For-Profit Philanthropy

For most people who have an inclination to become more involved in philanthropy, they immediately think of non-profit organizations that they can volunteer their time or donate money to. However, more recently, an entrepreneurial trend that is emerging is focusing on philanthropic involvement in for-profit companies. Simply put, for-profit companies adopt business strategies to sell tangible items that make money and then donate a portion of their revenue to charitable causes. In juxtaposition are non-profit organizations that rely on collecting donations with intangible benefits and rewards.

In today’s society, marketing and consumerism are on the rise, thanks to social media platforms and emerging technology. It is now easier than ever for consumers to purchase necessities as well as dispensable products online with easy check-outs and fast shipping. For this reason, it makes sense that companies are exploiting the profit-making capabilities of this trend. Why wouldn’t philanthropy follow suit? Millennials tend to be engrossed with materialism, but also show an interest in contributing to the betterment of causes that are important to them. For-profit organizations offer the best of both intents to millennials in that they can purchase a product that they want, while also still contributing a donation within the cost of the good. Consumers are also more inclined to spend money on an item if they are aware that it is also helping a greater cause, by adding emotion to a purchase.        

Another persuasive factor that charitable organizations should consider is the legal benefits of running a for-profit company. Since non-profits are tax exempt, there are various laws and regulations that 501(c)(3) must abide by in order to retain their exemption status. There are also serious penalties involved if they are not followed, which makes conducting business slightly more difficult. For-profit organizations are not exempt from federal income taxes, or any state and local taxes for that matter. For that reason, they are not held to the same standards and regulations that non-profit organizations are. For-profit organizations can essentially run their business structure how they would like within the confines of their fiduciary responsibilities and common law. So long as the organization makes it clear that they will be running a business with the intent to also contribute to a cause, they are then responsible for doing that while also providing benefits and profits to its stakeholders.  

While there is a stigma that for-profit companies are vastly different from non-profit organizations, For-profits can still make a difference and contribute to philanthropic causes. This is becoming a trend that we can expect to see more emergence in the near future.  

This article was originally published on MatthewGorelik.info

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