Worcester Business Journal

8 Worcester Business Journal | September 19, 2022 | wbjournal.com Rooting out racism BY LAURA FINALDI Special to WBJ U sually, the choice to enter the nonprofit world is based on a calling. e decision to pursue charity work as a career – instead of something more lucrative like banking and finance – is oen motivated by a strong urge to serve a cause or pur- sue some type of social justice. But nonprofits are still businesses. In order for charitable organizations to offer free or discounted services to the community, pay staff, and keep the lights on at owned or rented properties, they have to make some sort of money. While businesses sell goods and services to remain viable year aer year, human service nonprofits have a hustle of their own Sustaining a NONPROFIT Local organizations do that through various mechanisms, including individ- ual and corporate donations, yearly galas and events, and, in some cases, outside businesses generating revenue specifical- ly for nonprofit programs. "ey're always looking for ways to become sustainable, so they can help people in the community, because that's the bottom line for all of us," said Rick Cohen, chief communications officer and chief operating officer for the Na- tional Council of Nonprofits in Wash- ington, D.C. How are nonprofits funded? Although the term nonprofit is commonly associated with charitable organizations, the actual U.S. In- ternal Revenue Service definition can refer to a much wider net, like churches, hospitals, and schools, according to a report from the National Council of Nonprofits. e national organization, Cohen said, has more than 30,000 members. According to the report, which cites IRS Form 990 data from 2016 made publicly available in 2018, the U.S. has a total of 1,298,348 charitable nonprofits and 126,678 private foundations. Of those, 88% of nonprofits have a budget of less than $500,000 per year, and 97% have annual budgets of less than $5 million. Even though nonprofits have to gener- ate money to survive, it's not a business where funds are oen easily available. About 50% of national nonprofit organi- zations have less than a month's worth of cash reserves on hand. Jonathan Cohen, vice president for programs and strategy at the Greater Worcester Community Foundation, said nonprofits generally rely on a mixture of donations, grant funding, revenue generation sources like rents, and even endowments, if they're lucky enough to have one. An endowment is money set aside to grow over time for the organization's long-term financial stability. Many organizations, Jonathan Revenue sources for U.S. nonprofits across the board 49% earned: Private fees for services 31.8% earned: Government grants and contracts 2.9% donated: Foundations 1.5% donated: Bequests 0.9% donated: Corporations 5.2% Other 8.7% donated: Individuals Source: National Council of Nonprofits study Like many other nonprofits, Abby's House in Worcester runs its own thrift shop in order to generate revenue for its mission. PHOTOS | COURTESY OF ABBY'S HOUSE

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