Not-For-Profit

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Description

Donnie MacLurcan:

"Formed to fulfil social purposes, not-for-profit entities can make as much profit as they are able or would like, as long as this profit is used according to the organization’s stated goals, rather than being distributed to individuals for private gain. Indeed, NFP organizations such as Bupa and Mozilla have made (and redistributed) incredible profits in recent years, highlighting that not-for-profit really just means ‘not-for-private-profit’ or ‘not-for-personal-profit’. If incorporated, a not-for-profit entity can own and trade assets, it’s just that these assets and the company itself cannot be owned by any individual (in the sense of possession with intention and possibility for private gain). The organization’s finances and any assets are governed and run by a committee or board and people can be financially remunerated for the work they contribute, but no individual can receive a share of any of assets (beyond the returning of any capital they originally loaned in), should a NFP entity be dissolved. So, while the non-profit model may be receding in prominence, the not-for-profit enterprise model is on the rise, with activity across sectors as diverse as telecommunications to retail, to manufacturing, to healthcare and the food industry." (https://medium.com/post-growth-institute/the-power-of-three-words-not-for-profit-2e7ecca034b)

Discussion

1. Donnie Maclurcan:

"Distinguishing between non-profit and not-for-profit in use of language is particularly important for two reasons: Firstly, because of the way the game is set up in the U.S. where not-for-profit entities are often called ‘non-profits’ and that these generally represent the old-school model of grant-dependent organisations rather than functioning enterprises. Secondly because of the hermeneutics – In my experience, when people are presented with the words ‘non-profit’ they understandably think ‘no-profits’. When I say ‘not-for-profit’, there seems much more leeway to understand the ability to make profit, just for it to not be privatised profit. In this sense you’re right: ‘not-for-distributable-profit’ or ‘not-for-the-purpose-of-profit’ would be better ways to describe such groups. That said, non-profit will always remain too (as an important sub-division of a not-for-profit world)! Not everything in the not-for-profit umbrella will involve enterprise. Think of a protest rally, for example, where there are no fees for participation and no donations are taken. This can still build social capital but is actually a non-profit activity and, if it were in Australia and the organising committee for the rally has any recorded minutes, then the entity could actually be considered an unincorporated association (i.e. a not-for-profit that is non-profit!).

I believe profit will remain an important driver in any economy moving forward – not because of the payoffs in terms of big salaries and bonuses, but in terms of sustainable business and what this means for the support of full employment, livelihoods and service provision. That is, profit will always remain an important indicator, for many not-for-profit businesses, of their viability and sustainability. The beauty here is that, for people who think small business is “the only answer”, they can take heart in many not-for-profit start-ups thinking more ‘small-business-like’!" (http://ethicsfordoinggood.org/2012/11/24/beyond-economic-growth-pluralism-vs-a-non-profit-world/)


2. by Jen Hinton and Donnie Maclurcan:

"We are often asked, “Why are you calling your model the Not-for-Profit World? Why don’t you say For-Benefit or For-Purpose? Not-for-profit sounds negative and defines something by what it isn’t!”, and: “What about B Corps? They offer exactly the hybrid you’re talking about!”

We are deeply committed to the term ‘not-for-profit’, and what it represents as a business framework, for two main reasons. Firstly, the term ‘not-for-profit’ is fundamentally immune from co-option. Around the world, its near universal meaning consistently distinguishes businesses that can privatize profit from those that can’t, and, given the near universality of definition, it’s a distinction that is unlikely to change. This is important because history shows that those in power often seek to co-opt language in ways that maintain their vested interests. This is clear when you look at the wide variety of interpretations of ‘sustainable development’, ‘green’, ‘eco-friendly’ and ‘sustainability’. This trend is extending to business, where for-profits have been using language that blurs the lines between FP and NFP activities: ‘profit-for-purpose’; ‘hybrids’; ‘shared value’; and ‘mission-driven organizations’, yet all the time promoting activities that continue to privatize profit. At the end of the day, however, a company must always legally exist as either FP or NFP. Even attempts by NFPs to blur the lines can’t change that fundamental legal distinction. For example, Harvard University says on its website that it is “a private, not-for-profit institution”, as if to infer it is privately owned. Yet, no one owns Harvard University, as it’s a NFP, albeit a not-for-profit enterprise, generating over 30% of its revenue from business activities in 2012.

Secondly, the not-for-profit business model is precisely what the world needs right now. It’s a smart, humanitarian model that recognizes the value of financial sustainability through financial independence. But it’s a model that also recognizes that, in a world where 85 people control as much wealth as the ‘bottom’ 3.5 billion, financial redistribution needs to be built into the way we do business (because taxation and philanthropy will never be enough to create the level of equality needed for a society that works for us all).

In our experience, understanding ‘not-for-profit’ in this powerful light opens up a whole new world of possibilities. All the ingredients to build an entire economy on not-for-profit enterprise exist. And the best part is that it’s already well underway." (http://postgrowth.org/the-power-of-three-words-not-for-profit/)

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