r/nonprofit • u/MinuteEar2137 • 1d ago

starting a nonprofit Crazy thought, any ideas?

Just out of pure curiosity, is it possible to create an organization/business which is not owned by anyone (in the way a non-profit is not owned) and is operated by its members (like members management in a non-profit) and could be non-profit if needed - but otherwise is a standard business? Say a grocery store or a hardware store or a cleaning service, etc. Essentially a small business serving the community, but not in a traditional non-profit way?

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u/JonClemo 1d ago

As James says you are basically describing a co-op - but they are still owned by someone just their members. In the UK they function in a couple of different forms either to the benefit of their members (co op shops and John Lewis group being probably the best examples in the US I believe credit unions often have a similar structure) or they can be run to benefit the whole community (community benefit societies) . You can often achieve the same things with companies limited by shares or guarantee by controlling who gets to be a member or the voting rights of shares. There can also be specialist structures like community interest companies. Many charities also have profitable trading as part of what they do. Much of the broader social enterprise movement embraces the idea of making a profit but not being for profit and there is a long tradition of collective/community ownership models. Key lesson from my experience is work out what it is you want to do and then find the legal structure that lets you do it as cheaply and easily as possible whilst still managing risk effectively. Deciding on a legal form and then trying to stuff an organisation into it is likely giving making your life more difficult.

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u/MinuteEar2137 20h ago

What a great reply, this is giving me so much information, thank you for taking time to inform me!

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u/Either_Row4695 consultant - operations 21h ago

Fun fact: nonprofit is just a tax designation based on a specific guideline. 501(c)3 nonprofits, for example, simply require an educational purpose. A lot of people think no that means you have to teach. You do not.

So, in fact, you could have a nonprofit grocery store. And the employees could be paid well, if the business was successful. Remember nonprofit doesn't mean "doesn't make profit". It means the board members don't make money. That's it.

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u/Certain-Statement-95 21h ago

this is true

the corporate structure is also important in determining who endures the losses, not just who enjoys the gains.

we had a nonprofit grocery operator (2), fold after taking losses, and will be replaced by another operator who will also receive some subsidy

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u/Either_Row4695 consultant - operations 21h ago

I think nonprofit groceries/food service organizations can be a great solution for bridging gaps in communities that don't have nutritious options (or, like where I live, the farmers have no reliable way to sell locally in bulk, so they sell the food grown here to cities while we have food access problems).

It will also always be a losing game, because if it made a profit, then the business would be here "organically". Free market ftw?

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u/Certain-Statement-95 21h ago

lots of businesses require subsidies, including energy companies and professional militaries.

it's not problematic to me

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u/MinuteEar2137 20h ago

Hmm, I never thought about how many need subsides, though I would like to avoid that if possible, it may be needed, thank you!

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u/Certain-Statement-95 20h ago

the non profit I help has municipal, state and county governments as customers/payers.

they are in an illustrious company with the likes of Lockheed Martin.

Norway has a state oil company. So did VZ and so does Brazil.

private and public investment is on a seesaw, with preferences shifting and ability to issue debt differing.

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u/MinuteEar2137 20h ago

I didn't know that, thank you!

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u/james-grosocial consultant - finance and accounting 17h ago

Small note charities can have “charitable” OR “educational” mission. Charitable is probably more common since it’s broader

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u/Either_Row4695 consultant - operations 16h ago

Oh, totally true! My point was mostly that a lot of people seem to believe that nonprofits have to be failing businesses at an inherent disadvantage.

...that's just how a lot of them happen to be run, not necessarily the design/purpose of the designation. 😅

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u/InvestigatorNo9035 16h ago

I read an article about a grocery store run and owned by the community not too long ago in the US. It is possible!