Reprint Right's | Cyber Law Guide     

Profit or Non-Profit

On the other hand, more and more people are discovering that there are things in the world to which a monetary price cannot be attached – and the value of which may not necessarily be measurable in dollars and cents. For example, the fine arts – contemporary painting or sculpture, modern classical music, and great theatre are institutions that rarely find any kind of support from commercial markets (in fact, the technical definition of “classical” music is that which is primarily state-supported – something commonly done in Europe, Japan and China, but almost never in the U.S.).

If you are among those who aspire to be a patron of the arts and are content to make a modest living while doing so, a Non-Profit entity may be for you.

Also called a “Not-for profit corporation,” a Non-Profit is a non-stock entity (in other words, it cannot issue stock to shareholders) that as the name implies, is not intended to make profits. Such corporations are founded with a specific goal or purpose in mind, usually – but not necessarily – related to education, charity work or the arts. As such, they may be – and often are – exempt from many taxes and tax regulations.

A Non-Profit may certainly generate income, and indeed needs to do so in order to stay in operation. It can accept, hold and trade monetary instruments as well as tangible goods, and – despite the name – can legally make a profit – technically called “revenue” - on such transactions.

The use of such revenue – and how much revenue can be made legally - is subject to scrutiny, however, and is tightly regulated. Since it has “members” (like an LLC) rather than “shareholders” or “stockholders,” capital is generally raised by soliciting donations from the public, or from private industries. Depending on the purpose of your Non-Profit organization, such donations may be tax-deductible for the donor.

At this point, you may be wondering what the point is. After all, if you’re not allowed to make a profit, how is having a Non-Profit Corporation supposed to provide you with a livelihood? While it is true that a non-profit cannot issue stock nor pay dividends, it is still like any other corporate or LLC entity in that it can retain employees and provide reasonable compensation for its director(s).

Another major advantage to having a non-profit corporation – especially in the arts – is the ability to apply for government grants, such as those offered by the National Endowment for the Arts (NEA). In 1995, the new Congress changed numerous laws, making these grants unavailable to individuals. However, a non-profit organization can apply for these grants on behalf of individuals, should they wish to commission a work of art.

The same is true of charitable and educational organizations. Numerous Federal and State grants are available to non-profit organizations that cannot be applied for any other way. So – what is your passion? The arts? Education? Providing affordable housing to low-income people? Historical preservation?

 There are even non-profit sports organizations. You won’t get rich, but by incorporating as a non-profit entity, chances are good that you’ll be able to pursue activities that nourish your soul while retaining the ability to pay the bills.

You now know the difference between a non-profit and a profit corporation and how each can help your business.
 

To find out more ways to make money click here to see our full report!