Do I need to have a nonprofit status to become a social entrepreneurial enterprise?
Answers (7)
Chris F.
Just a guy who's crazy enough to think he can change the world...
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If I'm you, I'd learn more about using an L3C business structure for a social enterprise. This is a limited profit company that is basically a non profit with for profit capabilities.
Check with your state to see if this is a legal business entity. If not you have two options:
1) Establish the business in a state that has approved this type of entity.
2) Go to your capital and propose that your state approve the entity.
Links:
Philip C.
Instructor at Tacoma Community College
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L3C is a good option if, as noted, your state allows this. That being said, LLC's are legal in all states. Creating an LLC in partnership with a nonprofit should be possible (I'm looking into this option myself).
I know an expert in that exact field..send me a message on linked in and I will put you in direct contact to get that correct answer for you.
Rian Wilson
Wallace J.
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No.
No need to have nonprofit status to become a social entrepreneurial enterprise.
No. Reach out to the ultimate beneficiaries directly and be transparent in what you say and do. Status will follow
Matt H.
Copywriter for Nonprofit Fundraising & Marketing | Board Member, Assoc.of Fundraising Professionals, Gr Phila.Chapter
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Check out "B Corps." Only Maryland and Vermont have them right now, but it's a growing movement. B Corps meet the interest in doing social good without some of the issues around nonprofit status.
Links:
Rick C.
Business structure expert
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Dear Mark,
The "social enterprise" moniker is a red herring. There is no such thing as a unique type of company. (The L3C is a very distinctive special purpose entity, only available in a few states, that only has a precise regulatory function. This almost certainly doesn't apply UNLESS the major portion of your funding will come from large private foundations.)
There are nonprofits and for-profits. For-profits can do whatever they choose with their profits or pre-operating profit cash flow, as determined by the board as elected by the shareholders. For example, does a for-profit company that donates software licenses qualify for your "definition?" Maybe, but so what?
The real question is what *your* organization wants to do, and what corporate form is best suited for that purpose. Good corporate lawyers will never make the tail wag the dog: we find the right organizational and operational and contractual structure to help you accomplish what you want.
So please, do yourself a favor and start out with a vision, then find a lawyer to implement that vision.
I have clients that run the gamut of arrangements: for-profits, nonprofits, discounts for nonprofits, donations of services, cash donations, and side-by-side related for-profit and nonprofit entities. Every plan is different: what's yours?
Good luck!
