Jeanne Canina Tedrow, President & CEO, North Carolina Center for Nonprofits
In the Triangle, we are fortunate to have a robust network of nonprofits providing essential services to every part of our community. Having led a community-based organization for more than 30 years, I have seen the nonprofit sector’s longer-term impact. This past week, a woman who was one of the first residents in Passage Home’s transitional housing program for homeless families 30 years ago, called me to check in. She shared that her daughter is about to graduate from college. This formerly homeless mother has raised her three children successfully, been married, owns her own home, has started a business in the Triangle area, and is an employer of many who, like herself, have been challenged by some of life’s struggles. Like so many in the private sector, she chooses to give back to her community, inspired by the help and support she received along the way. This is just one example of how lives are changed by mission-driven businesses. There are so many more.
The Triangle’s nonprofit sector is large and diverse, ranging in size from our largest health care systems and private universities to volunteer-run organizations like local PTAs. The 3,200 charitable organizations in the Triangle provide essential services such as food, education, health care, spiritual development, job training, youth programs, arts and culture, child care, services for seniors, affordable housing, and assistance for victims of domestic violence. They also have an enormous impact, helping drive our local economy by employing about 1 in 10 workers in the region and spending $17 billion per year.
The common ground for these diverse nonprofits is their tax status as 501(c)(3) public charities. Tax-exempt 501(c)(3) nonprofits must operate for the public benefit rather than to benefit shareholders, investors, or their executive staff. Tax-exempt nonprofits also give up three fundamental rights that other private businesses have:
- Profits. Nonprofits are “owned” by individuals or shareholders and must reinvest their net earnings back into their missions. They can have earned revenue, but they sometimes must pay income tax on their commercial activities that are unrelated to their missions.
- Privacy. Many documents of 501(c)(3) organizations, including annual tax filings, are available to the public.
- Politics. Charitable nonprofits must remain nonpartisan. As organizations, nonprofits can’t make campaign contributions and can’t endorse or oppose candidates for office or political parties. However, they can – and often should – engage in nonpartisan civic engagement and issue advocacy related to their missions.
Aside from these differences, nonprofits operate much like other businesses. To run their organizations effectively, nonprofit leaders must be experts at managing personnel issues, maximizing revenue streams, offering competitive employee benefits, keeping up with the latest technology trends, and ensuring customer satisfaction. Like their for-profit counterparts, nonprofits are private sector entrepreneurs working in the public interest to solve tough problems. While the for-profit private sector is responsible to its shareholders, the nonprofit sector is responsible to live out its mission in ways that enhance and improve our communities. In practice, the nonprofit is a private sector, mission driven business with a charitable tax status that complements and leverages the private for-profit and public sectors.
Nonprofits offer opportunities for business leaders and others to “give back” and engage in community building across the Triangle. Many business leaders serve on nonprofit boards, invest in charitable organizations with financial contributions and free or discounted goods and services, partner with nonprofits as social entrepreneurs, and volunteer their time making a difference in communities. With this support from the business community, nonprofits make an enormous difference in the Triangle every day, leveraging private resources for the public good.
See the published article, “A Better World: Nonprofits play vital role in the Triangle”(paywall), in the November 22, 2018 issue of the Triangle Business Journal.