Not-For-Profit Companies

Recycling Bin

The main goal of a not for profit company is to leverage good-will from the community to make life better for those less fortunate.

They get a bad rap a lot of times because some of them are started with the only intention of making a profit for the people who started them. Bad NFPs often have hefty administration costs (salaries and executive expenses) that take away from the money that’s supposed to go back into the community to do good.

This is why a lot of well intentioned people that give to charities want to know what the administration costs of the charity are. They want to know how much money really goes to the cause.

When I was just out of school, I started working at a recycling plant. It was a not-for-profit and it was a good experience. It taught me a lot about how to get things done with few resources and a lot about leadership and hard work.

There are three key ingredients that a not-for-profit needs to be successful. If you’re thinking about doing something for your community, this is what you need:

1. Low Overhead Costs

The building we had was leased from the city for the grand sum of $1.00 a year. Not a bad deal. I don’t know how easy it is to find places like that anymore, but if you have the support of the local community, surely someone will give you some space. Or lease it out to you for next to nothing.

2. Get Stuff For Free

Donations are the lifeblood of every NFP. Our forte was cardboard, newspaper and office paper. We would collect all this recyclable material from local businesses with a couple of trucks. We’d sort it and bail it up and then we’d sell it to a paper mill or a broker.

While charities rely mostly on financial donations, not-for-profits generally operate more like a real business. Most of the revenue they earn is profit that goes to cause they champion because they sell goods or services that cost them next to nothing, but that have real value.

3. Get Cheap Labour And Volunteers

That was me. And quite a few other people.

Other Things

The business model is pretty simple. Most of the hard work you have to do is the networking and resource gathering. To do that well, it helps to:

  • Be active in the community to garner support and resources
  • Talk to the press and get exposure
  • Throw events that invite people to participate and contribute
  • Make sure you fill a real need by re-using things that people don’t want

2 thoughts on “Not-For-Profit Companies”

  1. Reading your article reminds me of my negative opinion of particular charities which seem to spend almost all their revenue on overheads (I won’t name names and turn this political though – don’t worry!).

    – Martin Reed

  2. Martin,

    There are quite a few bad ones out there I think. But it’s a great concept, and there are many NFPs that do good work in many communities.

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