The concept of who owns a nonprofit organization can be hard for some to grasp, especially given that the answer is, “No one…and everyone!” We encounter this confusion with new clients on a fairly regular basis. And, given people’s understanding of how basic business operates, it is understandable. In order to fully appreciate the concept of “non-ownership”, it is helpful to first talk about the various types of business entities. Then, we’ll look at organizational purpose. By the end of the article, it should make a lot more sense.
There are several different types of business entities. For-profit companies make up most of them. Here are a few (there are others)…all of these have an owner or owners:
Sole Proprietorship: One person who conducts business for profit. The sole owner assumes complete responsibility for all liabilities and debts of the business.
General Partnership: Two or more individuals as co-owners of a for-profit business.
Corporation (for-profit): The corporation itself assumes all liabilities and debts of the Corporation. A corporation is owned by shareholders. A shareholder enjoys protection from the corporation’s debts and liabilities.