Authors: Felicia Vallera, San Francisco Community Business Law Center, All Rights Reserved
The Singing Seamstresses of SOMA have a terrific idea. They want to start a new collaborative business organization that helps low-income single mothers develop job skills and gain economic independence by learning how to create fashionable hand-made hats from recycled materials and market them over the Internet. The Seamstresses are confused, though. Is this new sustainable business enterprise going to be a nonprofit or a for-profit organization? Even though they need to support themselves at modest levels, they don’t like the idea of being a for-profit business because they want to be free to reinvest most of the money they make right back into the program to increase their community service – so any traditional financial investors would be quite unhappy. However, if they try to operate as a nonprofit, they are afraid that they won’t qualify for tax exempt status or won’t be able to afford the administrative costs. What these harmonious humanitarians really need is… something in between?
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