How do I decide whether or not to make my company a non-profit?
I want to know the benefits of going non-profit with the kind of product I have. I am struggling with my market and not sure how to advance it at this point. The teaching end is very rewarding, but I need to cover the cost of the product or allow others to donate so I can use the product in teaching small (or large) groups.
THANK YOU TO ALL WHO ANSWERED MY QUESTION. i DID MEET WITH someone from the advancement of women in business and she has over 23 years experience working with and in nonprofits. She helped me see the differences. I will stay "for profit" and try to align myself with a non profit that I have the same vision with. I have a lot of reading to do. I need a great website person and have lots of interviewing to do to get the right people.
Probably the most important question is why you are taking the initiative to start the company. If it is that you have only one burning desire and that is to provide the service, then maybe a non-profit is a good way to go. Otherwise the key difference is that non-profits have no equity, and so you can't get that great multiplier effect that is the reward for taking the initiative of starting and running a business. You cannot sell a non-profit, nor your "share" in it, because nobody really owns it.
1.) I would recommend that you contact your local SCORE office. They have the knowledge and experts (retired executives in various fields and industries) to help you work through your business and situation.
As others have mentioned you really need to do the market research, SWOT analysis, define your mission and vision and develop a business plan. Even if you were to create a NPO you are still going to need a business plan to get people interested in donating to the cause and working on the board of directors.
2.) Just because there is a 'religious' undertone to your business doesn't necessarily mean that you should automatically turn the business into a NPO. There are numerous for profit companies that have a 'religious' element and undertone to them.
you can be a non-profit as long as you keep the 2 companies mission driven call to discuss 203-775-9999
You can get a bunch of tax and funding differences but this is not a question you should have to ask if you understand the legal distinctions for qualifying as a non profit. A principle difference is that while every kind of business needs to be sustainable not for profit means there is a purpose that is superior to money. If that is you then be a non-profit. If you want to trademark or patent something and broaden your profit potential then start a for profit enterprise (the government does not make you be profitable right away...)
Please provide us what business you are doing .
coming to selling product with non-profit your company will get brand name and you will get more sales
After few days you can increase product cost with less margin which will make some product
I hope this will help a bit
It seems you need to answer the question of whether or not there's a viable business behind your product or service before proceeding. You may be offering a product or service that is more suitable to a hobby in which you can get paid rather than a full-fledged business, non-profit or otherwise. As Peter already mentioned, you could try out your idea with an existing non-profit to see if you can roll your efforts into one of their programs.
Using a non-profit structure isn't going to make the situation any easier as you will need to achieve 501(c)(3) status if you want donations to be tax deductible which then brings about a host of regulations (and paperwork).
Depending on your product or service, you may want to operate under an LLC which provides you with some liability protection.
There have been many great answers already. You have not made it clear on your vision/mission which will inform your decision. Having formed several of each type organizations for profit and non profit. I can sat categorically forming and running a for profit business is far easier. Unless you have a very clear plan for public funding (Grants & Donations) I would strongly recommend the for profit route. Consider one of the newer forms such as Benefit Corporation/Certified B Corp or possible an L3C.
I don't know if I would sound a layman or something by saying this but I sincerely feel that it can't get easier than this...
If you have 'Profit' in mind, don't even think of non-profit and if you have 'Purpose' in mind, don't even look for any other option...!
Sorry if this doesn't help you, but this is what I believe...! All the best and find the purpose, means will follow!
There is one confusion, it is only idea or has any plan, if only idea then share on social media and collect the observation and other side if you have any plan e.g Sagheer Business Plan, then discuss with high authority of country or high bossiness icon,
step of business plan are as following:
(0) Market re-search………………………….why?
(1) Market re-search……………………………what?
(2) Market re-search…………………………..How?
(3) Title or name …with respect to name, with respect to business, with respect to location, with respect to era.
(4) Motto…with respect to business.
(7) Mission Statement.
(8) Vision Statement.
(9) Location……with respect to positive and negative aspects.
(11)Finance……..Fix and Running.
(12)Finance Management……with feasibility report in the form of chart.
(14)Business Flow…with the help of flow chart.
(15)Mathematical Model of Production…with cost estimation method.
(16)Promotion Strategy ……..with Probability or regression model.
(17)Risk factor…with your weak points (S (strengths) W (weaknesses) O (opportunities) T (threats) Analysis).
(18)Role of Technology.
Depending on your product, mission/purpose of and for your business, how you deliver your product, and your income needs/desires... the decision to form your business as a nonprofit could always work. Organizations that have grown large have many on staff and several well paid executives, yet all of them started small at one time. I don't know much more than what you have shared, but I would think there must be some creative way to operate as a nonprofit that leads to you reaching your goals, while helping better a community through your product/service and delivery model?
Two things you are mentioning.
Sell a product on non-profit
collection of donation for the production
If you sell your production without cost or on cost price.. then you have to design your strategy accordingly.
The Cost Price strategy.. is that you have to include all expenses and overhead and some marginal profit to pay all your expesnes.. This might make your product cheap and you can attract buyer.. But it will be need ample effort to make people believe that it is non-profit and for good cause.
Secondly, if you collect donations to produce and distribute your product free as sponsorship.. Then you have to work two ways.. Fund Raising and Creating a Market for your product.
In my view.. If your product is a Socially Useful, then you can seek Govt.'s support in creating market due to their committed users and credibility along with some fund support.
Its hard question to ask because details are not much available , But any how we could say that you have to decide when ever you feel its the right time , taking into consideration your calculation of Break even point to help you in taking your decision .As you mentioned you can benefit from teaching end then you have to save all expenses in between the starting and the end .
rthe problem as others have noted here is that non-profits fall into a totally different set of rules and regulations. You can create a good role for yourself and pay your self well but any money made must be put back into the NGO. You'll need a board etc.
In short it is not a viable alternative to a well though out business. Try doing a business plan with SWOT analysis and see where it takes you. Sometimes your questions will be answered in your research.
I think there's a lot of good info here already. What I want to add is that it's easy to think of a non-profit as not making a profit, and that's overly simplistic. Being a non-profit doesn't mean that the employees of the organization don't make money, or that the organization doesn't operate in the black. A well run non-profit should do just the opposite. It does mean that you have to follow a different set of structural, legal, and financial rules than a for profit.
It's difficult to know what the pros and cons of each set of rules would be for your particular situation without a lot more information. Find people you can have a lengthy conversation with, such as a local business incubator or chapter of SCORE and also a local non-profit advisory organization. They will be able to help you evaluate your options, and they can also support you in getting started, whichever path you choose.
Hi Eva, sounds as if you have a great deal of passion for what you are doing. Have you considered offering the service under the umbrella of an existing non-profit agency that has a similar mandate or goals? By working with an existing organization it would allow time and opportunity to determine if donations can be obtained to sustain your products.... best of wishes on your quest.
Generally, forming a non-profit means you resign control of the organization to a Board of Directors that has the power to hire and fire any paid staff members. A provision can be written into the By-Laws allowing you to be the Chairperson, but it is most commonly practiced that a Board of Directors does not participate in any financial gain stemming from the organization. I serve on a Board currently where we had to decide on whether or not to remove the founding chairman because of some legal issues with youth. The non-profit, a new Charter School, ultimately did not have to remove the person, because he resigned voluntarily. We believed he was innocent, and his court ruling appears to be heading that direction after discovery of malicious attempts to discredit him by an angry and historically volatile ex-wife. However, the Press had already run a story, which prompted his current employer (school district) to ask him to resign. No matter the reason. The fact is, sometimes a Board needs to exercise their responsibility to remove another Board member, or fire the Executive Director (who hires and fires everyone else on the payroll).
The benefit of having a Non-Profit come from the fact that you are allowed to secure grant money for new projects, and you are allowed to hold fundraising events. My experience has been that you can engage the community better with a non-profit, and if the organization has a worthy cause, and nobody is looking to get rich, it is a great way to run a company. There are sometimes waiting periods for when you are allowed to start to conduct business, taking into account the date of filing with the governmental agencies in question. There may be e-rate reimbursements available with educational endeavors. Just know that you will be filing a different (and possibly more complex) tax filing. To start, you can do a 550EZ filing, but to get grants you should just bite the bullet and do 550 (long-version) filings.
How well you can tell the story, and tug at heart-strings will be a key factor in how many donors will step up to help, and how many will remain loyal to the cause as you continue on down the road.
I have worked in 2 non for profits, and non of them have products. If you have a product likely is a for profit organization. But you can check the IRS rules here:
Something people don't always consider: do you have to pick between the two? Is it possible to have your training business as a corporation affiliated with (or promoting) the NFP?
Your a bit vague, which makes offering helpful answers really hard. But feel free to PM me if this is something you'd like to dive into in detail.
Establishing a non-profit creates a variety of additional concerns in regards to general administration of the company. Additionally although registering as a non-profit can be easy, getting IRS recognition can be difficult.
One advantage to becoming a non-profit may be the ability to start a development effort to help fund the organizations pursuit of its mission.