Rieva Lesonsky's ReadWriteWeb article Why Starting a Non-Profit to Create Social Change is a Bad Idea covers the various for-profit organizational options available to social entrepreneurs.
The key quote comes from Geri Stengel, the founder and president of Ventureneer:
your “first choice when starting a company to create a social impact should be afor-profit business,” because she says, the “revenue streams are more reliable, and there are more dollars available (both debt and equity) for starting and growing.”
The article goes on to describe several of the for-profit legal structures that can be used to accomplish a social mission, including B Corps and Low Profit Corps (LC3s).
We agree and would add even a plain old C corp or LLC can also be used to accomplish social missions. The founders simply have to include these in their articles of incorporation (or add them later).
The non-profit sector has been a growth sector over the last decade. According to the Urban Institute:
Between 2001 and 2011, the number of nonprofits has increased 25 percent; from 1,259,764 million to 1,574,674 million today. The growth rate of the nonprofit sector has surpassed the rate of both the business and government sectors.
But the last few years have been tough on non-profits. Donations are down, foundation funding is harder to get and there is a growing concern that there are too many non-profits chasing too few funding sources.
For-profit social enterprises, because they aren't as reliant on donations or grants, are often better positioned to thrive and accomplish their social mission.
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