Frequently (especially in tough economies), nonprofits struggle to meet their costs on grants and donations alone. When these organizations consider their options for a financially sustainable future, they sometimes choose to create a for-profit arm – though the goal of the for-profit business is generally just to finance the nonprofit’s mission and activities when its members can’t do so by other means.

Like any other organization, nonprofits need money to accomplish their goals, or even just to pay employees and keep the lights on, and there isn’t any way around that. So if they can run a business that doesn’t conflict with their mission or ideals, how is that so much different from throwing fundraising parties or soliciting donations? But having a for-profit arm doesn’t turn a nonprofit into a full-scale business. Why? The difference is that, in a regular company, the goal is to make money for the owners of the business. The more money the company makes, the richer its owners (and stockholders) get and, by extension, the more they’re willing to pay their employees. But even if a nonprofit has a for-profit arm, the extra money generated goes toward the nonprofit’s mission, not in its CEO’s wallet.

Tags: charity, for-profit, nonprofits, philanthropy