If your business is struggling, can you save it by turning it into a nonprofit? Short answer: probably not.
It’s Jess Birken here, and I’m back with my co-host Meghan tackling a super common question from business owners who think running a nonprofit might be an easier path.
Real Listener Question: "I'm an instructor at a small figure skating school. It's been around for 30 years, but we're not making ends meet. The current owner doesn’t want to run it anymore. Can we convert it into a nonprofit so we don’t have to make a profit or have an owner?"
We hear this one a lot. A business isn’t working, and people assume nonprofit status will solve everything. I mean, it’s right in the name – you don’t have to make a profit, right?! Meghan and I walk through why this logic doesn’t hold up, the realities of converting to nonprofit status (hint: you can’t), and what it really takes to start and sustain a nonprofit. If you’re dreaming about skipping taxes and raking in grants, this episode will help you get real about what actually works.
What You'll Learn:
- Why you can’t convert a for-profit business into a nonprofit
- What nonprofit status actually means and why it’s not a business model
- Why fundraising isn’t a magic solution
- How conflicts of interest complicate nonprofit governance
- What to do before starting a nonprofit if you're serious about it
- Why starting a nonprofit requires a plan, not just a tax filing
- What to think about if your org isn’t financially viable right now
Bottom line: Nonprofit status isn’t a quick fix. If your current business model isn’t working, you need to solve that problem first — not just switch IRS categories and hope for the best.
Resources from this Episode
• Listen to Episode 89 to learn about conflicts of interest: https://birkenlaw.com/charity-therapy-podcast/ct089/
• Check out my friend Steve Boland's podcast at Next In Nonprofits: https://www.nextinnonprofits.com/podcast/
• Previous Episode: Breaking Down the IRS Changes for 501(c)(3) Status for Churches: https://birkenlaw.com/charity-therapy-podcast/ct144/
• Episode Transcript: https://birkenlaw.com/wp-content/uploads/2025/08/CT145_Transcript.pdf
Connect with Us
• Jess Birken: https://www.linkedin.com/in/jessbirken/
• Meghan Heitkamp: https://www.linkedin.com/in/meghan-heitkamp-829254115/
Listen & Engage
• Listen on Apple Podcasts | Spotify | YouTube | Amazon Music
• Rate & Review on Apple Podcasts: Click "Ratings and Reviews" then "Write a Review"
• Send us your nonprofit questions: https://birkenlaw.com/podcast/#podcast-story
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