Drug testing

Could a Non-Profit Structure Be Right for Your Business?

If you have a business idea, or an idea for a service for your community, there's one decision you must make early on: are you going to structure your project as a for-profit business, or as a non-profit corporation?

Now, it may be that you already have a clear idea about this. Some business ideas are clearly "for profit". For example, if you want to sell insurance, or stocks, that's undoubtedly a for-profit business. On the other hand, if you want to raise money for research into a cure for juvenile diabetes, that project will best be served by forming a non-profit corporation.

One difference between for-profit and non-profit organizations is that grants funding is generally reserved for non-profits. Some grants are available to for-profits (and to individuals), such as government grants to promote affordable housing or job creation in economically depressed neighborhoods. Most grants, however, and particularly grants from foundations, are given only to non-profit corporations designated by the Internal Revenue Service as 501(c)3 corporations.

In many cases it is not so easy to determine into which category a business idea should fall. One question to ask is: will my planned project deliver a service to clients? A beauty shop located in Beverly Hills, catering to wealthy women, is certainly a service business. The clients, however, are not needy. They can easily pay for the service without assistance.

So the second question to ask is: will the project assist clients who are in need? A beauty shop located in a Medicaid-supported nursing home will serve clients in genuine need - clients who could not pay for this service from their own resources.

What are the benefits of a for-profit business model? Well, first of all, the owner of the for-profit business holds personal (or corporate) title to the business and all its assets. Any money that is made by the business can be used according to the discretion of the owner. The owner can borrow against the business, or sell it and keep the profits. When the owner dies, he or she can leave the business and/or its assets to his or her heirs.

For-profit businesses exist not just to support the owner, but also to build wealth. So if you have a business idea that has the potential to build wealth for you, I recommend you stick with the for-profit business model. For example, if you have designed a widget that is apt to revolutionize its market niche, and you hold the patent, by all means produce and sell it through a for-profit business. That widget could make you rich, while offering a great benefit to your customers.

Does this mean that non-profits can't earn money? Not at all. In fact, I always encourage my non-profit clients to look for ways to become self-supporting. Many non-profit agencies generate income through contracting with other organizations to provide services. Other agencies operate businesses such as thrift stores.

The difference is that the income generated by a non-profit organization always belongs to the non-profit agency, not to the organization's founder. If the non-profit organization decides to cease operations, its assets, by law, must be donated to another non-profit agency.

While a non-profit organization may not generate wealth for its founder, a non-profit can be a vehicle that provides a very good ongoing income. Many people create non-profits to do work they love, and to create a job for themselves. The founder of a non-profit organization can become the agency's Executive Director, and draw a salary that is comparable to salaries in the for-profit sector. In some cases, the founder may choose to occupy another staff position, and turn ongoing management over someone else who functions as Executive Director.

There is also a third possibility, one that I call a dual for-profit/non-profit structure. If you have a business that provides a service that could potentially be made available to clients in need, this structure may work for you. For example, if you teach painting, you may want to charge some clients a high fee for art lessons. But you could also teach painting to disadvantaged children, and use grant funds to reimburse yourself for the work.

In order to use this structure, you could join forces with an existing non-profit, such as the YMCA, and assist them in writing a grant to underwrite art lessons. You could also set up a new non-profit agency devoted to providing arts education to needy children, enlist interested people to operate the agency, and contract with that agency to be paid for teaching. This dual for-profit/non-profit structure can work for a variety of different businesses.

Jillian Coleman Wheeler is a Grants and Business Consultant to businesses and non-profit organizations. Her website, http://www.GrantMeRich.com, is a resource site for entrepreneurs, grant writers and consultants, and offers online training for grants consultants. She is also author of The New American Land Rush: How to Buy Real Estate with Government Money. For more information, visit: http://www.NewAmericanLandRush.com

limousine chicago service
In The News:

Rambling Confessions of a Recovering Entrepreneur

I told my family that I finally accepted that my... Read More

The Perfect Little Coffee Shop: Are You Afraid of Failure? Are You Letting that Failure Cripple You

Ah, coffee, the drink of choice when I want to... Read More

Curb Your Enthusiasm

Isn't enthusiasm a good thing? Aren't we urged to be... Read More

Motivation and Commitment

Why do people start small businesses? The most frequently cited... Read More

Health Insurance for Solo Entrepreneurs

One of the most important benefits employed people enjoy is... Read More

Entrepreneurial Ongoing Education Advice

I would like to give some advice to all the... Read More

Competitive Edge

In his book, The Road Ahead, Bill Gates of Microsoft... Read More

What is Entrepreneurship?

In discussing entrepreneurship and writing articles on the subject, I... Read More

Do You Want to Just Survive or Thrive? (Part 1)

You've probably heard this, or maybe you will relate to... Read More

Entrepreneurship Story; Over Regulation in Franchising Part I

Jim and Sally run a successful auto business, which they... Read More

The Power Of Personal Environments

I've got to admit, I'm a big fan of comfort.... Read More

... in Pursuing the American Dream

This morning I woke up at 4:30 in the morning,... Read More

Business Development: The Basic Ingredients

Cooking isn't much different than building a business. You have... Read More

Could a Book About Your Company be Worth $1.7 Billion? Building Value Through Publishing

"Berkshire Hathaway (NYSE: BRK.A) to purchase Clayton Homes for $12.50... Read More

Interview with Best-selling Entrepreneurial Authors Barbara Winters and Nick Williams

Ray Bradbury's quote, "You've got to jump off cliffs all... Read More

Veteran Entrepreneurs Are Growing In Ranks

When I'm not running my own business, writing articles about... Read More

5?4?3? 2...1?

A streak dating back more than three decades came to... Read More

The Entrepreneurs Dilemma

In business, you plan to protect your inventory, your unique... Read More

The 5 Senses of an Entrepreneur

If you have seen me speak you will know that... Read More

Why Most CEOs & Entrepreneurs Fail?

Times are tough. The economy is in a constant state... Read More

Four Steps to Entrepreneurship

As more and more people start or consider starting their... Read More

Success Secrets - What I, Mike Litman Learned From This Old Book

Yesterday was a beautiful, sunny day in New York and... Read More

Entrepreneurship Story; Over Regulation in Franchising Final Chapter

Sally and Jim have launched their automotive franchise business and... Read More

Double Down on Marketing

If you want to compete in the world of high... Read More

Create Your Entrepreneur Dream Team

I hear it all the time. "What should I do... Read More

industrial led bulbs street light prices Pete's produce ..