What Does It Mean to Work in the Nonprofit Sector?

For many people new to the whole concept of the nonprofit sector, there is a great deal of misunderstanding of what it means to be a nonprofit. Some think it means the organization can’t operate in the black, because it then becomes a “for profit.” Many people think that nonprofit staff should be paid less than standard wages because they are working for a “charity.”

For clarification purposes, let’s start with what it means to be a nonprofit organization. A charitable nonprofit is usually a 501(c)(3) agency, a designation received from the Internal Revenue Service after meeting certain requirements, most importantly that the organization serves a charitable, education, scientific, or community service purpose. Individuals can deduct donations to approved nonprofit organizations when filing their federal tax returns. Most government agencies and foundations will only make grants to nonprofit organizations.

Contrary to popular opinion, being a nonprofit does not mean that the organization must operate in the red or that it cannot have a fund surplus.

Actually, the main characteristic that separates a nonprofit from a profit-making entity is that no individual or group of individuals can benefit financially from the profits of the agency. By receiving nonprofit status, these organizations are exempt from paying most federal and state taxes.

Sometimes the nonprofit community is called the third sector (as opposed to government or the business sector) the independent sector, or the voluntary sector. All these terms are appropriate and accurate. Some nonprofits are thought of as charities, while some are huge operations such as major universities and health care systems, but they still share the commonality of being a nonprofit entity since no individual or group of individuals benefit from the surplus revenues of the organization.

Volunteering and Charitable Giving

One of the things that makes the nonprofit sector different from other sectors is the fact that so many people volunteer not only their money, but their time, to help these organizations succeed.

One report showed that 62.6 million adults (25.4 percent) volunteered through an organization in 2013. Altogether, Americans volunteered nearly 7.7 billion hours that year. The estimated value of this volunteer service is nearly $173 billion, based on the Independent Sector’s estimate of the average value of a volunteer hour.

American individuals, estates, foundations, and corporations contributed an estimated $390.05 billion to U.S. charities in 2016, according to Giving USA 2017: The Annual Report on Philanthropy for the Year 2016, released today. Total giving rose 2.7 percent in current dollars (1.4 percent adjusted for inflation) from the revised estimate of $379.89 billion for total giving in 2015.

So, what do all these statistics tell us? The nonprofit sector, and fundraising, is big business! The Association of Fundraising Professionals (AFP), the largest association of individual fundraisers in the world, has more than 31,000 members and there are many, many more people working in this field that are not members of AFP.  While it is difficult to unearth statistics showing how many fundraising professionals there actually are, if just twenty percent of the public charities in the United States employ just one fundraising professional, that makes almost 200,000 professional fundraisers in the United States alone. And, of course, many of these charities are large ones that may have a development staff of dozens of people (universities for example) and even mid-sized organizations often employ two to 10 development staff persons. I would safely estimate, therefore, that there are close to half million individuals in the United States that list their profession as fundraising, development, advancement, philanthropy or some term that involves the obtaining of funds for a charitable organization.

Who are these people and how do they find their paths leading to a career in fundraising? The professional fundraiser usually enters the field from one of these possible avenues:

• Another career in the nonprofit sector (social work, ministry, teaching, etc.)
• The for-profit sector (attorneys, bankers, business owners, etc.
• Volunteers: an individual who has volunteered for an organization, such as a board member or committee member and subsequently moves into a paid fundraising position within that organization or another nonprofit

So, are you thinking about a career in the nonprofit sector? Here are some practical tips to get you started in a fundraising career:

• Learn about the nonprofit organizations in your community—how many are there, which ones do you admire the most, which ones do other people speak highly about, do they have a development staff, how do they raise money?
• Choose three to seven organizations for which you might want to work and research them—which ones are financially stable, transparent, adhere to their missions and have a value system that is consistent with your own value system?
• Meet with the executive directors of these organizations and the development staff if there is one. Find out about their long-term goals and any possible plans for hiring development staff.

To learn more about getting started in or advancing in your fundraising career, take my course, Fundraising as a Career, sign up here