One of the greatest obstacles that threatens the ability of NFPs to serve their cause and community in a sustainable manner is the many common misunderstandings and myths about nonprofit organisations. The following is a list of the four most common misconceptions that the public has about nonprofits, and steps your organisation can take to set the record straight and increase your effectiveness.

Most Nonprofit Funding Comes from Government Grants

While it’s certainly true that government grants do have a part to play in the financing of many nonprofits, there are very few charities and associations that receive 100% of their funding from government sources. Most nonprofits count on the ability to raise funds from a wide variety of sources, including individual donations and endowments.

When individuals believe that there is always “someone else” or some other entity that will provide the funds necessary for a nonprofit to continue operations and services, they feel less inclined to give. For this reason, it’s always important for NFPs to show donors just how important their particular donations are to their very survival.

Most Nonprofits Have Low Overhead Because All of the Work is Done by Volunteers

Another common assumption about nonprofits is that they are entirely staffed by volunteers that do not receive a salary, and, therefore, their overhead must be lower than that of a business or other going concern of a similar size. While the work that is performed by volunteers is certainly valuable, some volunteers do indeed earn a small stipend or salary. Often, many nonprofits cannot recruit enough volunteers to carry out all of the work that needs to be done. Therefore, most hire at least a small administrative staff to handle all of the paperwork and processes that are necessary to continue to operate.

Larger nonprofits require a much bigger staff, and many have separate staff for different departments. All of this can increase overhead costs directly, in the form of salaries, as well as indirectly by a greater need for electricity, water and even higher insurance premiums.

It’s important for supporters to realise that even though your nonprofit may utilise a volunteer workforce, there are costs associated with operating your organisation. Be certain to let your donors know just how much of every dollar goes to support administrative overhead and show how it is necessary to the smooth and efficient operation of your NFP.

Nonprofit Organisations Should Not Earn or Operate at a Profit

One frequent misunderstanding about nonprofits is that because they are not in “business” they don’t need to operate at a profit. Therefore, it’s okay if their operations “lose” money. Wrong! Many nonprofit are charged rents, dues and membership fees or may provide services at a reduced rate or sliding scale. Just because the organisation is not “in business” does not mean that it should deliver services at a loss.

In fact, it is necessary for nonprofits to be wise stewards of all forms of their income, whether from sales of products and services or, revenue in the form of grants and donations. Carefully managing resources to avoid an operating loss ensures that the nonprofit can continue to provide for their community on an ongoing basis.

By being transparent with donors and explaining just how your donations are spent and saved, you can show supporters the impact of their giving, both in an immediate sense, as well as how their donations will support the community in the long term.

Being a Volunteer Always Means a Long Term Commitment and Face to Face Contact

Life is busy and constantly on the go and often our careers and personal lives make it hard for individuals to volunteer in the “traditional” sense. Others may have transportation issues that can make it hard for them to travel or volunteer in person. However, there is a lot of work that can be done by volunteers virtually, and many times this work does not require face to face contact or a long term commitment.

Even activities that are seemingly small, such as sharing your nonprofit’s social media posts, taking a poll, or writing to a public or government official can have a huge impact. So, if your nonprofit wants to ensure that it can recruit enough volunteers to support its mission and service projects, it’s important for your nonprofit to look at ways to open up opportunities for those who wish to volunteer virtually or on a short term basis.

Of course, this list does not include all of the false beliefs about how nonprofits operate. However, when nonprofits take action to show donors the truth and dispel these misguided notions, they can improve their ability to raise funds and continue serving their communities for many years to come.