Operating a non-profit organization is different from running a mainstream business, but just as challenging

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By Susanne MacDonald
This Week Staff

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Although for-profit businesses and non-profit organizations both offer services to customers or clients for a cost or fee, there are some substantial differences in how they operate.

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Non-profit organizations may have a different driving forces than for-profit companies, but they must still do business well.

Family Services Moncton (FSM) supplies a wide array of services to corporate clients and community agencies in the areas of wellness, consultation, and training.

They deliver a continuum of preventative and therapeutic services to children, families, couples, and individuals of all ages.

As a United Way member agency, FSM's counselling services offer reduced-fee scales to clients with low family income.

"We have two streams of services," says Maurice D. LeBlanc, CEO of Family Services Moncton and regional director for Family Services Employee Assistance Programs in the Atlantic Region.

"We promote the delivery of counselling services to employees under contract to their employers, which is know as an EAP (Employee Assistance Program).

"We also provide educational services to the public in relation to recognition, prevention, and resolution of difficulties in family life."

The agency has a range of clients, including full-fee or subsidized community clients who pay out of their own pockets. EAP clients receive services free-of-charge because FSM is under contract with their employer.

Clients also come from third-party referrals, such as an employer who doesn't have a contract with FSM but pays out-of-pocket, or referrals from a government agency.

They also offer services for treatment, such as family violence, which is provided under contract through a government department such as the Department of Social Development or the Department of Public Safety.

So, how does a not-for-profit (NFP) organization differ from a for-profit company?

"The main difference is, we don't have stockholders," says Maurice. "For-profit organizations have an objective to generate revenue and make money. Their profit goes to stockholders. Any surplus in a NFP gets re-invested back into the organization's mission."

Maurice emphasizes that not-for-profit is a tax designation, not a business model.

"Not-for-profit organizations differ from for-profit businesses in that they often rely on fund raising for revenue," says Maurice.

"NFPs also generally partner with government, are an integral part of a service delivery for social policy issues, and can often be a para-government organization, delivering services that are not delivered through the government department."

He goes on to explain that since a not-for-profit organization tends to operate in the social services sector, it has a pulse on peoples' needs, largely depends on volunteers, and its infrastructure is based on contributions by its volunteers that are for the betterment of the community.

"A not-for-profit is responsive, driven by community needs rather than market opportunities," says Maurice. "It doesn't operate to make a profit."

Another core difference is that an NFP's board of directors is made up of volunteer community representatives. Their mission and accountability return to the community, not to stockholders.

"They are trustees on behalf of the community," says Maurice. "Ultimately, the community is the owner of the NFP and the board of directors are representatives of that community. With for-profit organizations, the board of directors is comprised of stockholders."

Not-for-profits and for-profits may also differ when it comes to the salaries and benefits offered to employees.

"Because most not-for-profits are dependant upon government funding, they generally don't have the financial flexibility to offer competitive salary and benefit packages," says Maurice. "They may face the problem of having their personnel leave for the public or private sector, where they may receive better compensation."

Maurice explains Family Services Moncton is unique when compared to other NFPs because they offer strong and robust salaries and benefits.

This is because FSM requires staff to have Masters degrees. As a result, the organization needs to compete with provincial government for staff, so they reflect CUPE's provincial government salary scale.