Profit’s not a dirty word for not-for-profits

Professor David Gilchrist of the Centre for Public Value has advised not-for-profits (NFPs) and charities to reconsider their stance on profitability, arguing that generating a profit is crucial for their sustainability. He explained that while profit differs from surplus, with the latter being excess funds not required for operations, profits are essential for maintaining and expanding an organisation’s balance sheet. Profits enable NFPs to remain solvent, adapt to policy changes, and replace assets over time.

Gilchrist emphassed that there should be no cap on profitability for NFPs, as long as profits are reinvested into the organisation’s mission rather than distributed. He also highlighted the need for these organisations to understand their true costs and manage funding gaps to ensure they can meet their operational and strategic needs effectively.

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