Chapter 2: Why a non-profit?

So, what is it about a non-profit? Why do you want to be a non-profit? Or do you even know if you want to?

This is an important issue – to understand what a non-profit is, and to realize that you can probably accomplish similar goals without being a non-profit, or alternatively by being a part of another, already existing non-profit.

This was outlined in the preface, but we’re still going to dig a little deeper.

A non-profit is nothing more than a business formation. An ownership designation. It is not a tax exemption, it is not a 501c3. It is the formation of your business within your state and it determines (like an LLC, S-corp, C-corp, etc…) what happens with profits and taxes at the end of your fiscal year.

It absolutely, positively never has or ever will mean that you cannot or should not make a profit. If you don’t already know this, a profit is quite simply whatever is leftover when you subtract expenses (what you spend) from revenues (what you bring in).

Profit = responsibility

Why would you ever seek to create a business environment where you spend more money than you bring in? That doesn’t sound like something that will last very long does it? Is that something you would want to give your hard-earned money to? The answer should be no.

Secondly, we have to consider this “why a non-profit” in conjunction with our initial “why?”

As pointed out in a comment on the above referenced post

In the context of non-profits, specifically, I think lots of people settle for the answer [to why?], “to help people.” Have you found that to be sufficient, or not?

In short, no, this response is not sufficient – in regards to starting a non-profit. To say such implies that only non-profits help people. Sure, the Red Cross does a lot during disaster relief, and the Boys & Girls Club takes care of kids in need, but what about adults in need of jobs? Does a for profit staffing agency do no good? Is helping people find jobs inherently ignoble simply because your business is not formed as a non-profit? Does building a chain of clean, safe convenience stores to provide safe rest stops for families and quality jobs in the community do no good? Regarding the owner of the question (Eric) and his company; The Iron Yard: does providing a quality education program that garantees job placement after a twelve-week course and thusly allow people to change the trajectory of their entire families lives do no good?

“To do good,” can be a good reason to start something, but can’t be the reasoning of why a non-profit specifically is the chosen medium.

Also, “doing good” is relative, and depends largely on our own individual values, but that’s for Chapter 3.


One thought on “Chapter 2: Why a non-profit?

  1. “‘To do good,’ can be a good reason to start something, but can’t be the reasoning of why a non-profit specifically is the chosen medium.”

    Extremely well said, Ryan.

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