Nonprofit Myths: #10 - Using the Nonprofit's Revenue?

Starting and running a 501(c)(3) tax exempt nonprofit is a lot of work and not everyone is cut out for it. Some go into the venture with false assumptions and myths and only later find out they didn’t understand what they were getting themselves into. Let’s examine some of those myths.

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Myth: I can use the money for my nonprofit for anything I want.

 

Truth: No, you cannot. A nonprofit’s revenue is dedicated to the expenses included in the annual budget, and the Board approves that budget. Each expense must relate to the nonprofit mission and to the expenses already planned. You cannot use the money to pay your personal electric bill or car insurance just because you directed the nonprofit and helped generate the revenues. All nonprofit revenues belong to the nonprofit and must be used for the approved nonprofit mission.

 

Moral of this Myth: If the nonprofit is your main pursuit, make sure you have other sources of income to sustain your needs. Of course, if you are a salaried employee of the nonprofit and are performing needed functions on behalf of the nonprofit, the budget should include reasonable compensation for the work you do.

 

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"Nonprofit Myths" is a 12-part series by Dr. Kitty Bickford, founder of Pasture Valley Children Missions. As a nonprofit consultant, Dr. Bickford has provided guidance to thousands of nonprofit leaders in best practices for setting-up and effectively running their organizations. We're also proud to claim Dr. Bickford as an alumna of The Grantsmanship Center. 

© Copyright 2020 Kitty Bickford, DBS, CPC     Used  with permission

 

For further delight and edification, here's a short series on board development:

Who's On Your Board?     Where Can You Find Board Members?     What Does a Board Do?