In an article on reserves and revenue strategies post Covid, Rasheeda Childress beautifully reminds nonprofit boards that being nonprofit does not exclude profitable. From Association Now we hear:
"Successful associations are also accepting of the fact that nonprofit tax status doesn’t mean they shouldn’t be creating really profitable products.
"We always say that nonprofit is a tax status, not a business objective,” Fuller said. “We have to remind the boards of directors that they are the boards of directors of a corporation that has a protected tax status that will reinvest results into member equity. Profitability doesn’t mean that anyone is lining their pockets. Profitability means you’re able to offer more, and maybe even able to offer more at a lower price point or a reduced access point to students or emerging professionals, so there’s a benefit there.”
As many of my colleagues say, no money, no mission while Rasheeda correctly in my opinion emphasizes that creating revenue both now and for the future is essential for a nonprofit's sustainability. Nonprofit boards should sharpen their pencils when reviewing the annual budget and not only look to how much money is needed to meet expenses but how much money is needed to provide a cushion for changes in the market place - donative and earned income. And speaking of earned income, while most favor a cover-cost framework, profits are equally essential, beyond necessary costs that should be sure to also capture so-called indirect or administrative costs - the inclusive costs of doing business.