Ask any donor: What makes a nonprofit, well, nonprofit? Is it the tax status? The actors involved? The actions they take? Or is it the lofty goals they pursue?

Spoiler alert: It’s not the tax code, the org chart, or your stellar board of directors. It’s something far more elemental and far less tied to your paperwork.

New research dives into how regular people—not insiders or academics—see nonprofits. Turns out, the public doesn’t care about our institutional labels. They care about what we do and why we do it.

Here’s the kicker: They see nonprofit as a verb. A set of actions and aims. Not an identity, and certainly not a monopoly. And the competition is heating up.

Five Big Takeaways 

1. Actors: Nonprofits aren’t the sole champions of charity. Businesses, individuals—even your neighbor down the street—can hold their own in the public’s mental image of who does nonprofit-y things. Governments? Not so much.
2. Actions: Selling your services might keep the lights on, but it’s not winning hearts. People don’t see selling as “charitable.”
3. Recipients: Partnerships with businesses or government? Meh. Partner with another nonprofit, though, and suddenly you’re looking a lot more like the real deal.
4. Aim: Big-picture aspirations—“make the world a better place”—get the nonprofit gold star. Focused outcomes like “make this person better off” are nice, but they don’t hit that same sweet spot for the public.
5. The Rising Threat of the Fourth Actor: A person helping another person—no 501(c)(3) needed—ranks just as high in perceived “nonprofitness” as a traditional charity. And businesses? They’re creeping up the scale too.

Why This Matters

The public isn’t bound by IRS definitions. They don’t differentiate between the nonprofit sector and the growing “fourth sector” of social entrepreneurship. They see a world where people, businesses, and nonprofits all compete in the same arena of goodwill.

Worse still, people helping people—directly, disintermediated, no overhead rates or annual reports—already holds equal footing in their minds. And let’s face it: disintermediation is a trend we’re not equipped to stop.

If nonprofits cling to the belief that their label alone guarantees relevance or loyalty, they’re toast. The public has spoken: Nonprofitness is about the what and the why, not the who. The challenge for us? Prove we’re not just another outdated institution but the best vehicle for creating real change.

Kevin