Should Nonprofits Be More Like Businesses?

Every few years, sometimes every few days, the same question resurfaces. Should nonprofits be more like businesses? It is usually offered as practical advice, sometimes as critique, and often as a solution to very real challenges. After years in this work, I’ve come to believe the question itself is flawed.

Many of the problems nonprofits exist to address are the result of market failure. Capitalism, while powerful, has also created or deepened many of the inequities the social sector is trying to respond to. It is also worth remembering that 50% of for-profit businesses fail within five years. Even the most celebrated success stories required extraordinary patience. Amazon took seven years to report its first quarterly profit. That kind of runway is rarely extended to nonprofits.

Nonprofits do not have the resources to behave like for-profits, even if they wanted to. We operate with thin margins, unpredictable revenue, and constant scrutiny. At the same time, donors, public officials, and board members often resist funding the very things that make organizations sustainable. Comparable salaries. Core infrastructure. Strong operations. Long-term planning. Teams are asked to deliver transformational results without being supported to build professional systems.

Two forms of capital are especially critical and consistently undervalued. Unrestricted funding is the most precious capital social entrepreneurs have. It allows leaders to respond to reality rather than contort programs to fit narrow funding categories. Multi-year funding is equally important. One-time grants may help launch an idea, but sustained support is what allows organizations to learn, adapt, and scale. Without it, even strong organizations are forced into a cycle of constant reinvention instead of steady growth.

I have lost count of how many times funders ask what happens to a program if they choose not to support it, or how it will become self-sustaining in the future. These questions often come from a place of responsibility, but they also reveal a misunderstanding of what nonprofits exist to do. Hungry people cannot afford food, which is why they come to us. A seven-year-old girl who lost her mother to a drug overdose does not have a job to pay for one-on-one art mentoring. These are not market failures waiting to be monetized. They are human needs that require collective care.

That is why we are nonprofits. Not because we lack ambition or discipline, but because the work itself does not generate profit. We are not for-profit theme parks. We are institutions designed to absorb need, respond with dignity, and keep showing up even when there is no revenue model attached.

It is also worth saying plainly that a small net surplus is not a failure in this sector. It is often the point. Nonprofits do not raise millions of dollars with the expectation that the money will sit unused. We raise resources to put them to work in service of mission. Success is not measured by what remains, but by what is deployed thoughtfully and responsibly.

Perhaps the better question is not whether nonprofits should be more like businesses, but whether we can build systems that respect the distinct purpose of this work. Systems that value sustainability without demanding profit. That allow organizations to plan, adapt, and take mission-based risks without pretending the market will solve problems it helped create.

My professional perspective has been shaped not only by practice, but by ongoing engagement with contemporary discourse about the nonprofit and museum sectors. I am particularly interested in the ethical and cultural expectations placed on nonprofit institutions, especially museums, and how those expectations influence governance, funding, and public trust.

Vu Le articulates this tension powerfully when he writes, “When we invest in for-profits, we do so for the potential of realizing more value. When we donate money to nonprofits, we give our money with no hope of self-gain. Therefore, those of us who give our hard-earned money have every right to judge a nonprofit any way we want.” This observation resonates deeply with my experience leading museums, where public perception, accountability, and mission alignment are inseparable from curatorial and interpretive decision-making. Vu Le

Similarly, Dan Pallotta’s TED Talk, The Way We Think About Charity Is Dead Wrong, has been influential in shaping my thinking about sustainability, leadership, and societal expectations of nonprofit institutions. Pallotta’s critique of the structural constraints placed on charities—particularly the resistance to investment in talent, infrastructure, and innovation—mirrors challenges I have navigated throughout my career. These ideas continue to inform my approach to museum leadership and reinforce my desire to engage more deeply with academic frameworks that examine the economics, ethics, and public responsibilities of cultural institutions. Dan Pallotta