Social Entrepreneurship as a Non-Profit Corporation

Many individuals find that starting a new business is more about pursuing a dream rather than making a fortune. In fact, there are plenty of business ideas that are suitable for creating a non-profit corporation.

The same business efforts that drive a for-profit company are required for a nonprofit to succeed. Eric Adler and Rajiv Vinnakota created The SEED School as a non-profit college prep boarding school in Washington, D.C. They constructed a business plan just like they learned from their experience with management consulting firms. They realized that the same efficiency to control expenses in a for-profit business is required for their nonprofit.

The idea behind the school was to provide a safe quite place to study for inner-city kids with scholarships. Because of the rough neighborhoods for these students, they were likely to perform better at a boarding school.

To turn a business idea into a nonprofit requires assuring that similar nonprofits don’t exist in the region. A nonprofit corporation belongs to the community rather than to shareholders. But the individual founders can still benefit from their salaries.

In addition, a nonprofit can still earn a profit. Actually, that’s necessary to sustain operations. The SEED School requires only a small level of ongoing fundraising. That avenue supplies about $400,000 of the school’s $11,000,000 budget. Most of the funding comes from charter school funds provided by states and the federal government.

Many operators of nonprofit corporations generate revenue just like a for-profit business instead of relying upon fundraising. One example is Athena Partners in Seattle. This is a company that makes bottled water with a social purpose. Athena places a pink ribbon on its bottles to create awareness about breast cancer.

Founded by former marketing executive, Trish May, the company was started in 2003. The nonprofit status permits Athena to obtain volunteer workers. In addition, free advertising is provided by charitable contributions from other companies. For example, Alaska Airlines funded the cost to place large pictures of the Athena bottle on delivery trucks. Plus, landing shelf space at grocery chains has come at not cost because the stores want to align with the charitable cause.

Entrepreneurs are finding plenty of rewards with nonprofit corporations. Like any startup, initial salaries are low or non-existent. However, as the organizations grow, compensation for the executives rises along with their satisfaction from the purposes they serve.