What’s In a Name?

I confess this week’s impassioned discussion of changing our self-identity from “nonprofits” to Community Benefit Organizations took me by surprise… in a good way. What thoughtful consideration of so many aspects to the term and its use!

My initial thought has always been that using the term “Community Benefit Organization” would not be a legal term – it would not replace IRS or other taxing entity language. It would just be what we call ourselves.

I’ve ranted about this for a long long time (like in this video that many of you have already seen).  As an advocate for this sector’s ability to create massive visionary change in our world, my purpose in raising the issue everywhere I speak is all the points I posed in that post – that the term “nonprofit” is confusing, negative, and often downright debilitating.

Because empowerment of what are currently called “nonprofits” has been my primary purpose in suggesting the change, it has only been as an afterthought (and a powerful afterthought at that) that I have begun strongly considering the question that was raised by that post.

If the term is simply a self-identifier with no legal requirements, could such a language change help bridge the gap between the various types of legal entities who are all aiming their work at Community Benefit? If an entity chose to state that its primary purpose was Community Benefit, would its tax status really matter as much as its intent?  And if so, why?

I confess that I haven’t thought it through entirely, and that my thinking might change. But for the life of me I cannot find a downside in having the term be used broadly by any entity whose self-defined primary purpose is Community Benefit.

A government health office whose primary focus is improving health outcomes in a community. A privately held business whose primary purpose is the same.

For me, the important thing is the end result we are aiming at. We all know we cannot build healthy, resilient, strong, engaged, compassionate communities if we are each working behind walled siloes. And yet I am struck by how often my suggestion that we tear down those walls is met with a clinging to the very walls we all say we abhor!

If an entity is dedicated to building healthy, vibrant, engaged, humane, equitable communities – and if that entity happens to make a profit by doing it – does that matter? If so why?

And if the term has no bearing from a legal / tax perspective, and is simply the term we use to define the purpose of our work – is there a reason such a well-meaning business / organization should not call itself a Community Benefit Organization?

3 Responses to What’s In a Name?

  1. Great post, Hildy.

    This is the conversation that is happening all over the country – not focused on the term “community benefit organization” per se – but on your underlying point of dropping the walls and simply doing fiscally responsible work (i.e. okay to earn some money to enable the entities to continue operating) on behalf of positive social change.

    What’s stopping us?

  2. Hi Hildy, as usual, your post seems like part of a long and heated discussion I’ve been having with lots of different people for the many years of my career in community development and the arts. I’m going to use the old N term a lot in my comment but do so quite consciously.

    I’m afraid that the situation you describe with the arts group is an indicator of a bigger issue, and one which simply changing language does not cure.

    Ignorance. Impatience. Assumptions. Compounded sometimes by brain laziness and more often by turning to others as ignorant as ourselves for information.

    Many not-for-profit organizations (especially in the arts, which is not a sector that fits the form well at all) are formed as a means to an end, by well-meaning people who have no previous experience at doing that. I am often asked (because there are always new folks coming into the field like fresh green shoots) HOW do we start a nonprofit? I always tell them it is the wrong question. They must rather ask Why start a nonprofit? What form will best serve the function you need to deliver your mission? Inevitably, there is a moment of shock, and then the consideration starts. Usually.

    Rarely does anyone do a careful assessment of the best way to implement their passion for social good. People are as ignorant of the legalities of for-profit forms of incorporation as they are of the not-for-profit. Yet the orthodoxy of the ‘brand’ of the ‘nonprofit’ makes it seem familiar – associated with ‘moral high ground’ and with ‘getting grants’, which is very appealling. There is a built-in forgiveness factor if you meant well, had the best of intentions, etc. etc.

    People start small businesses every day, which fail at a high rate due to this kind of thinking (if you build it they will come), even in a good economy. It is definitely a problem to think like this in a sector where – if you think about it – we are NOT ALLOWED to fail.

    Like a marriage, starting a nonprofit is easier than sustaining one. A little ‘pre-incorporation’ counselling would be a good thing, but so would periodic tune-ups. The great and thriving groups do both.

    That arts group is not alone in their distorted definition and belief about the ‘nonprofit’. A little effort – or basic due diligence on the part of their Board – would have turned a big mistake into a teachable moment. And to us beating our chests over this issue, it may seem more daunting to get people to pay attention to the legal form they are using than it is to change the language used to describe it by a whole culture. But as we know, if all we do is change the language, without that concommitant mindshift, the new name/phrase begins to take on the meaning of the old. Domestic engineer, anyone?

    Now, I do agree with you about the need to change our language and our thinking both, for sure. The one CAN influence the other. But also expand the landscape of options people can see as viable for getting their mission to a point of impact. Being a project or program under the umbrella of a healthy community organization takes work, too. But may in the end be a more effective way to deliver the performance, and at the same time practice the skills of survival in a shifting landscape.

  3. Ah, the memories …

    Long ago (seems like a different lifetime) I was practicing law, mainly advising “exempt organizations” — tax lawyerese for 501(c)(3)s among others.

    Every time someone came to me wanting to start a new nonprofit, I did my level best to provide the kind of counseling Judi refers to. Many aspirations are simply better suited to other legal forms, or to strategies other than creating a new organization.

    And yet the default that one must be “nonprofit” in order to “do good” usually trumped any more thoughtful analysis. What I thought was wise counsel most often fell on deaf ears.

    I think that background is why I get so impatient with the focus on legal entity as if it’s some kind of credibility marker. Nonsense. What matters is what people are doing in the world.

    Thanks, again, Hildy!

    Pam