Question

Goodwill Industries International is a nonprofit that has been serving people with disabilities for over 100 years. It funds its operations with sales of donated items from its chain of more than 3,000 retail thrift stores and through its shopgoodwill.com website. What possible advantages could a for-profit social enterprise with the same mission have in competing with Goodwill stores? What disadvantages would its for-profit status create, and how could the advantages overcome the disadvantages?

Answer 1

Advantages and Disadvantages of For-Profit organizations:

In a capitalist economy, the land's settlers and cowboys are the businessmen willing to take the risk and start a profit-making enterprise. Establishing a company for profit has some obvious advantages: self-employment and financial benefits equal to success. However, it is not without inconveniences such as contractual responsibility and duty to taxpayers and creditors.

Benefits:

• Legal Ownership, Entitlements, and limited liability: Since an income company's general purpose is to make money, the owners are driven by cash flow production, which in turn will ideally produce returns for shareholders. The Encyclopedia of Environmental Management notes that the structure of the board of directors is one of the main disparities between for-profit and non-profit organizations. The board of directors is granted the organization's approval to make decisions, such as naming CEOs and managing the company in general. The initial board of directors, all forms of companies, typically consists of those founders who began the business. Such original members of the board are therefore given set terms in both cases. However, businesses work differently for-profit and charity when it is time to retain or replace members. The charitable agency performs this process by merely requiring the board to determine whether to re-elect or substitute a candidate or not. Each board member is assigned one seat. Occasionally, non-profits may require members of the group to vote in such elections, in which case their vote can be viewed almost like a stake of the corporation, reflecting in a temporary sense the portion of the group that they "own." But, in a charitable corporation, the election procedure is very different. When the time comes for the board of directors to be elected, the number of shares each shareholder owns is especially significant. Increasing share is treated as a vote which entitles stock owners to as many votes as they possess shares. This gives investors owning vast numbers of shares an enormous edge in dictating how it will operate the company. When a single individual or organization holds 51 percent of the shares, this individual is deemed to have the majority vote both in the company itself and in the appointment of members of the board, but this is not generally a common cause. Through allocating votes based on ownership assets, companies are even more sensitive to what interests their creditors have, rendering organizations much more appealing for profit.
• Employee Compensation: For charitable companies, whose employees are often usually well paid. Funding helps these businesses to offer payment programs, paid sick days, incentives and other motivational cash opportunities to their workers, which are assumed to help the workers perform more efficiently and show a greater contribution to the company.
• Function: The freedom to fulfill whatever role or purpose is another quality for-profit entity enjoys. Laws limit which fields of research non-profit organizations are permitted to be involved in, but there are no other limitations for-profit organizations aside from common regulatory prohibitions such as unlawful drug trafficking or other criminal activities.
• Political Stance: Organizations for profit can also donate to election efforts, and can advocate as aggressively as they wish. Several big profit companies take advantage of this advantage to eventually make profits in their business. Generally, a non-profit corporation's most evident and important advantage is income creation non-creditors. It is the clearest competitive distinction between corporate companies and non-profit organizations.

Disadvantages

• Taxes: Although most non-profit agencies fall into corporations that, for varying reasons, are excluded from a number of taxes, benefit businesses pay state and federal income taxes, sales and use taxes, and real estate taxes, and are also paid on several other words. It significantly lowers the actual bottom line that the company produces that would in effect impact actual profitability and valuation of the stock.
• Missed Special Rates: Non-profit companies are seeing an uptick in incentives when it comes to receiving discounts and exceptional or even preferential care. The postal service gives preferential rates to a variety of non-profit groups, and television also has competitive advantages. Many magazines, radio stations, as well as other outlets offer non-profit deals, others also calling for free advertisements. Non-profit coupons and grants from food banks can also be obtained. All of that is available for the corporate benefits business.
• Nondeductible contributions: Contributions made to benefit companies are not only charged but are not exempt from taxpayers on tax returns. It is one of the greatest benefits non-profits have, but it aggravates the fact that companies invest in none of these benefits for benefit.
• Zoning: For certain countries, only those types of companies are permitted to work for distinct regions. There are several rules and regulations limiting where corporations can do business for profit, but non-profit groups can operate in any part of town or neighborhood without needing to think about stringent zoning criteria.

Here we can clearly see that the advantages are far more than the disadvantages. So. we can say that For-profit organization is more beneficial than any non-profit organization.