What exactly is a non-profit, anyway?

Remember those thought problems from standardized tests back in the day?

Not all rectangles are squares, but all squares are rectangles.

Well, the same sort of thing applies to non-profit organizations. For instance, not all non-profits are charities, even though all charities are non-profits. Confused yet? How about the fact that labor unions, chambers of commerce and volunteer fire departments all qualify as non-profits, too?

In all, there are 29 different types of organizations that are exempt from federal income taxes under Section 501(c) of the U.S. Internal Revenue Code, but the variety we’re focusing on here is the kind that¬†people donate money to without expectation of return.

This type of non-profit either provides direct services or facilitates others to provide direct services in the following categories: religious, educational, charitable, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or the prevention of cruelty to children or animals.

Charities, or direct support organizations, are what most people think of when they hear ‘non-profit.’ They can encompass everything from food banks to education, as long as they provide a service to people.

But wait, there’s more!

Funding organizations also exist. They assess and provide funds to other organizations for more tangible work, functioning as a sort of charity ‘bank.’ But instead of giving out loans and relying on interest to make their money back with a profit, they give out grants and rely on donors to replenish their coffers.

The species of non-profits described above is what we’re interested in supporting here at Do-Goodery. Our goal is to raise awareness of their missions and direct your contributions their way. We suppose you’ll let us know how we do.

How do I get involved in the non-profit world?

Hey friend – you’re already involved!

Even if you haven’t purchased and distributed your Do-Goods yet (what are you waiting for, exactly?) you’re already dangerously close to joining the merry band of misfits that make up the non-profit sector. The first step is enlightenment, and if you’re clicking around this part of the website, you’re on the right path.

If contributing to non-profits isn’t enough for you, there’s always volunteer work. Use our organizational profile pages to discover where our highlighted non-profits are looking for more people power.

But if you *really* want to sink your teeth into the whole non-profit thing, to the point of pursuing gainful employment, there are some avenues we’d recommend.

You might’ve heard of some colleges and universities offering bachelor’s and master’s degrees in non-profit management. While those would definitely help prepare you for the opportunities and challenges inherent to non-profits, they’re certainly not a prerequisite. (More on this topic coming soon!)

Non-profits aren’t so different from for-profit companies; they need information technology, human resources, financial management, media/public relations… and most of all, plain-old leadership qualities. If your background covers any of those areas, plus some others not mentioned here, you could be a great fit for your local non-profit organization.

In the meantime, and while you contemplate donating your time and talents (or even a change in career), we’ll remain here at Do-Goodery, nagging you chip in while (hopefully) enjoying our Delicious Content.

Why divide non-profits according to budgets?

Not that we at Do-Goodery subscribe to the thought that size is everything, but we are very much interested in the idea of fair competition.

That isn’t to say a non-profit with a $500,000 budget couldn’t beat one with $5 million on its ledger. This is a meritocracy here, so we’d be thrilled to see such an upset attempt come to pass. Regardless of the metrics we present, it’s all about who piles up the Do-Goods from people like you.

At the same time, our reasoning behind splitting the non-profits into two ‘divisions’ is justified in a couple of ways.

First of all, we want to encourage an apples-to-apples comparison. The larger non-profits operate in a different sphere, with larger staffs, more cash on hand and, in many cases, more name recognition among the general public. Like it or not, those are all advantages, especially the last one in our situation. Two non-profits might do similar good jobs in pushing toward their missions, but the one a person don’t immediately recognize will always face a higher standard of credibility.

Secondly, even if the line dividing the two non-profit ‘classes’ is arbitrary, it still creates more races and more drama. For the same reason that sports leagues typically have divisions and wild cards — see Major League Baseball’s current multi-tiered playoff system¬†— we have established multiple chases for championships.

Judging from the publicly-available information at our disposal, the most logical path to dividing these non-profits is via budget. It’s not perfect, but it does the job. May the best organizations win.

What's this about percentage of individual donors?

If you’ve explored our full standings page, you’ve undoubtedly noticed that we have listed the percentage of individual donors for each of the non-profits involved in our competition.

You might be asking, ‘Why does that matter?’ Turns out, it’s a simple matter of not being tied to one particular entity or trend in order to keep the organization afloat.

Similar to the idea of diversification when playing the stock market, a non-profit doesn’t want to have its entire operation propped up by government funding or grants. While that flow of capital is certainly appreciated, a change in leadership or a shift in priorities at the highest levels could throw a non-profit’s entire mission into doubt.

So, in the interest of giving the Do-Goodery visitor the most relevant information about a non-profit’s health and viability, we’ve included Individual Donor Percentage, or ID%, to give you an idea of how much money is derived from actual people. These sources can be fickle, too, but individual giving generally doesn’t come with as many strings attached as government funds.

Put simply, it’s much easier to adhere to the mission when not chasing funding dictated by outside forces and agendas. So, the higher percentage of individual donors, the better the odds that a non-profit can continue on its merry way for the foreseeable future.

Unrestricted asset ratio? GOOD SIR I DON'T UNDERSTAND

Sometimes, when there’s not a ‘thing’ out there in the world to explain a concept, you have to invent it yourself.

That’s what we did here at Do-Goodery with the Unrestricted Asset Ratio found on our full non-profit standings page. It might sound a little wonky, but we promise it’s rather simple. In short, what the UAR (gotta have an acronym!) attempts to show is the percentage of total funds at a non-profit’s disposal are free to use for any purpose.

As you might imagine, when government funding or certain individual donations are involved, not all money given to non-profits is handed over with no strings attached. Similar to the thought behind the ‘Individual Donor Percentage’ metric described above, a non-profit is better off when it has more freedom to operate.

For instance, if a non-profit had a 50 percent UAR, then exactly half of its funds are free to go to whichever department or operation needs the capital. As you might have intuited by now, that means a higher percentage is advantageous to the non-profit in question.

Not to say that a non-profit can’t succeed with a large percentage of appropriately earmarked assets, but the thought here is that it’s preferable when money isn’t restricted to a particular use. Also important: Employee salaries typically aren’t covered by restricted giving, so having unrestricted funds might give non-profit professionals a better chance at fair compensation.

Think of UAR as another data point regarding the long-term health of an organization, if not the end-all and be-all metric.