Starting a Nonprofit vs For-Profit Business (Pros and Cons)
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- Опубликовано: 8 июн 2024
- Thinking about starting a nonprofit organization or a for-profit business? Here are a few differences and how you can make a difference in the world with either structure. #Nonprofit #Entrepreneurship #SocialEnterprise
I now work full time for the 501c3 nonprofit I started many years ago and love seeing the social impact we make in our community as we grow. But I also know many people who started a for-profit business or social enterprise instead, and are making a social impact through that model!
In this video I talk about a few pros and cons about starting a nonprofit vs a for-profit business to help you think through which is the best direction for you. I hope this helps!
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// MORE ABOUT ME
Hi! I’m Amber, a nonprofit founder, Executive Director, and public speaker on social impact, changemaking, nonprofits, leadership, and more. Want me to come speak at your business, college, school, or event or interested in consulting for your nonprofit? Reach out: ambermsmith.com/
My Nonprofit Founder to Full-Time Academy -- with online trainings to guide you through the steps to start a nonprofit (in the USA) and more -- is now LIVE! foundertofulltime.com/
On Facebook? Talk to me and other change makers about social change, nonprofits, social enterprise, leadership and more in my Facebook group, Change the World or Bust: / changetheworldorbust
Join my newsletter! ambermsmith.com/blog/newsletter/
I'm also on Twitter: / ambermelsmith
Pics of me and my cute dog on Instagram: / ambermelsmith
My Nonprofit Founder to Full-Time Academy -- with online trainings to guide you through the steps to start a nonprofit (in the USA) and more -- is now LIVE! foundertofulltime.com/
do you do individual consults?
I own twenty acres near Myrtle Beach SC and will retire from Army in four years. I want to open a Transition Home for young Males ages 18-23. I want a house/barracks type home with 10-15 beds. My goal is to mentor and coach these young males into College, Business, Job, or whatever. My goal is to use my leadership from 20 years of service with these young males. Doing research now.
Thanks for sharing your vision Chance!
Wonderful I hope you get it done what a beautiful thing to do for the young adults
How is this idea going ? Would love to help
@@powerofsightfoundation9162 Currently trying to finish up the Army thing. Once I get closer I will let you know!
Great job, well respected! 💪🏿 And thanks for your service!🫡
This is what I have been looking for Amber you are a game changer and I thank God for you...and all the people that are so helpful to people like me.
Thanks for watching Carmela!!
This is the BEST video I've seen breaking them down!! Thank you!!
Yay! Thanks for watching!
Great video! I love your style and think you’ve done a very good job. Keep making videos!
Thanks so much for your kind words!
Always great content. Keep up the good work🌟
Thank you so much!
Thank you so much for the unbiased yet very informative video!!!! Helped so much
You are so welcome!
Extra detailed information, thank you for looking into the pros and cons for us, this is really good advice Amber!
Any time!
Thank you so so much for this! This is great
Glad it was helpful!
Your videos have been truly helpful with so much great information, thank you I appreciate it
I'm so happy to hear that!
Thank you so much for providing me with some clarity.
Glad it was helpful!
Thanks for sharing and happy holidays. God bless
Thanks, you too!
Excellent info , Amber !
Glad it was helpful!
Excellent info and well presented vid. Thank you so much!
Glad it was helpful!
awesome content! thanks so much!
Glad you liked it!
Excellent video Amber.
Thank you!
This is my favorite video ◡̈ Thank you!
:) You're welcome!
Super helpful, thank you.
Glad it was helpful!
Are you in the process of starting a nonprofit or a business to make a social impact? Shaaaare more about it here!
Hi I would love some advise if that would be ok to message you ?
Sure
Ok thank you I've just joined your fb page is it ok to messaged you through there ? Or email?
Hi dear, Thanks for the informative information. I want to open my non profit organization for sponsoring refugees with my friend, we only have $5000. is it enough to establish it? We already have people’s and organizations ready to donate so, can we receive donations right away after registration done?
Then Can we sponsor refugees right away after receiving donations and incomes?
Hey I currently have an athletic wear company and I'm torn between keeping it for profit or swapping to a non profit and give back to the youth in my community.
Thank you for this video!!
You are so welcome!
A really useful video!
Glad it was helpful!
Thank you so much 😇🌻
You are so welcome!
Very knowledgeable young lady. Thank you for your support.
Thanks for watching!
You are truly phenomenal 🌟🌟 Amazing descriptions. I was learning towards Non-Profit however when you are saying that the board could put me one day……nope. Want to leave my businesses to my kids or other great people
Yes, that's the thing - with nonprofits, the community 'owns' the organization - not you (even as founder!). There are pros and cons to either approach for sure!
Great video thank you
Glad it was helpful!
Perfectly good information for my community service neighborhood watch volunteer services
Hope it was helpful!!
Thank you And God Bless you
You are so welcome!
Thank you
You're welcome!
Per my Financial Education 501c3 Foundation Legacy Heroes...there are a host very different doors & opportunities for Education in our process -- that simply would not be nearly as open (if not outright Closed) to me IF I were acting as a for-profit business. The very notion of "Profit" can unfortunately scare many people off outright or, prevent them by policy from sponsoring me since they'd get pressure to do likewise with other "competitors". My non-profit status sets me far more in a neutral light which those with a profit motive must constantly battle against.
There are certainly pros and cons to either approach.
@@AmberMelanieSmith the only reason I mentioned it is that you did not include "other doors/opportunities" likely opened to non-profits, that for-profits would Not likely have. Another big Pro for non-profits...and a limiting Con per for-profits.
Hello Amber, thanks for sharing this good information. I have a Question: do all board members in a non-profit share the same amount of power or can that be structured percentage wise?
Typically all Board members have 1 vote. You may want to consult an attorney on whether you can structure your Bylaws to say something different, but I will tell you that it would probably be a red flag to people interested in joining your Board, and possibly to funders and the IRS, if different Board members had different percentages of power.
Very nice and detailed information. I wanna join you .
So glad it was helpful!
If a person want to be a benefit corporation do they file as an llc or c-corp if they are operating overseas?
Here's a great resource about benefit corporations that may help! benefitcorp.net/faq
This made the choice more difficult. I'm sure founding members don't want to be pushed out or get the wrong board member who pushes them out. I'm also curious if for profits are able to recieve grants?
Your bylaws would dictate how many votes it would require to remove someone (usually a majority).
Hi, Amber. I'm interested in creating a Sole Member Nonprofit, but I've not found information enough. Could you post something about this kind of nonprofit? I appreciate it.
Thanks for this suggestion! I can look into it - there are pros and cons (IRS scrutiny). In the meantime, here's a helpful article: charitylawyerblog.com/2022/01/17/who-owns-a-nonprofit-corporation/
I have an LLC for profit but I am wondering if I should only convert part of that business to non-profit or start a brand new one with a similar business one for non-profit?
Definitely something to consult an attorney on, based on the nuances of the business vs. potential nonprofit parts!
@@AmberMelanieSmith You are right, but my friend said I should start a new one for the non-profit.
Amber, Cna an existing non-profit museum be considered a business in the eyes of a state government grant program?
I'm not sure what you mean? Is the grant program saying it only wants to funds businesses? Then if your museum is 501c3, probably not.
@@AmberMelanieSmith Thank you for your reply. I guess each state agency would have to be questioned to determine if 501c3 types can apply. There is at least one program in NJ where the agency will refund 50% of the costs for items purchased in the last 2 years. Oddly enough, it requires a $100 application fee.
Can a for profit business transition to a non profit business or vise versa?
I've heard of it being done but there are definitely some things to consider about how the program activities will be structured and your revenue models. As a nonprofit there are very different rules and board members cannot personally profit.
Seems like the for-profit model could result in decisions being made to maximize profits. Non-profits don't have that motivation and financial gains are used to benefit the beneficiaries of the non-profit rather than just go back to the shareholders.
That's an argument that could be made. Some people start businesses for social good (instead of nonprofits) because the revenue can be more reliable in a for-profit business. These may be called "social enterprise" organizations (or even B Corporations) - they are pretty interesting!
@@AmberMelanieSmith does social enterprise orgs officially register themselves as for-profit organizations? How do they get investors then? Do you have any article that covers them in-depth?
Thank you for this vid! Question, when you say you can be voted off by other members, what if you’re the only owner? For example, I want to start a group home for homeless pregnant teens, in my state, the licensing dept requires you to be a non profit. So I would be the only owner or CEO, so who would vote me out?
So to get formal 501c3 nonprofit status, you are legally required have other board members besides yourself in most states/cases.
@@AmberMelanieSmith got you. I want to put my all into it but I hear you can’t make any money and I can’t quit my job. Now in my case, the state will place the kids but they say u can’t touch the money, you have to keep it all in the business. I want to understand this 😩
Here is an interesting question. Can you be a not for profit business? For example, company makes $1M, but 500,000 of that is going to charity for orphans internationally, or would that simply be a business llc with a write off for charity? Can I collect donation on behalf of people?
That's just a business that donates to charity. :)
@@AmberMelanieSmith Yeah, I was wondering it is pretty much the same thing. What if I call myself a non-profit instead providing a service. Genuinely confused, because I was offering a service, but I baked in a donation.
So if I want full control..what do I do?
Start a business you own :) Instead of a nonprofit that requires you to have a board that votes.
What if I want to start both?
Nothing stopping you from starting a business and then a separate nonprofit. :)
Also, in a non profit, how do you make money if you choose not to become an employee and just stay being the owner or ceo
For 501c3 nonprofits, you would have to become an employee even as a CEO to make a salary. In nonprofits there isn't really an "owner"; the "owner" is the community represented by the board of directors; it's not like a private business that has an owner.
@@AmberMelanieSmith got you. If you become an employee can you be fired by the board?
@@BishimDejayes the board can fire you
As a spa owner I really want to start offering skincare and massage services to special needs so in my head I’m thinking the nonprofit is not gonna be the way to go since my business has been incorporated since 2014.
Makes sense!
@@AmberMelanieSmith I tried to get an Amber Grant to become certified as an oncologist skin care, Esthetician. But sadly, I didn’t win the grant. Do you have any suggestions of where to go to look for funding for something like this?
I would love to learn and have your help. I just started Kingdom Restoration LLC and I’m looking for grants. I’m trying to help people and change the world and I am chosen and have a calling on my life to spread Love
Definitely check out some of my videos on grants!
Business or Charity.. I'm confused even more. Launching seems simple. Integrity is goal. Livelihood is daily. Nonprofit perhaps is genuine.
Really it comes down to mission and what level of control a founder feels the need to have over all decisions.
Great video think I heard a baby in the background I was listening so hard
Maybe a puppy, hehe.
You're a lawyer?
Hi Nathan! No, not a lawyer - definitely consult one for legal questions!
Subscribed. Fantastic job. 👍
Welcome aboard!