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A Better Name than "Nonprofit"

By Leo Ramirez Posted on May 31, 2017

We all know businesses are out to make a profit, either for the owner or for their shareholders. And I think we would agree that, for the sake of our financial markets and the economy at-large, this is a good thing. So for years, I’ve advocated for replacing the terms “Nonprofit” and “Not-for-profit” with “Social Benefit Organization” for several reasons.

For one, some nonprofits actually turn a profit. A profitable nonprofit may sound like an oxymoron, yet, in places like the United States, where 94% of all charitable giving goes to only 6% of nonprofits, only the strong and innovative survive. If a nonprofit’s profits are reinvested to further an organization’s stated mission, let them make money. But don’t call them “nonprofit.” 

If a nonprofit’s profits are reinvested to further an organization’s stated mission, let them make money. Don’t call them “nonprofit.”

Ballets, rare disease researchers, animal rights activists, do-gooders, world-changers… we need them all. They solve issues governments and corporations may not want or have the resources to solve.

Labeling a company “nonprofit” implies inefficiencies in their model. That’s unfair to the multitude of organizations that effectively leverage volunteers, employ innovative revenue-generating activities, and practice strong governance. 

Labeling a company “nonprofit” implies inefficiencies in their model. 

Nonprofits exist to deliver social services. Why not define them by what they do for the world? Let some nonprofits turn a profit; let some depend entirely on public support; let some live off of a huge endowment; let others be hybrids.

A simple terminology change can have a profound effect on perceptions. George Carlin once remarked that the term “Shell Shock” was softened-out over the decades into “Post-Traumatic Stress Disorder.” He argued that the modern term marginalizes the severe impact “Shell Shock” has on our soldiers.

I’m proposing the reverse effect. Social Benefit Organization (SBO) encapsulates the entire sector better while leaving intact the underlying mechanisms in which organizations uniquely pursue their mission.

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Author: Leo Ramirez

Leo is the co-founder and CEO of Encast, an organization dedicated to improving the way CSR professions create, manage, and measure CSR programs. Leo is passionate about the role that culture plays in business success. Leo has launched and managed social ventures, lead multi-disciplinary teams, and built solid relationships with civic and corporate leaders. His 25-year career has spanned executive management, business development, consulting, nonprofit management, technical support and engineering positions with Southwest Key Programs, Oracle, Sun Microsystems, Coremetrics, Trilogy and Apple.

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