Not all companies operate to gain profit. Many businesses enter the industry with a purpose to fulfill humanitarian needs. You can classify these types of companies into three: Nonprofit, For-profit, and Benefit company.
Let’s go ahead and distinguish each.
For Profit Corporation
A corporation has one core obligation: to make money. A for-profit corporation exists to generate income for employees, business owners, and stakeholders. Sales in multiple forms such as cash and other receivables are what keep for-profit companies going. Regarding financing operations, for-profit corporations must rely on their income as well as credit arrangements with lenders or suppliers.
Often, for-profit corporations have more resources compared to non-profit companies. They can afford higher salaries, bonuses and other add-ons financially beneficial to employees, business owners and stakeholders. As for taxes, for-profit companies are solely responsible and do not receive a tax break.
Some examples of for-profit companies are Starbucks, Nike, Apple, Bloomberg and Action Against Hunger.
A non-profit company cannot operate for profit. Compared to for-profit companies, these businesses cannot acquire, distribute or keep income generated. Furthermore, income should not personally benefit everyone involved. The money is for the activities of the corporation, expenses as well as salaries and must stay within the corporate account.
Non-profit companies operate to serve a humanitarian need. They often conduct programs centered on fulfilling met or unmet needs. As for taxes, non-profit companies are offered tax incentives and can sometimes register for tax exemptions under section 501(c)3 of the tax code.
Some examples of non-profit companies are the Museum of Modern Art, United Nations Children’s Fund, Doctors Without Borders and Do Something.
A benefit corporation is a more recent movement that is gaining momentum. It’s too see why, it merges the intentions of both for-profit and non-profit corporations. A benefit corporation is legally required to redefine fiduciary duty to place a high standard on mission-driven impacts.
The idea of running a benefit corporation is enjoying the best of both worlds. There is a need for a greater cause to serve humanity but at the same time, still incur income.
As a Benefit company, you can legally protect your social goals by mandating considerations other than profit alone. When directors have legal protection necessary for all stakeholders, instead of just those who elected them, these benefit companies can focus on solving social and environmental issues.
Investors find benefit corporations very attractive. These companies pose social responsibility while still generating profit. Benefit companies receive no special tax advantages compared to non-profit organizations.
Yuda Bands Project, a Benefit Company
We at YudaBands.org, are a Benefit company. We made it our life mission to provide students an opportunity for a better life. Throughout the years, we have experienced a grander sense of joy by providing for the greater good.
We, as a benefit corporation and as dreamers for people of developing nations, are committed to this mission. Perhaps this is also why we have been fortunate enough to work with individuals who share the same goal. Our numbers continue to increase because we have one purpose: To help.
Being mission-oriented, we continue to do our part in affecting change and widening our social impact in hopes of providing a better future for every poor child.
We hope to meet more people who are equally passionate, if not more, to making this world a better place to live in.