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Welcome to Research Friday! As part of a continuing series, we invite a nonprofit scholar, student, or professional to highlight current research reports or studies and discuss how they can inform and improve day-to-day nonprofit practice.
Do you have passion for social good and want to step out and lead it? Or maybe you have a great idea to create your own business, but want to balance making a profit with creating social impact?
Let’s face it, sometimes we struggle between our commitment to helping society and our personal needs for monetary income. In the finance class of the MNpS program at ASU, we were introduced to a fascinating article by Jim Fruchterman: For Love or Lucre. He suggests that all social entrepreneurs should balance the following four factors when deciding on a legal structure for their venture:
So when it comes to choosing the right legal structure for an enterprise, there are several options out there, most of which are available in Arizona:
I am sure I have not listed all of the possible legal options. Another alternative is to combine different legal structures by forming “hybrid” partnerships, as happens when a for-profit business and a nonprofit organization join their efforts.
The good news is that along the spectrum from a high motivation for profit to a high motivation for social impact, there are now many more options for organizing enterprises to make a positive impact in our communities.
Karina Lungo is a graduate student in the MNpS program at Arizona State University. She has vast international experience since she was born in El Salvador and has lived and traveled in several other countries. Today she works for the ASU Lodestar Center as a Research Aide for Arizona Scope of the Sector and Compensation Studies.
1. Fruchterman, Jim. (2011) For Love or Lucre. Retrieved April 9, 2012, from Stanford Social -Innovation Review: Informing and Inspiring Leaders of Social Change: http://www.ssireview.org/articles/entry/for_love_or_lucrehttp://www.ssireview.org/articles/entry/for_love_or_lucre.
2. "Cooperative Development Institute." CDI Home. Web. 1 Apr. 2012. http://www.cdi.coop/.
3. "Certified B Corporation." B Corporation. Web. 1 Apr. 2012. http://www.bcorporation.net/about.
4. "Benefit Corporation." Benefit Corporation. Web. 1 Apr. 2012. http://benefitcorp.net/.
5. IRS. (2012, January 10). Exempt Purposes – Internal Revenue Code Section 501(c)(3). Retrieved April 26, 2012, from IRS: http://www.irs.gov/charities/charitable/article/0,,id=175418,00.html.
6. IRS. (2012, February 16). Limited Liability Companies. Retrieved April 3, 2012, from IRS: http://www.irs.gov/businesses/small/article/0,,id=98277,00.html.
7. IRS. (2012, February 24). Partnerships. Retrieved April 3, 2012, from IRS: http://www.irs.gov/businesses/small/article/0,,id=98214,00.html.
8. IRS. (2012, January 18). S Corporations. Retrieved April 3, 2012, from IRS: http://www.irs.gov/businesses/small/article/0,,id=98263,00.html.
9. IRS. (2012, March 16). Sole Proprietorships. Retrieved April 3, 2012, from IRS: http://www.irs.gov/businesses/small/article/0,,id=98202,00.html.
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