Nonprofit FAQs

Every nonprofit can and should get involved in advocacy to help advance its mission. Representatives of nonprofit organizations can educate and inform decision-makers, including policymakers with the expertise, experience, and real-life stories necessary to find solutions to complex community problems. Additionally, advocacy shapes the public debate about issues that affect nonprofits. It’s the number one way nonprofits can focus attention on the issues they care about and bring about real change for the people and causes they serve.

Yes, nonprofits are permitted to move beyond advocacy (e.g. educate and inform policymakers and the public) and lobby. Lobbying is the practice of influencing policymakers or their staff by expressing a position on a specific piece of legislation (known as direct lobbying) as well as mobilizing advocates to contact their legislators about that legislation (known as grassroots lobbying).

Nonprofits play an important role in the local, state and national economies. Businesses and governments have recognized that mission-driven nonprofit organizations offer something unique - leverage of social, financial and human capital - that is necessary to advance the common good and provide essential services to support a thriving community.

In Texas, the nonprofit community has doubled in size over the last decade, averaging a growth rate of 10% every year. The majority of nonprofits are small in both budget size and number of employees and are structurally underdeveloped to meet the growing community needs. It is important government and business understand the current limitations of nonprofits and help facilitate ways to support and build the capacity of nonprofits to be better partners in service and innovation.

Nonprofits are called to respond to urgent needs in the community, and to do so with funding streams (grants, contracts, and donations) that tend to be less secure than those of for-profits. For this reason, nonprofits are forced to do more with fewer resources. Although this revenue cycle suggests great efficiency; it is not conducive to developing an organizational structure that supports financial sustainability nor viability to meet the growing demands of community needs.

The term ‘nonprofit’ is a misnomer. Nonprofits can make a profit. The key point is that nonprofit organizations are able to put revenue back into its organizational budget and are prohibited to distribute dividends to individuals, otherwise seen as furthering ‘private benefit’. For more information, review the state and federal laws pertinent to nonprofits. (This response is adapted from National Council of Nonprofits, "Myths about Nonprofits")

Nonprofits must apply for tax-exempt status, a federal designation, to avoid paying federal taxes. This designation is then passed on to its financial and in-kind contributors who can receive tax-deductible benefits. The tax-exempt status serves as an advantage to nonprofits as an incentive to advance their common good missions.

The Texas nonprofit sector as a whole is often overlooked, in part because it lacks a single voice or advocate to trumpet its successes and learnings. In reality, this largely invisible sector is an incredible asset to Texas’ economy and the very fabric of our communities. Built for Texas is a multi-year, multifaceted collaborative effort that will elevate the power and role of the nonprofit sector, its value to local communities and the state. Key goals include:

  • Raise visibility to shape public perception and understanding of the Texas nonprofit sector
  • Empower the Texas nonprofit sector to be effective advocates and build strong relationships with systems’ leaders
  • Advocate for public policies that support and strengthen the success of all Texas nonprofits