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  • May–June 2023
  • Article
  • Harvard Business Review

Should Your Start-up Be For-profit or Nonprofit?: A Guide for Social Entrepreneurs

By: Cait Brumme and Brian Trelstad
  • Format:Print
  • | Pages:10
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Abstract

Years ago the line between nonprofit and for-profit enterprises was clear, but that has changed. Nonprofits now offer products that compete with those of the best for-profits, and for-profits can deliver as much social value as charities. Despite the blurred distinction, all mission-driven start-ups will eventually face a stark choice about which legal structure to adopt, and they need to make it carefully, because it’s hard to undo, say the authors, the CEO of a nonprofit accelerator and a partner in an impact investing fund.

To guide their decision, social entrepreneurs should examine several questions: Is the market ready for a for-profit solution? Where is the available capital? And which structure would help the organization attract the talent and resources that it requires?

Keywords

Business Startups; Social Entrepreneurship; Mission and Purpose; Nonprofit Organizations; For-Profit Firms; Decision Choices and Conditions

Citation

Brumme, Cait, and Brian Trelstad. "Should Your Start-up Be For-profit or Nonprofit? A Guide for Social Entrepreneurs." Harvard Business Review 101, no. 3 (May–June 2023): 136–145.
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About The Author

Brian L. Trelstad

General Management
→More Publications

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More from the Authors
  • So You Want to Change the World?: A Personal Reflection on Systems Change By: Brian Trelstad
  • Unleashing Opportunities in Brazil's Favelas By: Brian Trelstad, Pedro Levindo and Lucas Cardoso
  • Social Enterprise in the MENA Region By: Brian Trelstad and Ahmed Dahawy
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