We all long to make a difference in the world. But while there are many ways in which positive change can be achieved, people seeking to impact the world on a large scale have no choice but to be bold enough to establish an organization through which they can ensure impact. durable. When it comes down to it, the choice often comes down to one between a non-profit and a for-profit organization.
The most underlying difference between for-profit and non-profit companies is why they are established. The main objective of a for-profit business model is to make a profit. For nonprofits, the goal is to help the community. However, over time, the difference between the two has blurred. In fact, the line between them has become so blurred that one could help the less fortunate in any way and still find satisfaction in what they do.
The rise of for-profit charitable business entities has made organizations and leaders realize that they can address social issues and develop communities without needing to be a non-profit business. However, each of these models has its merits and drawbacks. The argument in favor of the for-profit structure is that it is self-sustaining, since social entrepreneurs can generate their own income and do not have to rely primarily on others for financing.
Furthermore, as a for-profit business, you can generate as much income as you want. There are no limits to the amount of income you can generate by providing goods and services. Sometimes getting more funding is as easy as getting people to buy stock in your organization.
However, despite all the benefits it offers, the for-profit business model is limited in certain respects. First, you need to pay taxes. Second, being a for-profit business disqualifies you from foundation and government grants. Non-profit organizations, on the other hand, are eligible for grants and may be exempt from paying taxes.
However, if you decide to operate as a non-profit organization, the downside is that you will not be able to make equity investments. In addition, your ability to generate income becomes limited, as you can only sell products or services that are linked to the purpose for which your organization receives tax relief. Otherwise, you will be charged taxes. If the amount earned from the sale of the unrelated item is substantial, you may lose your tax privileges entirely.
In the end, your ability to make an impact on the world or push the boundaries of what is accepted may be limited by the amount of money you can raise. Without the funds to power the plan, your wish remains a mere wish. So before settling for any model, it is essential to ask yourself, “Where can I raise the most funds?”
Without enough money, your ability to prevent disease, reduce crime, global warming, or end a refugee crisis will be limited. If you opt for the nonprofit structure, you will need to understand the large amount of effort it takes to attract and retain donors. If you can think of a related product or service that is marketable, even better.
Similarly, your success as a for-profit company depends on your ability to present an attractive product that sells at a margin that allows you to make enough profit to alleviate human suffering.