Profit

Contrary to popular belief, and the clear verbal contradiction, nonprofit organisations ”must” make a profit in order to be sustainable. Here’s why.

If any organisation is running at a loss, it will soon run out of money and be forced to close its operations. It could seek investment, grants and other sources of funding, but these are hard to find and by no means guaranteed. Trying to swim while wearing a lead jacket will sink you quickly.

If that organisation were to break even, it would at least be able to continue what it is doing. It would not, however, be able to grow, improve or achieve more. This will limit the number of people that it can reach and help. This could be equated to treading water, as you are putting a lot of effort into staying afloat, but you are not actually getting anywhere.

However, if that organisation makes a profit on a self-sufficient basis, not only can it continue to operate, but it also has the opportunity to thrive. It can invest in what it is doing, getting better, achieving more and helping additional people. To continue the analogy, if you can swim for yourself, without any help from others, then you will achieve your goal.

The primary distinction that separates a for-profit company from a nonprofit organisation is how they invest that profit. Many for-profit companies have shareholders, who have purchased those shares expecting a percentage of the annual profits that the company made that year. They might also have staff who expect an annual bonus, which is again usually a percentage of the annual profits, and perhaps an annual raise if they have done an outstanding job. Once all of that has been paid, then the board can decide how much they want to reinvest back into the operations of the company.

A nonprofit organisation, however, has few of those concerns. There are no shareholders, so no money needs to go to them. Many nonprofit organisations do employ staff, but most understand that charities need to be especially careful with their cash, so wages are often slightly below market rate and any bonuses are usually minimal. This means that a nonprofit organisation can focus the vast majority of its financial resources on furthering its objectives.

Geek.Zone is a nonprofit organisation. Yes, Geek.Zone does make a profit, but unlike a for-profit company, we have neither shareholders nor employees. Everything that happens at Geek.Zone is done by Geek.Zone members just like you, on an entirely voluntary basis. This means that 100% of those profits and donations go back into your Geek.Zone, ensuring that it can continue to grow, connect more Geeks and help fight the torments of anxiety and depression.

TL;DR

Yes, nonprofit organisations like Geek.Zone do need to make a profit to be sustainable. The difference is that 100% of that profit goes back into the organisation!

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