Why don't non-profit orgs take donation money, invest in a product or store and sell an actual good or service for money and use profits for charity work?
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I'm not talking about Salvation Army. I mean what if a non-profit org saved donation money for a few years then opened a mid-high end department store like Target, or an online retailer and actually made money. Wouldn't the profit of the sales of goods and services be way better than donations? What about a non-profit micro-brewery?
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Answer:
http://www.newmansown.com/ does something like this, they make high-quality food products which they sell in stores and give all the after-tax profits to charity. However, Newman's Own is not considered a charitable organization as its primary operation is the production and sell of food products for profit. Therefore it is not tax-exempt. Many larger charitable organizations have profit-generating enterprises, but they often have to pay taxes on these profits as opposed to donations and grants. Most charitable organizations are reluctant to start for-profit enterprises because there is no guarantee of success. An unsuccessful business would be a massive drain on money, time, and other resources that could have been put to use addressing societal needs. Basically, they would stop being a charity and become a business. Often, when an organization wants to have a for-profit and charitable branch, they operate them as two separate entities. As with Newman's Own, there is the business which makes the food, then there's the Newman's Own Foundation which receives the businesses profits.
Darrell Francis at Quora Visit the source
Other answers
There is a small movement in the nonprofit world called 'social entrepreneurism'. The term was coined by Gregory Dees. Here is an article about social entrepreneurism - http://e145.stanford.edu/upload/articles/dees_SE.pdfNonprofits can set up businesses, but it is a risky venture. They also have to evaluate whether the enterprise furthers their mission. This venture is separate from their nonprofit organization. There is even a new designation for this type of enterprise, an L3C, a low profit limited liability company. This is a hybrid of a for-profit and non-for-profit. Examples - - Some nonprofits set up restaurants to serve to train formerly homeless individuals. - Another may set up a coffee distribution warehouse to employ adults with developmental disabilities. - Another may train women to design jewelry so they can be entrepreneurs.
Sheryl Foster
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