THE BLOG
01/22/2009 05:12 am ET | Updated May 25, 2011

We're All Nonprofits Now

The White House has just announced plans for a $17.4 billion bail out of the auto industry. According to the Institute for Policy Studies, America and European governments have already chipped in an unbelievable $4.1 trillion in total financial bailouts. So what's another $17 or so billion added to that mountain of cash.

So, if you're a nonprofit advocate and you find yourself begging to a funder and trying to justify why your organization should get a thousand dollars to continue providing for the common good, you can now take some comfort in this new reality. We are all nonprofits now.

Nonprofits that provide educational, health-related, social service, policy and cultural type services typically define themselves as being owned by no body -- they act on behalf of the community and no one owns stock and so there are no "profits" from income in excess of expenses. These organizations exist to meet a need unmet by government or business.

In a market economy, if you try to start a nonprofit or dedicate yourself to working for a nonprofit, you get no special credit. You have to pay your bills, same as the next person. Nonprofits operate in a tough competitive climate. There are many organizations and businesses vying for a customer's attention, time and dollars. There is virtually no nonprofit that is not facing competition from for-profit businesses. Take, for example, public education -- which faces stiff competition from private schools, religious schools and corporate and for-profit institutions. All this competition is a healthy thing. But my point is -- the desire to serve is at the heart of the nonprofit mission -- not the desire to make profit.

Nonprofits provide services to people who never pay the full cost of receiving those services. By definition, some nonprofits do better than others in charging fees, generating revenue from good and services other than what is provided directly to their customers, and getting sponsorships. Bottom line -- there is always a gap between the total amount of what is called "earned" income and what it costs to run the organization. Contributions and grants make up the difference. For most nonprofit organizations that provide the type of services I'm thinking about, contributions from individuals can be deducted from their income tax obligations -- hence the term "tax-deductible contribution."

Well, with the hundreds of billions of dollars the U.S. government has doled out to the financial services sector and now the auto industry, I think we have just obliterated the distinctions between "for profit" and "not for profit" operations in America. Unfortunately, the tax payers are not going to be able to deduct their "contributions" to the corporate sector.