BOSTON (TheStreet) -- The line between for-profit companies and nonprofit charities continues to blur. The organizational creep of nonprofits into areas that seem more in keeping with the for-profit world is nothing new. In an effort to boost their bottom line, many charities have branched out into other investments -- real estate holdings, property management, paid endorsements and retail sales among them. And the organizational structure of some nonprofits has evolved in new directions.
In 2007, Google(GOOG) launched Google.org, an effort defined as a for-profit charity. Seeded with 3 million shares of company stock, it has primarily funded alternative-energy projects. Other nonprofits are looking closer at "hybrid" models to combine profit-driven strategies with charity-minded outcomes.
"For many years nonprofits have often used for-profit subsidiaries or a fee-for-service approach," says Ken Berger, president and CEO of Charity Navigator, a service that evaluates the financial health of more than 5,500 American charities. "In fact, the biggest piece of income for nonprofits is not individual contributions or government money -- it comes from fee-for-service income. This notion of hybrid, or the 'for-profit nonprofit,' is nothing new at all."
The impact of "this notion that for-profits have a social mission, the notion of doing well while you do good," remain to be seen, says Ken Berger, president and CEO of Charity Navigator, a service that evaluates the financial health of more than 5,500 American charities.
Berger laments the fact that some nonprofits are formed with charity as a secondary intent. "There are occasions where businesses consciously choose to be a nonprofit because it gives them a strategic advantage over for-profit competitors," he says. "They get a tax exemption and therefore they get a leg up. We are clocking in now at about 2 million nonprofits, the largest nonprofit sector in the history of the world. For the past 20 years, we had more nonprofits formed than in the whole 200 years before that. Even in a down economy it is still explosive."
The nonprofits cited as working more like businesses include:
-The College Board
-The National Geographic Society
-American Cancer Society and Susan G. Komen for the Cure
-The PGA Tour
-Corporation for Public Broadcasting
-Higher Ed such as Harvard, Columbia, and Yale
-Hospitals and Blue Cross/Blue Shield
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