I have formed many nonprofits for my clients over the years, and have helped run one myself. A nonprofit is usually only as good as the person running it. A nonprofit can mean many things, but popularly it is usually meant as a Section 501©(3) IRS approved tax-exempt corporation that dedicates its funds to the general good in certain areas.
Having a nonprofit does not mean that you are taking a vow of poverty. You have the right to pay yourself “fair market value” for your work. Fair market value is determined by looking at what others make for similar work in your area. If nonprofits didn’t pay their workers, how many nonprofits could there be? I appreciated what Howie said about this (even if he gives away just 20% of the money, he gives a lot more than me, and if I worked hard to have a good annual guide, I think I might go on vacation afterward). Nonprofiteers do give up the massive profits that can be made in a very successful for-profit business.
Any kind of business, profit or not, can have the high ethics normally associated with a nonprofit. And nonprofits occassionally let us down; they don’t have the corner on the market of ethics. There have been scandals in which the Red Cross took the money for 9/11 families and gave it to others, where the United Way execs paid themselves king’s ransoms taken from blue collar workers and meant for those in need.
There are good reasons to become a nonprofit, but less than you might think. On the plus side, there is some credibility that goes with having been approved by the IRS, and if you do have profits, you do not pay taxes on them, but plow them back into your work. But this is what many for profit businesses do also. Major reasons then to have a nonprofit is because they are considered for grants by grant makers and most of the time others are not, and because donations are tax-deductible.
Whether Wingfoot’s nonprofit is a full fledged IRS tax-exempt nonprofit (and this process takes months of skillfully working your way through the bureaucracy), or at the other end of the spectrum simply a “doing business as” name by which he accomplishes some good, we can still appreciate the good it does.
If you are curious to know whether a nonprofit is actually 501©(3) approved, and thus follows those rules, check www.IRS.gov.
Aeschylus