Partnering with commercial businesses can be a great way for nonprofit organizations to fundraise. Over the past decade, cause-marketing relationships between nonprofit and commercial businesses have grown exponentially in popularity. Campaigns like Yoplait Save Lids to Save Lives, Dove’s Campaign for Real Beauty, American Express’ The Members Project, Nike’s Livestrong Bracelets, and The Gap’s Product Red are all great examples of long-term cause marketing relationships that have helped generate millions of dollars for their respective charities.
Yesterday, AL.com reported that Marcus Fetch, a former nomadic traveler was opening Redemptive Cycles, a nonprofit bike shop. The article explains, "The [shop's] nonprofit status allows the business to serve a charitable function, rebuilding, fixing and reselling used bikes at the cheapest price possible."
How is it possible that a retail store, which provides goods and services in the selling and repair of bicycles, can be a nonprofit organization? It seems so… commercial.
It can be daunting to decide whether to organize a new venture as a nonprofit, tax-exempt organization or as a for-profit, business entity. Sometime an organization could be organized and operated both in a manner that qualifies for tax-exemption under Internal Revenue Code Section 501 or as a taxable business entity. Toss in a number of recently developed “hybrid” legal entities like the L3C and the social benefit corporation, and it is easy to quickly become misguided and/or confused in the options. Founders should thus heed Stephen Covey’s wisdom and begin with the end in mind.