• Nonprofit or For Profit?

    market place by Juan Ignacio Tapia

    That was a pretty easy one for us – profit. We are entrepreneurs. We are comfortable with the profit business structure. We understand it. It is more nimble than the non-profit structure.

    We agree with the Boulder Thesis that states a robust entrepreneurial ecosystem starts with entrepreneurs themselves, especially the established ones. If we are going to ‘own’ it, we may as well own it.

    The only reason to go with non-profit would be to access funding available to nonprofits. We looked but we couldn’t find any funding that pays for infrastructure, which is what we are. There is money for programs and we are happy to partner with nonprofits who can access that funding. Having said that, even that funding is getting tighter in terms of paying any expenses not directly related to program delivery.

     

    There are restrictions on what business activities a nonprofit can do. You can’t carry on a business and call it a nonprofit. We can make a strong case for the nonprofit nature of our enterprise and make sure we stay within the guidelines of what a nonprofit can do, but why make it difficult?

    This is a social enterprise, meaning the main aim is to provide a service for the community. We don’t anticipate making a profit. So that means either structure works from a tax standpoint. A nonprofit can carry forward a ‘profit’ to be used in the next year or 2. If a for profit business has excess income over expenses during the period of their fiscal year, they pay taxes on that profit. Using up that profit over the next year means a loss in that subsequent year that can be carried back to get a refund of the taxes paid. A cash flow and logistical hassle. So we will make sure we don’t make a profit.

    We are a for profit social enterprise.

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