August 4, 2023

What does adopting babies have to do with being non-profit?

Why is Nightlight a non-profit organization?  Below are six answers to that question.

Our stakeholders demand it.

People are sometimes surprised to find out that the main difference between a non-profit and a for-profit actually has nothing to do with money, but who makes the highest-level decisions.  A non-profit has a board of directors who have no financial stake in whether the organization makes money or loses money.  Therefore, their only interest is to see that the organization does not stray from the mission or purpose.  Nightlight’s board of directors is comprised of embryo placing parents, adoptees, adoptive families, ordained pastors, or former adoption agency directors.   None of them has any financial interest in how much money Nightlight makes.  Their only concern is that we remain pro-life, pro-permanency, and do not stray from the Word of God.

We are mission-minded. Our charter and mandate:

Similar to the stakeholder structure, Nightlight is non-profit because it is inherent to our mission.  Our mission is to “Share God’s love through foster care and adoption.”  We were founded in 1959 by members of the National Association of Evangelicals, and the purpose was (and always has been) to put the Gospel to action by helping vulnerable children and expectant parents.  We are not finding children for families, but families for children in need of a loving home.  We see adoption as a fulfillment of the Great Commandment and the Great Commission.

It is ethical.

One reason that Nightlight Christian Adoptions, and other licensed adoption agencies, are non-profit is that this is the only way to reasonably expect non-biased pregnancy counseling for expectant parents.  The agency employs social workers committed to non-coercive ethical behavior, who are not measured by how much income they produce.

Similarly, as a non-profit foster care agency, Nightlight does not have a financial incentive to keep children in foster care.  The agency is committed to permanency.  Even though the agency makes less income once children go from foster care to adoption, our non-profit charter mandates that we seek permanency.

It is required.

Similar to the above section, because a non-profit structure is ethical, it also happens to be legally required in many cases. Most states require foster or adoption agencies to be non-profit, and accreditation for international adoption also demands this non-profit status.

It keeps fees low.

Christian adoption agencies like Nightlight have often been started by groups of churches who want to serve the Body of Christ by offering a service while keeping fees low.  Donations toward Nightlight, combined with a non-profit mindset, allow us to charge families less for our services, such as adoption, home studies, counseling, and post adoption support.  Currently families only bear 60% of the cost of their adoption, since the rest is covered by a combination of donations, grants, and reimbursement for government services.

It doesn’t make money.

In this article published by NCFA, research of Hague-accredited adoption agencies revealed that agencies were only able to generate enough revenue to meet the minimum accreditation required of 2 month’s cash reserves.  Two-thirds of formerly accredited agencies have gone out of business since 2016, and financial insolvency has been a major factor.  The average profit margin is only 2.5%, which is lower than the profit margin that any for-profit company would reasonably tolerate.  Adoption agencies which remain solvent depend on fund raising to do so.  The state reimbursements are insufficient, so even foster agencies are dependent on fund-raising. Nearly all attorneys who specialize in domestic adoption supplement their practice with other types of law services (family law, trusts, etc).   Even with respect to embryo adoption, we have discovered increasingly that clinics are closing their third-party donation programs and are referring embryo placing parents to Nightlight instead.  In addition, the federal embryo adoption awareness grant was a vital part of making our program sustainable, as many other embryo programs discovered it was a struggle to be viable without this grant.

As a non-profit driven by mission-oriented goals, we make several decisions that "don't make financial sense." For instance, we offer several services that have insufficient or no revenue stream at all, such as the  Post Adoption Connection Center, counseling, the Renewed Hope adoptions from dissolution, and the Anchored in Hope adoption from foster care program.

Why does Nightlight have money?

Our standing with the Council on Accreditation demands that Nightlight have 2 months of operating in cash reserves.  This is the amount of money that Nightlight always has (no more, no less).  This requirement is based on an industry standard of a minimum level of financial solvency.

Charity watchdogs have their own benchmarks for what constitutes an appropriate level of cash reserve and income.  These non-profit tracking sites also agree that 2 month’s reserves is a minimum standard, and surprisingly, they have no limit on the maximum amount.  These watchdogs are actually not looking at income and assets as the primary way to score the legitimacy of a non-profit: instead they score the percent of income that goes to fundraising and how much goes toward “general and administrative” (G&A) rather than to programs.  Nightlight has the highest score by all charity tracking sites, for instance we are platinum level with GuideStar.  The typical benchmark by charity trackers is that more than 75% of the non-profit’s budget goes directly toward programs (not G&A).  Nightlight’s ratio exceeds the expectation with a ratio of 80%.

 

Daniel Nehrbass, President

 

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