For Profit or Not?

By sbdceditor,

You have a big heart, you know your community and it pains you every day to see your neighbors, friends and others suffer.  You have ideas and, better yet, a solution that works to address this pressing social need.  The question now is do you need to be a not-for-profit to deliver that solution?

The lure of not-for-profit lies within the perception that there is a lot of grant money available to help you start or expand the services offered by your not-for-profit enterprise.  Television commercials, friends who know someone who got a bunch of money they didn’t have to repay and others tell you that this is easy money.  It isn’t.

The competition for funds has become fiercer since the recession. Most grantors fund for service delivery instead of operating support, which means that the dollars cannot be used to start the program or pay for the director. The grantors want dollars spent to help the people you want to help.  If your organization is prepared to do that, your chances of getting funded and being able to meet the requirement are good.

The second question is can you do the same or more good via a for-profit business?  If you had the opportunity to make money with a business, contribute cash to non-profits already doing good work, or to a cause, would that address the problem or satisfy your need to contribute?

Please note that nothing stops a for-profit from contracting with non-profits, government agencies or the like to deliver community services for a fee.  It can also contribute owner and employee expertise and time to solve a social ill.  The for-profit has fewer restrictions and does not require an outside board of directors’ governance, like a not-for-profit does.  If you value autonomy, speed and have the willingness (it takes a lot) to run your own business, maybe this is a better choice.

The point of this story is that the goal of doing good for your community by addressing a social ill can be addressed in either a for-profit enterprise, a not-for-profit enterprise, or a combination of both.  Consider various options for achieving your goals and the organizational form will be a more natural decision.

Contact an SBDC Business Consultant to further discuss the organization of your business. Schedule your no cost appointment today by calling (951) 781-2345.

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