What is the definition of a non-profit startup?
I have seen some entrepreneurs use the term non-profit startup. What exactly is a non-profit startup?
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In what country? – Dnbrv 12 years ago
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@dnbrv, I live in Germany but I am trying not to localise the question to a particular region. However, it complicates the taxation aspects of this question. – Tehnyit 12 years ago
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Non-profit status is granted by the local authorities in all regions of operation. – Dnbrv 12 years ago
2 Answers
I would assume it's a startup that complies with regional non-profit rules. For example, in the USA, there's the 501(c) non-profit designation that has explicit rules set by the government, mostly for tax purposes.
Often, if your company complies with these rules, you don't pay as much in taxes (often nothing). Usually non-profits set out to improve the world, in what ever way they see that the world needs improvement (not everyone has to agree that they are, in fact, improving the world).
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Thanks for the technical clarification! – Tehnyit 12 years ago
First, draw a dividing line between being a nonprofit (which is a function of being formed as such under state law) and being a public charity (aka a 501(c) organization) which is a function of being a nonproft under state law AND submitting a Form 1023 to IRS. Second, there are many new social ventures which take on varying formats - not for profit corporations, benefit corporations, low profit limited liability companies, joint ventures and ownership of for profit entities, etc. The startup mentality - agility, speed to market, customer focus, energy, etc. - are all equally as present in these entities as in for-profit startups.
