5 compelling reasons why every entrepreneur should consider starting a nonprofit
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When people think of nonprofits (sometimes called nonprofits), they usually think of charities and religious organizations. However, non-profit organizations can also be created to advance education, scientific research, sports, music, art or entrepreneurship.
In this article, I’ll detail five compelling reasons why every business owner or entrepreneur, regardless of the industry or market they operate in, should consider starting a nonprofit as an extension of their business, and how you can grow your business and have a deeper impact in the world by doing so.
Boost your credibility, reliability and goodwill in the market
One of the main benefits of starting a nonprofit organization is the credibility, goodwill, reliability, exposure, and impact that a business or individual can gain and develop in the community. As a non-profit organization, especially an organization that focuses on education or philanthropy, a business owner has the opportunity to share their knowledge and expertise in an educational setting which in turn, helps the business owner gain more credibility in the market, develops more reliability in the eyes of the consumer and the general public, and allows the entrepreneur or business owner to enter the market from a completely different perspective that of its competitors.
For example, if you are a business owner who has specialized knowledge or skills that you have developed, you can create educational videos, training sessions, educational blogs, or even digital courses that allow you to position yourself. as an educator, teacher and the source of knowledge in your industry. It will instantly elevate your position, authority, branding, and how people recognize you (and your business).
There’s also a good chance that a majority of your direct competitors aren’t thinking about these strategic angles and focusing only on the bottom line, instantly giving you a slight competitive edge in the marketplace. You position yourself as the primary source of knowledge, which builds credibility and reliability – the key ingredients to getting more clients and customers.
If you look at examples of large organizations such as Google, Facebook, Apple, Oracle, Dell or Amazon (to name a few), you will notice that each of these organizations has strong educational and philanthropic goals that it does defends through its non-profit organizations. .
Think about the practical and competitive advantages a business owner enjoys by having more goodwill, gaining more confidence, and building credibility. You are basically saying that you are not only a business that cares about its bottom line, but that you are also focused on changing lives, giving to causes, and advancing humanity through your causes and non-profit initiatives.
This concept is called strategic philanthropy, a concept that literally every Fortune 500 companies are supporting themselves to create a more famous and trustworthy brand.
Related: 4 Common Pitfalls When Starting A Nonprofit Organization
The ability to qualify and take advantage of millions of dollars in grants and funding
As business owners and entrepreneurs with limited resources, it’s up to us to be resourceful and figure out how to leverage âmoney, time, reach, influence and platformâ. In some industries this is called “OPM” (other people’s money). The real estate investment world is based on this precise principle: taking advantage of money from investors or banks to invest in real estate.
Each year, more than $ 200 billion in grants and donations are distributed by businesses and government organizations for charitable, educational and philanthropic missions. These companies have the same choices we make as small business owners – pay taxes on total profits or find ways to reduce their total tax liabilities. In other words, whether or not you apply for these grants or funding opportunities, they will be awarded and distributed annually to reduce their total tax liability.
As a small business owner with limited resources and funding opportunities, starting a nonprofit that complements your business will allow you to qualify for funding opportunities and even partner with. Fortune 500 companies that would be delighted to finance your educational or philanthropic missions and initiatives, which in turn only strengthen your notoriety and your notoriety in the market.
Tax incentives associated with donating or investing in nonprofit causes
Another compelling reason to think about starting a non-profit organization that complements your business is the possibility of taking advantage of several different tax benefits and deductions. The Internal Revenue Service (IRS) and the Canada Revenue Agency (CRA) offer businesses and individuals the ability to write off or deduct funds and even intellectual property spent on nonprofit causes and initiatives and philanthropic.
Think about this example for a second, as a small business owner you have a choice to pay taxes at the end of the year based on the profits reported by your business. The more profit your business generates, the more taxes you have to pay. One way to reduce the total taxable income of your business is to incorporate a strong charitable or educational initiative that allows you to devote a certain portion of the funds or resources to the advancement of these causes. Money invested in these causes or initiatives may be eligible for a full tax deduction or write-off. You can find out more about how it works by visiting the IRS page here.
In other words, you have a choice to make. Do you prefer to pay income taxes or invest part in educational or charitable initiatives that will strengthen your credibility and reputation in your market?
Related: When It Makes Sense to Turn a Passion Project into a Nonprofit Organization
Increase Your Business Equity By Adding A Nonprofit Component
Imagine for a second that you are an investor looking to invest in a company and you are faced with two choices: Invest in Company A or Company B. Let’s say Company B is the same as Company A, but also has a branch. nonprofit that is funded and supported by Fortune 500 organizations and government agencies, has strong tax reduction strategies in place and is getting exposure and publicity for his philanthropic work.
Which business do you find most attractive as an investor or even as a buyer – Company A or Company B?
Chances are, the answer is Company B.
Goodwill and reputation are essential parts of your business – after all, people are more likely to do business with someone they trust. Establishing a non-profit branch for your business allows you to gain more goodwill and reliability, which not only benefits the business in the short and long term, but can also increase the net worth of your business. the company.
Goodwill is an intangible business asset on the balance sheet, just like intellectual property. The more goodwill your brand has in the market, the more worth your business is, and an investor or potential buyer of your business would certainly take this into account when analyzing the various options.
In short, goodwill, credibility, reliability and general reputation can not only increase the valuation of your business, but also make your business more attractive to an investor or a buyer.
Create your legacy and leave a deeper imprint on your market
Another compelling reason to start a nonprofit branch of your business is to create your legacy and leave a deeper imprint on your market. When you start a nonprofit organization and engage in one or more philanthropic, educational, or charitable assignments, you are not just focusing on your business and bottom line, you are also focusing on improving society. and humanity through your business.
You can hone your focus, donate money, intellectual property, knowledge and resources to improve the world and advance humanity. Nelson Mandela said, “Knowledge and education are the keys to the progress of mankind”, and you can certainly do it through your non-profit business.
Starting a non-profit organization allows you to think beyond profits and income, and allows you to think about your overall goal in life or in business. It’s a vehicle that allows you to focus on the big picture and set long-term goals and objectives that can change the lives of hundreds, thousands, and even millions of people. On top of that, Fortune 500 businesses and government agencies will be more likely to support your business and fund your initiatives as well.
First steps towards starting your non-profit organization
Identify the moments that changed your life and use that information to connect with your mission, goal, and lifelong educational or philanthropic goals.
Nonprofits are relatively easy to set up, require the same set of entrepreneurial skills you already use to run your business, and are fairly straightforward to manage and keep in compliance (just like your for-profit business). .
Related: 3 Avenues of Nonprofit Funding Every Founder Should Know