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How To Profit With A Nonprofit Organization

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By Daniella Masterson


Daniella Masterson
Thinking of starting a nonprofit organization, but not sure how?  Or have you started a nonprofit, but you're not sure where to secure funding? These are common questions for people who have a vision to create a business but lack the information to empower their dream. 

Sherita Herring is the founder and president of Kreative Images Foundation. Formerly an executive director for the YMCA, Herring's primary role was to obtain lucrative grants for the organization.  In 1994, she decided to use her expertise to help nonprofits, community development corporations and various professionals to become nonprofit powerhouses through properly structuring their companies and procuring grants.

The following Q&A with Ms. Herring on how to profit with a nonprofit organization.

What's the difference between a for profit and a nonprofit organization?

A for profit company can have stock and offer an investor a return on his investment.  A nonprofit can't offer stock. But donations are tax deductible.  The nonprofit needs to fill out the 1023 form with the IRS to facilitate that status.

Is there profit in a nonprofit?

Many times people hear the word "nonprofit" and they think that means there's no profit, but there is no limit on the profit.  Unfortunately, millions of grant dollars are untapped due to nonprofits' lack of knowledge on how to procure them. 

How do they make a profit?

There isn't a ceiling on how many grants a nonprofit can have. Grants are contingent upon the services provided.  Keep in mind, measurable program outcome generate measurable organization income. Obtainable grants can go as high as seven figures or higher for programs like a housing project for Katrina survivors. 

How do you identify new funding sources?

I offer a free newsletter each month giving people information on grants. But the Internet is a great tool too. You can enter a description in the search window, such as "youth, gangs, grants" and it will list sources.  There are also books in the public library or at book stores.

Can people pay themselves a large salary at a nonprofit?

Absolutely.  It's just like any company.  Your pay is commensurate with your experience, program deliverables and the market value of that position. 

Where do nonprofits go wrong in not obtaining funding?

They go wrong in many areas.  First of all, many fail to structure their company correctly and have ineffective program strategies.  Funding agencies look at all of those things, including your board of directors to make sure their investment is protected.  If your last name is Williams and your board members' last names are Williams, that's a conflict of interest.  It doesn't mean that family members can't be on the board, they just can't be voting members.  The other area they go wrong in is filling out the application improperly.  However, grant procurement is achievable.


To obtain Kreative Images' free grant newsletter, contact them at www.kifoundation.org or calling (323) 294-0223. 


Daniella Masterson hosts a public affairs show called, "It's A New Day" that can be heard on Sundays, from 6 AM to 8 Am on KRBV-FM V100.  She's also a veteran journalist who has written for the Los Angeles Times and the Daily News.

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