1. Most nonprofit revenue doesn’t come from donations
Surprised? You’re not alone. A lot of people think donations and grants are the main ways nonprofits make money, but that’s not the full picture.
On average, more than half of all nonprofit revenue comes from some form of earned income. That could mean charging program fees (like when you pay the Red Cross for a CPR class), selling goods or services related to your mission (think Girl Scout cookies 🍪) or earning revenue from contracts and licensing.
Every nonprofit is different. Some may rely more heavily on donations or grants, while others are better suited to sustainable earned income models. The key? Align it with your mission.
2. Nobody owns a nonprofit (yep, not even the founder)
I get a lot of questions about this one. It trips people up all the time, especially new founders.
Unlike a traditional business, a nonprofit isn’t privately owned. If you’re a 501(c)(3), the organization is technically owned by the public. That means I don’t own it, the executive director doesn’t own it, and even the founder doesn’t own it.
Instead, nonprofits are governed by a board of directors, a group of people elected to make sure the organization stays accountable to its mission and the community it serves. In fact, the IRS requires that at least 51% of your board can’t be related to you if you’re the founder. Why? To prevent any one person or family from benefiting unfairly.
It’s a unique structure, and once you understand it, it really reinforces what this work is all about: service over self-interest.
3. Most board members are unpaid volunteers
Another common question I hear, especially from folks starting a nonprofit, is “Can I pay my board members?”
I understand the confusion. In the for-profit world, board members are often compensated with salaries or equity. But in the nonprofit sector, it’s different.
In most cases, nonprofit board members are volunteers. They donate their time, skills, and energy to help govern the organization. While a few exceptions exist where board members might be reimbursed for expenses or paid in very specific circumstances, paying them isn’t considered a best practice.
Why not? Board members are often responsible for fundraising, and if they’re also receiving some of those funds, it can create a major conflict of interest. Nonprofits are built on public trust, and keeping governance separate from personal gain is a big part of that.
4. Nonprofits do pay some taxes
Wait—aren’t nonprofits tax-exempt? Well… mostly.
It’s true that 501(c)(3) nonprofits are generally exempt from federal and state income tax and, in many cases, property or sales tax. But that doesn’t mean they’re off the hook for everything.
For example, nonprofits still pay payroll taxes like Social Security and Medicare when they hire staff. If organizations earn money from something unrelated to their mission, like a hunger relief nonprofit making most of its money by selling bicycles, they could owe taxes on that income. That’s called Unrelated Business Income Tax (UBIT).
So yes, nonprofits have some significant tax advantages, but they still have financial responsibilities, especially when earning revenue outside their core mission.
5. Nonprofit work is a real career
This one might hit close to home, especially if you’ve ever had someone ask, “Wait, how do you get paid if you work for a nonprofit?”
Here’s the truth: nonprofit work is a legitimate career. In fact, nonprofits employ about 10% of the U.S. adult workforce. Millions of people work full-time jobs to keep critical programs running, from feeding families to protecting the environment.
Just because we’re mission-driven doesn’t mean the work isn’t professional or that it doesn’t deserve a paycheck. Behind every successful nonprofit are program managers, fundraisers, communicators, and other dedicated staff making real change happen every day.
Try It This Week! 🚀
Pick one of the five facts we covered and share it with someone in your life who’s curious (or confused!) about how nonprofits work. Whether it’s a friend, board member, or future donor, a little education goes a long way in building trust and understanding.
Want a quick way to do that? Send them this video: What (MOST) People Don't Know About Nonprofits. It’s one of my recent favorites!
Which of these five facts surprised you the most, or which one do you wish more people understood about nonprofits?
Hit reply and let me know. I would love to hear your perspective!
