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Should all charity causes always be "Not for Profit"?

 5:12 am on Aug 31, 2009 (gmt 0)

At a superficial level, the first answer that comes to anyone's mind may be "Yes". If I drill down the question a bit further -

- I start a "business" whose ultimate objective is to help under-privileged people.
- I help channel money from the Haves to Have-Nots.
- But I don't register as a "Not-for-Profit" organization and this fact is communicated to the benefactors.
- I charge a certain fee for the service I am doing, which is my revenue.
- Like any business enterprise, I try to maximize my bottomline.
- My bottomline will only increase when I channel more money from the Haves to Have-Nots. In other words, by being efficient in what I am doing.
- I show there are profits to be made by helping people and this profit is made out of willing privileged people. More such businesses will start, more needy people are benefited.

The puritans may frown at this idea. But what arguments have you against this?



 12:20 pm on Aug 31, 2009 (gmt 0)

As I understand it (IANAL), the criteria above does not exclude you from being not-for-profit.

Not-for-profit can, within their income streams, pay running costs (inc advertising), invest internally for future growth/projects, and the owner can still take a fat salary themselves.

Its just that whatever is left must go to charity, rather than to shareholders as a dividend.


 10:58 pm on Aug 31, 2009 (gmt 0)

somebody turn over a rock down here ?


 5:32 pm on Sep 1, 2009 (gmt 0)

Not-for-profit can, within their income streams, pay running costs (inc advertising), invest internally for future growth/projects, and the owner can still take a fat salary themselves.

One would need the advice of lawyer and accountant to speak to a specific situation. However, non-profit in no way means unable to generate and manage gigantic amounts of revenue. There are very specific rules, regulations and laws that apply. However, non-profit is nothing more than a business model to choose from if the business 'objective' qualifies. A model that can be 'weaponized' against for-profit businesses that offer the similar/same services.

Automan Empire

 7:36 am on Sep 2, 2009 (gmt 0)

There is a substantial investment of paperwork and filings when you are a nonprofit. There are also restrictions on certain activities, in particular political ones. Balance this against the main tangible benefit of being a nonprofit, that donors can get tax benefits for their donations, and to a lesser degree, the occasional reduced or exempt fees.

If you can reach the economy of scale that makes the extra work and restrictions of nonprofit status worthwhile, go forward.

Starting out with limited seed capital and time, it might be better to run as a standard (for-profit) entity until it shows tangible signs of viability. Especially if you don't have donations and grants lined up already.

Beware of going through all that paperwork and filing, expecting donations to come spilling forth once you attain nonprofit status. THEY WON'T! It's easy for that to take too much away from the core goals of the organization, and sets the stage for demoralization and burnout when the return on investment takes so long to arrive. Getting nonprofit status is almost a fulltime job unto itself, then so is wrangling donations evermore, once you do.

With vision, and energy, and moxie, and a certain amount of luck, one can potentially build a nonprofit organization that far exceeds what one could do alone toward toward whatever worthy cause. That risk and reward factor is the same as in for-profit enterprises in many ways.

If you really just want to spend your days working directly for your cause, because you find that rewarding and it is working, what exactly is the benefit of filing as a tax-exempt organization?


 12:57 pm on Sep 2, 2009 (gmt 0)

Getting nonprofit status is almost a fulltime job unto itself

And add to it the legal maneuvering to take home a fat salary that justifies your time and effort. I personally believe monetary reward as being among the greatest of motivators for a person/organization to work harder and achieve excellence in any field. One could choose between excelling in the business of selling colored bottled water in the name of softdrink or excelling in the 'business' of helping out people.

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