Alternative Legal Structures for Value-Driven Nonprofits

In: Business and Management

Submitted By Chanchia
Words 1489
Pages 6
Alternative legal structures for value-driven nonprofits

Legal structures define how businesses will be held accountable in the court of law.
Nonprofits are entirely different structure than pure for profit organizations. As time goes on, more and more private corporations are becoming socially aware and wanting to combine profit with some product or service that simultaneously benefits society. Nonprofit organizations exist as executors of a socially beneficial service or product. This paper will discuss the benefits and disadvantages that both of these structures face. Additionally, this paper will examine benefits of the nonprofit sector’s consideration of newer legal structures as a future platform for business.
There are many reasons nonprofits may want to adjust business as usual but, here are just a few: Experts are predicting that with the current economic environment eating away at nonprofit’s primary sources of funding (charitable donations and foundation funding), that as many as 100,000 of the nations roughly one million nonprofit organizations will close their doors in 2009.(REF)” This is the reality for most organizations across the board. The credit market and the capital market turned upside down during the economic crisis in 2008. Foundations are making fewer grants because their endowments portfolios also changed along with the recent recession. Economic turmoil affects for profits and nonprofits differently, but, it makes sense for nonprofits to plan for business cycles, booms and busts, and periods when donors just aren’t lending as much.
Nonprofits can learn from businesses and for-profits businesses can learn from nonprofits. Nonprofits and for-profits need to start working together. One alternative legal structure that allows them to do this is the L3C. The L3c legal structures are a fairly new way to…...

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