Social Profit

We prefer the term Social Profit to Non-Profit for organizations that are to serve the community instead of shareholders.

Our business is working with governing boards and management of social profit organizations to achieve real results in and for the communities served.

We also like to work with consultants and others who serve social profit organizations. If we can work together to pool our expertise, the whole community will benefit.

Why don’t we like the term non-profit? First, non-profit is a negative sounding word. All it signals is what the organization is not. Somehow, it seems to make this kind of corporation sound less worthy than a for-profit.

Second, as consultants who serve the non-profit leadership, we constantly see the enormous value that these organizations are providing to their communities and to the world. We also see that they are consuming community resources — and sometimes lots of resources. These resources may include generous donor contributions, the valuable time and energy of an army of volunteers, the passion and dedication of staff, and more. Part of what we do is make manifest the truth that the value being created with all of these resources is greater — often much greater — than the value of the resources consumed. In other words we know there is a very real, and quantifiable, social profit being produced. We think that it is this social profit that characterizes these organizations, and not the fact that the bottom line that shows a net profit.

Third, we are astonished to find that there are board members who think that because their organization is a non-profit, they are constrained from achieving an annual surplus (or profit). Looking at the long term survival of their organization, this philosophy is not only incorrect, it is suicidal. All organization have good and bad years. During those good years it is prudent to ensure that there is a fund reserved to support the organization during the difficult times, or to allow it to be able to take advantage of opportunities when they arise, or to be able to fund a new program when a new need is perceived. There are issues of how to report a surplus to maintain a 501(c) Status in the USA, or Charitable Status in Canada. That is simply a matter of responsible accounting for, and reporting, how the surplus is allocated.