Monday, March 03, 2014

Non-profit DOESN'T equal "NO"-profit

Hey there,

So this post was inspired by some comments that have already been left at the Burning Man blog, regarding the post Burning Man Transitions to Non-Profit Organization. The post starts off:
BIG NEWS! It’s been a long time coming: we’re excited to announce that Burning Man achieved an historic milestone in January with the successful transition of the 24-year-old organization to a non-profit organization! The process has taken nearly three years, and now more than ever we’re positioned to support the global cultivation of art and community based on the 10 Principles.
I do recommend reading the rest. But one of the comments was:
...all of the for-profit stuff will continue to be for-profit.. calling burning man non-profit is sort of disingenuous
And another was this:
So burning man actually continuing as a for profit..and will remain for-profit in the foreseeable future.. it’s just owned by a non-profit
Now I will immediately say that I may be attributing information from other similar conversations working the mission driven arts world, but the comments seem to come from a perception the "non-profit" means "no-profit", or the idea that a non-profit organization isn't allowed to make ANY profit.

I'm going to refer to Wikipedia's definition of nonprofit organization, which starts of:
A nonprofit organization...is an organization that uses surplus revenues to achieve its goals rather than distributing them as profit or dividends.

So no, the revenue mechanics of Burning Man aren't going to change drastically, if at all. Becoming a non-profit simply dictates what the organization is legally allowed to do with excess revenue, which is a pretty big deal. And, to my understanding, part of the reason for this transition came because some members in the community were concerned that there were people who were unscrupulously profiting from the endeavors.

Transitioning to a non-profit was a way to be publicly and legally accountable for how the finances of the organization were managed. Yes, the blog does mention that the LLC will continue to operate the event itself, but the non-profit now has oversight responsibility.

Not only that, as board members of the non-profit, those individuals are fiscally and legally responsible for anything that happens, for better or for worse. Which, for me, is just another indicator of how much those people are dedicated to and invested in the work they obviously love to do, for the community.

So I'll stop beating a dead horse. I will say that the very confusion regarding what being a non-profit means is why you will sometimes hear folks refer to them as "not-for-profit".

Anyway, this post might be a gross oversimplification of the subject. But I just wanted to make sure that the misperception that a non-profit isn't allowed to make any profit was addressed. Non-profit organizations are ABSOLUTELY allowed to make a profit. Any profit must then be spent in a way which moves the mission of the organization forward, rather than any individuals profiting directly.

Any questions or additional thoughts? Leave' em in the comments,

JR
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