Monthly Archives: July 2012

What is a Non-Profit?

What Is A Non-Profit by The Startup Garage

What is a Non-Profit?

The purpose of a non-profit is to bring together a group of people that share an idea to change the world and that unite under a common goal for the specific change they seek.  Unlike the perception of a non-profit as a hippie volunteer operation, a non-profit business model is a great way to make a living while pursuing your desire to fulfill a need that exists in your community or beyond.

While the term “non-profit” does not reference a specific legal structure, it does signify that your group is working on a mission towards a specific goal rather than simply working towards profit.  Most non-profits will choose to incorporate and become a functioning business, and by filing as a non-profit corporation, the non-profit is eligible for various state and federal tax exemptions because the non-profit is working for a social and community benefit.  In return for the tax breaks, a non-profit has to follow certain organizational guidelines designed to ensure the effective pursuit of the non-profit’s mission, such as having a board of directors.

Significant differences between a traditional corporation and non-profit corporation include the success metrics.  While a profit corporation is successful if it earns a profit, a non-profit is successful if it is accomplishing its mission.  However, financial health is crucial for the non-profit to continue to operate.  As a non-profit generally does not earn revenue through sales, they are particularly dependent on fundraising efforts and grants.  Fundraising consumes a significant amount of time and effort from the non-profit, and demands a marketing and sales skill set amongst the non-profit’s employees.  But rather than selling a traditional product, you are selling your mission.

If a non-profit business model sounds like the best fit for your vision, read through the rest of The Startup Garage’s blog series on Starting a Non-Profit Organization.  We will have a new post every Monday and Wednesday with tons of information on how you can start your own non-profit!

 

Whether you have a question about Non-Profits, or you’d like to discuss our business plan writing services, feel free to contact us for a free consultation!