar and do a search for the organization. Guidestar provides 3 years worth of 990s for most nonprofits.)
Knowing the difference between nonprofit designations also helps. The two most common types of nonprofits in Little Falls are 501(c)(3) and 501(c)(6). The IRS provides a definition of 501(c)(3) organizations here and 501(c)(6) organizations here. To further your knowledge of nonprofits, check out this page of links from the IRS. While it might seem to be dry reading, when you’re looking into how a nonprofit is supposed to function, it’s very useful.
Do you feel you have the necessary knowledge to serve on the board of a nonprofit in Little Falls? If not, what information would be helpful to you?
Do you think Little Falls has too many nonprofits, just the right amount, or too few?
How should local nonprofits go about finding new volunteers?