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A New Form of Business Entity Is Needed to Promote Social Entrepreneurship: The Not-for-Loss Corporation | Author: Jay Milbrandt

A New Form of Business Entity Is Needed to Promote Social Entrepreneurship: The Not-for-Loss Corporation | Author: Jay Milbrandt

Philanthropy frequented the headlines in 2006. The personal fortunes of high-profile individuals, such as Warren Buffet, Bill and Melinda Gates, and Richard Branson, became the engines of social change. Social entrepreneurship gained serious commercial focus, with awards like the X Prize recognizing social and scientific achievement and corporations like Google dedicating resources to eradicating poverty, stopping climate change and eliminating world hunger. A trend points to a correlation between business and social change. As this trend continues, the distinction between for-profit and nonprofit blurs, evidencing a decaying, century-old dichotomy, which has become stale to its modern participants. A new corporate structure is needed to bridge the gap—reflecting the power for social change possessed in the traditional for-profit corporation and breathing sustainability into the 501(c)(3) nonprofit. Standing on opposite sides of this divide are the members of each camp, searching for middle ground.

In this comment, I will explore the creation of a hybrid corporate entity, coined the “not-for-loss” corporation. I will start by highlighting Google’s philanthropic arm, “Google.org,” as a model for developing the not-for-loss corporation. Second, I will discuss the legal benefits and drawbacks of nonprofit and for-profit entities. Finally, I will outline the proposed not-for-loss corporate structure and provide criticism of the concept.

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