Three Examples of Nonprofit Businesses
Not all nonprofits are focused solely on social causes. Many operate in a transnational nature to support an underlying cause. Some even operate exactly like a business would under the federal guidelines that a certain percent of revenue must go to the cause while the remainder can go toward wages, overhead and so forth. This leaves sometimes controversial wiggle room for high-earning positions within a nonprofit model. State laws also partially dictate how nonprofits operate and manage finances.
Goodwill is a large-scale retail operation that resells used items taken in through donations. Goodwill made Forbes's top 100 U.S. charities list in 2017, with $5.7 billion in revenue. The company reduces waste by reintroducing quality products to the marketplace at a significantly lowered rate.
Clothing makes up a large portion of Goodwill sales, but kitchen supplies, furniture, decorations and common household necessities are found in most Goodwill locations. Unsold clothing items go to textile recycling, and profits from the products sold go to charity and operations.
The Sierra Club is a classic example of the cause-based nonprofit model. The Sierra Club raises money through donations and fundraisers. Any retail sales are strictly regulated, and must relate to the cause and be built into fundraising campaigns. The organization does not have physical retail stores but does operate an eCommerce section on its website.
The Sierra Club uses donations to influence environmental policy and advocate for environmental protections and causes. They also partner with private-sector businesses to help drive awareness and revenue.
What is the biggest difference between the gym at your local YMCA and any other local gym? The nonprofit status. The YMCA also offers camps, youth sports leagues and a number of other services outside of the gym. The organization has a hybrid style model that runs like a for-profit business and also acts as a community center. You pay for a gym membership, access to sports leagues and other services/facilities, but the $1.2 billion per year tax-exempt organization puts that money back into the community and its charity services.
Numerous nonprofits use this hybrid model to help drive revenue through transactions while serving their greater mission.
The NFL had tax-exempt status until 2015, when it voluntarily dropped the status and assumed a corporate model. The NFL is included here to demonstrate that it's possible for nonprofits to operate on a large scale without announcing their tax-exempt status.