Thursday, September 22, 2011

nonprofit vs for profit

It seems like there is a lot of talk in the world of social innovation and entrepreneurship having to do with for profit vs not-for-profit business models. The black and white distinctions seem rather shortsighted to me. While the tax structures are different, it doesn't seem like there is enough of difference to make one seem inherently better than another. Not-for-profit organizations seem to be more favorably thought of, but to me, I think the stigma that sometimes goes along with for profits is unwarranted. There are so many examples of for profit companies who do excellent things for the social good (e.g. D.light, described in the article by Marci Alboher, Toms shoes, and many others). The main problem to me is that not-for-profit business models really need to be rethought in general. Just because something is nonprofit doesn't mean its necessarily going to be the best for enacting social innovation. Not all not-for-profit organizations are as charitable as they would like others to believe (blood banks for example are often big businesses that rake in a lot of money, despite their nonprofit label). Aside from that, there really isn't such a clear distinction between the two, and I think it's fairly obvious that not-for-profits can often learn from the business models of their for profit counterparts.The biggest issue for me is not the specific business model of an organization, but rather its focus. Not every mission is best served by not-for-profit status. Social innovation, like all other ventures, varies greatly depending on the specific innovation being marketed. In order to do the most good, organizations should focus more on what they want to do and less on the tax structure they attain in the process.

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