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Ask HN: Why Should a Startup Operate as a Nonprofit?
In light of the news that YC will now fund nonprofits[1], why should a business or organization choose to operate as a nonprofit instead of as a for-profit company? What advantages are there to being a nonprofit? What are the disadvantages?
What's different about building a successful nonprofit versus a for-profit startup?
[1]: https://news.ycombinator.com/item?id=6341568
- ronreiter 13y agoObviously, the disadvantage of a non-profit is that you cannot sell shares of the company or receive dividends from revenues the company creates. You can only receive a salary. If it makes sense to receive donations and to operate a non-profit, then a non-profit start-up is something that benefits the world. If someone wants to gain reputation and build a resume, this is a good way of doing so.
- redtexture 13y agoNon-profit, meaning "non-stock" corporations need capital and initial support to get started as much as any other entity. Clearly YC considers the investment in non-stock entities a charitable contribution towards a (potential) good cause, and is not participating to see a profit on their investment, but is just as interested in helping the founders figure out their mission, and funding market. Non-stock organizations raise money just as competitively and actively as stock organizations, and have a community of users and donors, as well as user-recipients. http://Water.org http://Water.org is an example of an entity that is actively and successfully raising millions of dollars toward a their mission and purpose, with a successful community of supporters and recipients.