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Non-Profit Business Analysis

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One factor that sets non-profits and for-profits apart is that non-profits are required to reinvest their profits into the organization. Social enterprises are blurring this line as well because some social enterprises have business plans that call for organizations to reinvest their profits in the enterprise instead of serving the private purposes of investors and founders (Husock, 2006). However, this is not a radical break because there have been a few business owners that have offered to minimize personal gain. Business owners have always had the option of giving away their profits in the past; it is what charity is for. The concern is whether the business plan to reinvest profits can be sustained. The owners of social enterprises will most likely use profits to move on to other areas and their successors may request better personal returns (Lohmann, 2007). There is also the issue that there might be other businesses that enter the same market as social enterprises that make promises to reinvest their profits into good works. This …show more content…

Social enterprises can take the ideal of social responsibility intertwining with revenue too far. Businesses that supposedly show profit by hiring the disadvantaged can be based on an unsupportable claim that social enterprises help government (Jones & Donmoyer, 2015). For instance, the founder of Grameen Bank, Muhammad Yunus, claimed that his business is new type of business that focuses on serving impoverished individuals and sustaining itself through earned revenue (Jones & Donmoyer, 2015). He failed to mention or acknowledge the importance of how Grameen Bank was initially capitalized with the support of philanthropy (Jones & Donmoyer, 2015). This sends the wrong message to donors that investing in a for-profit organization is just as good or even better than

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