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mercredi 5 décembre 2012

"For-Profit" vs "Non-Profit" enterprises

The truth is that ALL nonprofits are actually businesses. 
And they need to be run like a business. 
non-profit-management-dr-fram.com Sylvia Helper of Launching Lives commented to one of my recent blogs tilted : “What’s in a Name? Benefits of the Nonprofit President/CEO Title” “While this irritates and...

Launched by Pr. Eugene Fram, mid november on Harvard Business Review LinkedIn group
As today 54 comments


(...)tdk
Dear Pr. Fram,

being a non english raised professional and not living in US or UK (eg raised in France and living in France), may i ask you how i should read "non profit" and "business".

For the sake of the discussion, do i need to refer to some specific background ?

Kind regards
Tru Dô-Khac



(...)tdk
@Satha,
since you get a good point for your definition, let me remix its formula :

a Not For Profit (or a Non Profit) organisation
* has a "commercial focus"
* has a "Purpose which is not to make a Profit"
* "serves a cause".

Do i read correctly ?



 (...)tdk
So we have :
a Not For Profit (or a Non Profit) organisation
* has a "commercial focus"
* "has a purpose to achieve its mission, using its vision and values"
* "serves a cause".

Is a clause related the "profit" not necessary anymore ?


(...)tdk
@Bill,
"the key difference between for profit and not for profit companies is tax status".

With "tax status", do you suggest that we need to take some kind of legal perspective ?



(...)tdk
@Bill,
In the title of the discussion, there are two propositions :


* 1. "The truth is that ALL nonprofits are actually businesses".
* 2. "They need to be run like a business".

These propositions are tightly linked together :
If an entity is actually a business, what could possibly be the reasons why it should not be run like a business ?

Hence, i am feeling that the real discussion is to challenge the proposition that
"all non profit organisations are actually a business"



 (...)tdk
@Bill,
The organisation should
* a "have a clear purpose",
* "generate revenue to fund its expenses".

and for these organisations, there are "more commonality than differences..."

Precisely what kind of differences do you see between
Red Cross, Salvation Army, Notre Dame University, Google, Southwest Airlines and Apple Computer ?

(i have rearranged the list)



(...)tdk
Indeed.
But wasn't it the purpose of this discussion, that is to debate on the difference between nonprofit organisation and profit organisation ?

as you just say :
- self serving
- serving others

but who is "self" and who is "others" ?



(...)tdk
@Bill,
if i understand you well, to make a difference between a profit and a nonprofit organisation does not matter from a managerial or operational perspective.



 (...)tdk
however i note that you recognize that there are two types of organisation.


I am currently simultaneously engaged in five "organisations" which might be at the frontier of these two types :
* as an independant business author (two books and 60 + articles) http://www.archilogies.net

* as an independant digital innovation and governance consultant owning my own legal structure http://www.do-khac.com

* as the chairman and founder of X Propriété Intellectuelle (a professional group addressing intellectual property and hosted by Ecole Polytechnique Alumni association), http://www.x-propriete-intellectuelle.org

* in an "open" process to create a second group within Ecole Polytechnique Alumni association, "X Open Innovation" addressing open innovation http://www.x-open-innovation.eu

- founder of a "creative and open" professional community, The Archilogy Institute http://www.archilogy.net


(...)tdk
@Raymond,
Ultimately, no matter the structure, there are two main objectives,
*1. the "margin", "profit", "surplus", applied,
*2. sustainable growth.

Maybe.
But assuming this, again, for whom ? (eg who is "self" and "others" as Pr. Fram stated above) it ?

Is this question really not worth asking ?



(...)tdk
@Raymond,
"In the for-profit sector, boards tend to be growth and profit motivated"
and if i may ask
in the not-for-profit sector, what would likely motivate the boards ?



 (...)tdk
@Raymond,
thank you for sharing right at this place a model to help identifying the likes and differences between forprofit and nonprofit.

Your description of a non profit organisation collecting used things and distributing them to less-privileged is rather convincing to show that it is run like a for profit business.


PS : I have just made a google search "exact phrase" with "non profit organization" and "non profit business"
result : 339 000 000 vs.... 8 000 000. non profit business seems not to be an oxymore any more.



(...)tdk
So it seems that is the likes or the differences between a forprofit and a nonprofit is all about enterprise governance ?

PS :
Google search exact phrase for "non profit enterprise" : 960 000



(...)tdk
@Guido,
thank you to bring in some types of "self" and "others" : customer, client, donors, [volontary] board members, volonteers, paid executives,

What difference do you make if any between "client" and "customer" ?

Any other types to think of ?



 (...)tdk
@Carter,
can you share a link to your "free library" ?


(...)tdk
@Guido,
thank you for your response.

By "client/customer", i was thinking of the beneficiaries (Fr : bénéficiaire) that is the "less-privileged" Raymond was talking about.



(...)tdk
@Carter,
thank you for the link.



 (...)tdk
@Catherine,@Judy
you are right.
A nonprofit is a "business" in a sense that you need to deliver as efficiently as possible (quality, time, cost,...) and ytherefor you need professionals who actually can make a carreer in nonforprofit.

Now what is a "purpose" ?
Or more exactly : how would you qualify that a "purpose" is elligible for the "label" notforprofit ?