Lesson 1 Reflection: “The Blurring Line Between Corporations & Non-Profits”

This week we learned how corporations and non-profits are similar, except for the fact that corporations exist to make money for shareholders, while non-profits exist to fulfill a specific mission. Non-profits are allowed to make a profit – in fact, What You Should Know About Non-Profits points out that having a surplus allows non-profits the flexibility to research and develop new programs and to respond to sudden opportunities or emergencies – but the profits must be reinvested towards the mission, not paid out to members of the board.

However, I was most interested in the growing number of for-profit, mission based organizations that are blurring the line between corporation and non-profit. How Five Trends Will Reshape The Social Sector, by La Piana Consulting, discusses low-profit limited liability companies (L3C), which are now legal in four states and two Native American tribal communities. These organizations can accept funds in the form of program-related investments, mission-related investments, loans and guarantees, and are eligible for some forms of tax exemption. We also discussed Benefit Corporations in class, which are now legal in 33 states and strive to create public benefit through the power of business. I was listening to a podcast the other day with former Bachelor Ben Higgins, who is using his newfound fame to start Generous Coffee Company which will donate profits to various charities; he mentioned that because fundraising is so difficult and time-consuming, they decided to start a for-profit to support non-profits. It will be interesting to see how for-profit and non-profit organizations continue to blend in the coming years, hopefully to raise even more funds for important causes.

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