Should you start a profit or nonprofit?
If you are going into ministry, a question that may cross your mind or maybe should cross your mind is, “Should I start a for-profit or nonprofit organization?” That’s a very serious question that should be carefully considered and answered before you found your organization. Many people believe that to do ministry work, you have to start a nonprofit. That’s not true. With very few exceptions like churches, you may be able to do with a for-profit corporation almost everything that you can do with a nonprofit corporation. In fact, in many situations, I think you may do better and glorify God more with a for-profit organization.The tax-exempt status that governments give to nonprofits come with some limitations that may not always be conducive to doing Christian ministry and preaching Christ as boldly and openly as possible. I’m not going to go into those details here but you may want to do research. Just something for you to think about: In only a few years the U.S. government’s position on abortion and gay rights have changed. There are certain things you cannot do through your tax-exempt organization such as support certain positions that are deemed political. You also cannot do anything that may be viewed as supporting a political candidate. While on the surface this may not mean much, in the future, it may mean that you can’t say what the Bible says openly and boldly because if you do your tax-exempt status may be taken away. This will certainly keep many Christian nonprofits quiet. I encourage you to think about these things.
Free money is sweet and sometimes that is the only option available to do ministry work, however, there are many situations where people start nonprofits when for-profit organizations would actually have been better. There are many ways you can scale a for-profit organization and use it to do good. Nonprofits come with their own limitations and struggles.
Donations come with strings attached. Many donors expect funds to be used for specific purposes. Don’t be surprised that if you are caring for orphans, you may get donations that are expected to be used 100% to help the orphans, but you struggle to have funds to support yourself and the staff that are sacrificing to serve the children day in and day out. People can be quite unreasonable with how they expect their donations to be used. It is hard to understand why some people don’t see the value in those donations also supporting the staff that care for the kids. If you had a for-profit business model, none of these issues would ever come up because the organization has full control over how the earned income is managed.
In addition to that, the leadership experience we gain running a business will help with the nonprofit (which is harder to run than a for-profit business). We can also be able to teach orphans wealth creation because lack of money is exactly why many orphans need help. If their parents had money in the bank for them before they died, they probably wouldn’t be needing much outside support.
The author of this video sheds some light on the advantages of starting a for-profit business instead of a non-profit business.
If you want to learn more on the subject, read about the creative approach that Embrace Innovation used to serve poor children around the world. Instead of starting a non-profit or for-profit organization, they started both! Their organization has a non-profit arm and a for-profit arm that allows them to levy funding from multiple sources to accomplish their purpose.
For-profit businesses do a lot of good around the world and I think its time that we Christians stop saying bad things about them and start starting them.