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Who Owns A Nonprofit?

best practices board finances foundation Aug 31, 2023

Who Owns a Nonprofit?

     Nonprofit organizations operate with the purpose of serving their communities and meeting a need.  While they don’t exist to make a profit for their owners, they still have to operate effectively as a business. So, that raises the question, “Who owns a nonprofit?” Today, I aim to shed light on that question. 

Nonprofit vs For-Profit Ownership

     Ownership of a nonprofit is quite different from a traditional business. In a for-profit business, owners have complete control over the enterprise, and the goal is ultimately to make a profit to benefit the owners. But, in a nonprofit, no individual person or group of people actually owns the organization. So instead, nonprofits are accountable to their communities, their donors, their supporters, and the general public, as well as the board that governs them. 

Does the Board Own the Nonprofit?

     The board is responsible for managing the operations of the nonprofit organization by making sure that it is staying true to its stated mission. It provides oversight of the organization’s governance, direction, mission, and financial affairs. It’s the board who allocates the nonprofit’s resources, sets the policies, and ensures that the nonprofit is progressing towards its intended purpose. However, the board members do not own the nonprofit, but rather serve as a fiduciary, which means that they put the interest of the nonprofit above their own interest. 

Do the Members Own the Nonprofit?

     Nonprofits can also exist as membership-based organizations. In this type of governance structure, the board reports to the members. While the board is accountable to the members, the members do not own the nonprofit. 

     In nearly every community, there are amazing nonprofits doing incredible work. But, as nonprofit leaders, we must always remember that we serve the community and that we are ultimately accountable to the community. A solid understanding of these governance structures can empower your board to make wiser decisions as they exercise their duties effectively. 

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