1. Non-profits have done a spectacularly lousy job of explaining themselves to the American public. Modern societies need three components to function: government, businesses, and non-profits. Non-profits are the glue that holds society together, and while in the USA we have a market economy, our society is bigger than the economy. Non-profits are inherently different than businesses. Governments are inherently different than businesses. Here is a diagram showing the fundamental difference between businesses and non-profits. It is astounding how many non-profit leaders (and political leaders) don’t do a better job of communicating to the American public about the value of all three components of society, all of which are critical. Business Organization Non-profit Organization

Business PROVIDER OF GOODS/ SERVICES

Non-profit PROVIDER OF GOODS/ SERVICES

Source of Funds – Customers Recipient of Benefits/Goods – Customers

Source of Funds: Donors Foundations Govt.

Recipients of Goods/Services

Clients; Patrons & Students both pay &

derive benefit.

© Bill Huddleston, www.cfcfundraising.com

The fundamental difference is that in the business example, the provider of the

funds is also the direct recipient of the benefits of goods and/or services provided, e.g. customers. On its face, the diagram on the right is more complex than the one on the left, and this is what non-profit leaders have done a poor job of communicating to the American public. Warren Buffet’s Gift to the Entire Non-profit Sector

When Warren Buffet pledged his $30 billion gift to the Gates Foundation, he also gave a gift to every non-profit in America, if they are smart enough to recognize it. Here is the world’s best known financial genius of the market based economy, saying that the non-profit sector is too complex for him to figure out the best use of his money – so he’s going to give it to his good friends Bill & Melinda Gates, so that they and the Gates Foundation professional staff can make sure the money does the most good! This is

terrific, both for the Gates Foundation and for the entire non-profit sector, because it makes the case in way that no one else could, that the non-profit world is not simple, and it’s not easy to make sure that any donor’s money is used in the best way possible. I have yet to see any non-profit leader use this stunning example as an illustration of the fact that the non-profit world is complex, and it takes, brains, talent, dedication and plain hard work to for a non-profit to be successful.