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Who Are We? The Nonprofit vs. Community Benefit Organization Debate

 As we work with clients on the development of strategic plans, or toward building stronger, more effective leaders, teams and boards, we are constantly reminded of the impact language has on how an organizations’ purpose and intention are perceived. Lately we’ve been wondering, if this is true for our clients, is it also true for the sector we work in? What implications does the term “nonprofit” have on how the clients we serve, and the work they do, is perceived?


Maybe it’s time for a change.


Focusing on Finance Not Mission?


It’s the end of the year and your nonprofit organization has finished with a surplus on the books. When you report the good news at the board meeting one of the board members pipes up, “Wait, we’re a nonprofit! We can’t have a surplus!” And thus begins another round of the age-old conversation about what a nonprofit is, what it does, and lastly, how it is financed. While we might roll our eyes, let’s be fair, you really can’t blame the board member. For a lot of people, the term “nonprofit” is confusing.


That reality is why a growing number of people advocate for changing what we call the nonprofit sector in general and charitable organizations in particular. Search online and you’ll find thoughtful and well-reasoned arguments for changing the phrase nonprofit sector to delta sector, (a reference to the Greek word for change), social sector, third sector, independent sector, even humanity sector. The discussion seems to have gained the greatest traction, however, around defining a new term for describing the organizations that make up this sector. An expanding chorus of voices suggests rather than focusing on the financial structure of these organizations—nonprofit—a better, more accurate description would express what these organizations do and why they exist—to deliver community benefit. 


Change the Name, Clarify the Purpose


Hildy Gottlieb, a social scientist and co-founder of Creating the Future (an organization dedicated to engaging people around the world in asking questions that inspire catalytic thinking) has been an eloquent advocate for making this change in terminology. In a blog post first published in 2009, articles in the Stanford Social Innovation Review, and in numerous speeches delivered around the country, Gottlieb has articulated six clear and thought-provoking reasons to make the switch from nonprofit to Community Benefit Organization:


1. Community Benefit says what these organizations are and why they exist. What’s more important? The financial means that allows organizations to do the work, or, the work they actually do?


2. The meaning of Community Benefit Organization is clear and straight-forward. There’s no question what a Community Benefit Organization is about: to make a positive impact on the life and well-being of the community.


3. The term Community Benefit Organization creates a strong, powerful self-image. Gottlieb suggests the term nonprofit puts organizations on the defensive. It creates a perception these organizations aren’t “really” businesses and can lead people to overlook the fact charitable organizations possess knowledge and skills critical to addressing issues and meeting need in their communities. The term Community Benefit Organization is an empowering message for staff and volunteers, and a potent reminder of the unique and valuable work they do in the community.


4. Community Benefit Organization is inclusive. The term nonprofit suggests that only those organizations with tax-exempt status do good for the world. That discounts the growing number of for profit businesses that are incorporating nonprofit components into their work. Community Benefit invites all organizations to the table to join the effort to build better, stronger communities.


5. Community Benefit Organization provides direct marching orders to the Board: Focus on providing benefit! The essence of the board’s role is to be the eyes and ears of the community, to ensure that the organization’s programs are relevant and impactful, and that the mission is being fulfilled. Identifying as a Community Benefit Organization keeps everyone’s “eyes on the prize.”


6. The phrase Community Benefit is a promise. Gottlieb asks: “What is the highest priority outcome of the work these organizations do? Is it a vow to never make a profit? Or, is it a promise to provide benefit to their communities, now and into the future?” For her, the answer is clear. If that’s your promise, it should be your name.


Not so Fast! Embrace the Nonprofit Label


While Gottlieb advocates for change, Phil Buchanan, president of the Center for Effective Philanthropy, champions the opposite position: We should embrace the word nonprofit, not change it. In a blog post on the Center for Effective Philanthropy website, Buchanan argues that the very “nonprofitness” of nonprofits is what enables them to play the essential role they do in transforming lives and communities. Society needs, and benefits from, organizations that pursue a mission, not a profit. Nonprofitness, Buchanan says, matters, and it is time the sector stopped apologizing and started wearing the nonprofit label proudly.