What are the Pros and Cons of having a Hybrid Non-profit and For-profit

A non-profit is defined by the business dictionary as an association, charity, cooperatives, and other voluntary organizations formed to further cultural, educational, religious, professional, or public service objectives. According to the Business dictionary, their startup funding is provided by their trustees or others who do not expect repayment, and who do not share in the organization’s profits or losses which are retained or absorbed. A for-profit primary goal is making money, as opposed to a nonprofit organization.

A for-profit can be retail stores, insurance companies to real estate companies. A lot of people believe just because you want to start a non-profit that you are crazy, and you will not make any money. I love nonprofits because you can provide a service, further cultural, and educational programs. You can still be paid for providing these services, and you will still feel like you are accomplishing something that can enhance the world.

In some instances, you can have a for-profit, and nonprofit exists under the same roof, and you do have pros and cons when they do. According to Lapowsky (2018), The model that works best the for-profit needs help to manage its philanthropy. Some corporate for-profits are starting their nonprofits and foundations to manage the charitable activities. This is a perfect relationship builder for, both entities and they can complement each other.

The Cons with both entities, you must have two boards, and if any decisions are made both boards have to approve it. Both entities may put themselves in a position that a possible crossover and that is a “no” “no” when it comes to the IRS. It is a thin line when it comes to the IRS laws, and we always want to stay in compliance.

References:

Lapowsky I, (2018). The Social Entrepreneurship Spectrum: Hybrids Retrieved from: https://www.inc.com/magazine/20110501/the-social-entrepreneurship-spectrum-hybrids.html
Read more: http://www.businessdictionary.com/definition/for-profit-organization.html

Read more: http://www.businessdictionary.com/definition/non

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