Five Nonprofit Myths That Hold Organizations Back

If you ever watched MythBusters, you know that some widely accepted "truths" don't hold up very well when tested.

The same thing happens in the nonprofit world.

Many of the beliefs we hear from board members, volunteers, and nonprofit leaders contain a grain of truth. But when those ideas go unchallenged, they can become myths that influence decision-making in ways that aren't always helpful.

Let's put five common nonprofit myths to the test.

Myth #1: Nonprofits Aren't Supposed to Make a Profit

This is the one we hear most often and we understand where the confusion comes from. After all, nonprofits aren't businesses, right?

Well, yes and no.

Nonprofits do not exist to generate profits for owners or shareholders. But that doesn't mean they should spend every dollar that comes through the door. In fact, a healthy nonprofit should aim to end the year with money left over.

Why? Because missions aren't well served by teetering on a financial edge.

Unexpected expenses happen. A vehicle breaks down. Technology needs replaced. A major funder delays or withdraws payment. Without reserves, even a temporary setback can create a crisis.

Strong nonprofits build operating reserves, plan for emergencies, and maintain enough financial stability to weather challenges. In fact, many funders and donors expect it because it shows good stewardship. Most importantly, it allows organizations to stay focused on their mission instead of constantly worrying about cash flow.

So no, making money isn't the mission. But money does make the mission achievable. 

The most effective nonprofits understand that financial sustainability isn't a distraction from the work. It's what allows the work to continue.

Myth #2: Good Boards Agree on Everything

Nobody enjoys conflict in a board meeting. It can feel uncomfortable to challenge an idea, ask hard questions, or vote against the majority.

But healthy boards don't automatically agree on everything.

In fact, some of the best decisions come from thoughtful discussion and differing perspectives.

Board members bring different experiences, skills, and viewpoints to the table and it is their responsibility to speak those viewpoints out loud. One member may focus on the people being served, while another may be thinking about finances, risk, or long-term sustainability. Those differences strengthen decision-making and can benefit the nonprofit long term.

The real danger isn't disagreement. It's silence.

When board members avoid difficult conversations simply to keep the peace, organizations miss opportunities to identify risks, consider alternatives, and make better decisions. Over time, a culture of automatic agreement can lead to poor governance and groupthink.

One way to encourage healthy discussion is to intentionally explore different perspectives before a vote. Ask questions like, "What concerns might we be overlooking?" or "What are the potential downsides of this decision?" Some boards even designate a member to play devil's advocate and challenge assumptions. The goal isn't to create conflict. It's to make sure important issues receive thoughtful consideration.

Board members also have a responsibility to create a respectful environment where everyone feels comfortable contributing. When individuals dismiss ideas and interrupt, or the group relies too heavily on the opinions of a few influential members, it can discourage participation and limit valuable discussion. Strong boards listen carefully, consider differing viewpoints, and focus on the issue rather than the individual.

Ideally, members should ask questions, challenge assumptions, and share concerns before a decision is made. But once the board votes, everyone should support the final decision and move forward together.

A board that agrees on every issue isn't necessarily healthy. A board that can disagree respectfully and still work toward a common mission is. 

Myth #3: Financial Reports Are for the Finance Committee

Many nonprofit board members join because they care about the mission, not because they have a background in accounting.

That's okay. You don't need to be a CPA to serve on a nonprofit board. But you do need to understand enough about your organization's finances to provide meaningful oversight and ask important questions.

Nonprofits are entrusted with funds from donors, foundations, corporations, and government agencies. Those supporters expect the organization to use resources wisely and responsibly. As a board member, part of your role is making sure that happens.

If financial reports feel overwhelming, start with a few basic questions. Are we bringing in the revenue we expected? Are expenses tracking with the budget? Do we have enough reserves to handle unexpected challenges? Are there any financial risks the board should be discussing?

You don't need to understand every line item immediately. What matters is being willing to ask questions and seek clarification when something doesn't make sense.

In fact, if you're confused, there's a good chance other board members are too.

Transparency is an important part of good financial stewardship. When only one person understands the finances, whether it's the treasurer, executive director, or finance committee chair, the organization becomes vulnerable. Strong boards encourage open discussion of financial reports and make sure all members have access to the information they need to make informed decisions.

Financial oversight works best when responsibility is shared, not concentrated in a single individual.

Strong organizations make financial information accessible and understandable. Strong board members engage with that information rather than avoiding it. Asking questions isn't a sign that you don't belong at the table. It's a sign that you're taking your responsibility seriously.

Financial stewardship isn't reserved for the treasurer or finance committee. It belongs to the entire board.

Myth #4: Board Service Is My Donation

Serving on a nonprofit board is a meaningful contribution. Board members volunteer their time, share their expertise, attend meetings, help solve problems, and advocate for the organization in the community.

Those contributions are valuable. They are also expected.

Board members are not simply volunteers. They are leaders entrusted with the long-term success of the organization. That responsibility often includes supporting the nonprofit financially as well.

Many organizations adopt a simple board giving policy that asks every board member to make an annual contribution. The amount is often left to the individual's discretion because board members bring different financial circumstances and capacities for giving. The goal is participation, not equal gifts.

Why does this matter? Board giving demonstrates a shared commitment to the organization's mission. It allows board members to confidently tell donors, funders, and community members, "I support this organization myself because I believe in its work."

Some grantmakers and major donors also view board giving as an indicator of engagement and organizational strength. They want to see that the people responsible for governing the organization are invested in its success.

Financial support is only one part of a board member's investment. Many contribute professional expertise, community connections, volunteer hours, and advocacy on behalf of the organization.

Together, these contributions strengthen the nonprofit and help advance its mission.

Strong boards understand that leadership involves more than governance. It means investing in the organization's success and encouraging others to do the same. 

Myth #5: Volunteers Are Free

Volunteers are among a nonprofit's greatest assets. They expand an organization's capacity, strengthen community connections, and help advance the mission in countless ways.

But volunteers are NOT free.

While volunteers donate their time, effective volunteer programs require an investment from the organization. Much like hiring an employee, recruiting, training, supervising, and recognizing volunteers all take time and resources. Without that investment, volunteers can become frustrated, disengaged, or unsure of how they can best contribute.

The most successful nonprofits view volunteer engagement as a long-term investment rather than a short-term solution. They provide clear expectations, meaningful work, and regular recognition. 

In return, volunteers can become some of the best networkers you can imagine. They share their experiences with friends, family, and colleagues. They introduce new supporters to the organization. Many become donors, committee members, and future board leaders.

When organizations invest in their volunteers, they gain far more than extra hands. They build a network of ambassadors who help strengthen the mission and expand its reach throughout the community.

Volunteers may not receive a paycheck, but they are far from free. Like any valuable asset, they require care, support, and investment to thrive. Treat them with the respect they deserve, and you will see a return on that investment. 

This article is based on a series of nonprofit governance blogs originally written in 2022 by Judy Chambers, a former member of the Ghost Writer team. We appreciate her contributions and the opportunity to refresh and combine these ideas for today's nonprofit leaders.