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Sure. Besides the technical differences in ownership structure which you can easily google, the reality of nonprofits is that in most cases the founder stands

Sure. Besides the technical differences in ownership structure which you can easily google, the reality of nonprofits is that in most cases the founder stands to make as much money (yearly) as the founder of a for-profit company. For example, let’s say I have and s-Corp and it provides me with, let’s say, 100k of salary and my pass through income (profit) of 25k. I could alternatively have created a nonprofit giving myself a 100k salary and bonus myself 25k - what would have been profit. In this way, I’d end up with 125k and the company ends up with no profit. The details are different but the results are nearly the same. One major difference is that the founder of a nonprofit can’t sell the organization. Again though, the reality is that they can be given a do-nothing role in the company and receive what could be understood as compensation for the exchange. Sadly, many nonprofits are set up for the benefit of their founders and cronies, thus nonprofits aren’t always as virtuous as you would be led to believe. Also, I should note, incase anyone is unfamiliar, nonprofit != charity. A charity is a special type of non-profit.

eesmith 9y ago
I'll add another example, which I heard about in the context of charter schools. I'm quoting from http://curmudgucation.blogspot.com/2016/07/for-hrc-profit-vs-non-profit-charters.html http://curmudgucation.blogspot.com/2016/07/for-hrc-profit-vs... : > I set up my non-profit school-- and then I hire a profitable management company to run the school for me. The examples of this dodge are nearly endless, but let's consider a classic. There's the White Hat management company that was being dragged into court way back in 2011. This particular type of arrangement was known as a "sweeps contract,' in which the school turns over close to all of its public tax dollars and the company operates the school with that money-- and keeps whatever they don't spend. The White Hat story is particularly impressive, because the court decided that White Hat got to keep all of the materials and resources that it bought with the public tax dollars. > Or consider North Carolina businessman Baker Mitchell, who set up some non-profit charter schools and promptly had them buy and lease everything-- from desks to computers to teacher training to the buildings and the land-- from companies belonging to Baker Mitchell. ...
dwaltrip 9y ago
Thanks for the response. That is good information to know.

eesmith 9y ago

I'll add another example, which I heard about in the context of charter schools. I'm quoting from http://curmudgucation.blogspot.com/2016/07/for-hrc-profit-vs-non-profit-charters.html http://curmudgucation.blogspot.com/2016/07/for-hrc-profit-vs... : > I set up my non-profit school-- and then I hire a profitable management company to run the school for me. The examples of this dodge are nearly endless, but let's consider a classic. There's the White Hat management company that was being dragged into court way back in 2011. This particular type of arrangement was known as a "sweeps contract,' in which the school turns over close to all of its public tax dollars and the company operates the school with that money-- and keeps whatever they don't spend. The White Hat story is particularly impressive, because the court decided that White Hat got to keep all of the materials and resources that it bought with the public tax dollars. > Or consider North Carolina businessman Baker Mitchell, who set up some non-profit charter schools and promptly had them buy and lease everything-- from desks to computers to teacher training to the buildings and the land-- from companies belonging to Baker Mitchell. ...

dwaltrip 9y ago

Thanks for the response. That is good information to know.