Forget what you think you know about nonprofits.
Many long-held beliefs about nonprofits are outdated and overdue for re-examination, according to Dan Prater, director of Drury University’s Center for Nonprofit Communication. Prater, who led the research on the center’s Nonprofit Impact Study, which was released to the public April 23, has developed a list of five common myths he said should be challenged.
Myth No. 1: Nonprofits aren’t supposed to make a profit.
The myth starts with the way the industry tags itself.
“Our name even says, ‘nonprofit,’ so it’s like we brand ourselves as not wanting a profit,” Prater said. “Forget that we are nonprofit for a second and think about a business or organization – no matter what the brand or mission is. If you don’t make a profit, you are vulnerable.”
Prater said nonprofits by definition are designed to provide a specific community benefit. Revenue collected above expenses must be reinvested in the organization, whereas for-profits would distribute earnings to their owners. Operating with a surplus, often banked in a cash reserve fund, is a sign of a well-run nonprofit, he said.
“We are led to think that nonprofits should be poor, needy, hungry and starving, but I don’t want my local hospital cutting corners to save money,” said Jackie Barger, the executive director of Ozark-based nonprofit Children’s Smile Center and a nearly 30-year industry veteran. “If you want to be involved with a successful organization, you should want your nonprofit to have a surplus.”
Prater noted there is a technical distinction between nonprofits and not-for-profit entities. Not-for-profits, he said, are groups that were formed for a specific activity or purpose, such as neighborhood associations or country clubs.
Myth No. 2: Nonprofits don’t pay as well as for-profit businesses. 
In Springfield, the two largest employers are nonprofits: Mercy and CoxHealth. In 2013, Cox posted revenue of $1.16 billion, according to Springfield Business Journal list research, while Mercy Springfield Communities generated more than $680 million. According to 2011 990 forms – the most recent available online with the National Center for Charitable Statistics – Mercy’s top five highest paid employees earned just under $4.5 million combined. Cox’ top five earners took home more than $4.1 million. Each organization employs more than 10,000 workers in the area.
While roughly three-fourths of the nonprofits in Springfield have annual budgets of $150,000 or less, according to the nonprofit study, Barger said pay should be commensurate to the size of the organization.
The other pillar of Springfield’s economy is education. Drury and Evangel universities, both organized as nonprofits, are large institutions with thousands of students and millions of dollars in assets. Barger said the leaders of such schools should be well compensated.
“I don’t want a college president at a school I support not making six-figures,” Barger said.
Myth No. 3: Low overhead is the holy grail.
Prater said it is a common misperception that keeping overhead low is the definitive mark of a quality nonprofit.
Often, he said organizations need to make investments in technology or facilities to more effectively achieve their missions.
“The nonprofit sector has focused a lot on keeping overhead down over the last decades, and I think that has actually starved a lot of nonprofits from investing in their own work,” Prater said, noting organizations are often just responding to the will of donors.
Jeff Nene, national spokesman for Springfield-based Convoy of Hope, said the global group’s operating budget surpassed $100 million for the first time last year, and roughly 10 percent goes to overhead – well below an industry standard of 20 percent. Nene said while the faith-based nonprofit can stand up to the overhead test, potential donors of nonprofits should utilize websites such as CharityNavigator.org to find organizations that are well run.
Charity Navigator rates nonprofits based on financial health, accountability and transparency. Its metrics include a review of program and administrative expenses, as well as revenue growth. Charity Navigator has given Convoy of Hope its highest rating, four stars, four years in a row.
Barger said it is unfortunate that many donors make giving decisions based on overhead data alone.
“It is very rare that there would be a nonprofit that doesn’t have to make photocopies, that doesn’t have to keep records or do accounting or pay rent,” he said.
Myth No. 4: Nonprofits are small, charitable groups. 
Convoy of Hope started small in 1994 by brothers Hal, David and Steve Donaldson with the idea to help churches help their communities, and two decades later, the organization has an international reach and $28.9 million in assets, according to 2011 tax records.
Convoy provides more than 145,000 meals each day to children in need across 11 countries. In all, the organization estimates it has assisted more than 65 million people.
Stateside, Convoy is most associated with disaster assistance, helping communities like Mayflower, Ark., recover from devastating tornadoes.
“We’ve responded to hurricanes, earthquakes, floods, tsunamis, you name it. They all have different names, but the end result is about the same – people losing homes, people losing loved ones,” Nene said. “What we do is come in and do our best to help.”
Beyond the immediate response, it wants to help communities recover, he said. In Joplin, for example, the nonprofit has built 13 homes.
Megan Munzlinger, development director for Springfield-based Rainbow Network, visited Nicaragua on April 24 to celebrate the Christian-based ministry’s milestone: 40 million meals served. With just five paid employees working from a small, 1,500-square-foot office near Campbell 16 theater, the nonprofit helps feed the poorest people in Nicaragua and provides basic health care as well as microloans for economic development.
“It was a large celebration. We had 600 to 700 in attendance, with people from our seven different regions,” she said, adding nothing would be possible without some 1,700 volunteers.
With 2011 reported assets of $750,000, Rainbow Network is slightly above a nonprofit asset threshold in Springfield: More than 70 percent of nonprofits have assets less than $500,000. Giving some merit to this myth, Drury’s study found roughly half of Springfield nonprofits hold assets under $150,000.
Myth No. 5: Nonprofit work is easy.
Habitat for Humanity International CEO Jonathan Reckford visited with Springfield staffers and members of the community last week as part of a meet-and-greet held at the Horton Smith Room at the Courtyard by Marriott on West Kearney Street.
He said the local staff’s work is far from easy, as Springfield employees of the nonprofit often wear many different hats.
“Habitat is deceptively complex. If you think about Larry [Peterson, executive director] and his team, they are a construction management team; they are land developers; they are a mortgage bank; they are fundraisers; they are retail operators; and they are a social-services agency doing training, financial literacy and home management with these families,” said Reckford, who visited from Atlanta.
Prater said nonprofit workers are typically driven by a passion to help others. He said funding is always a challenge, and the jobs aren’t necessarily secure.
The work of nonprofit staff is meaningful, though, and often extends beyond the workplace.
“When you work for a nonprofit, it tends to be your life,” he said. “It’s like being a coal miner, you can’t wash it off when you go home.”[[In-content Ad]]
