Evan Carmichael argues that a for-profit business donating a portion of profits beats a pure non-profit for scaling impact. His example: a design shop owner grows faster by building a profitable firm and donating staff time to charities than by working solely for nonprofits. Embed giving into your business model, not as an afterthought.
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Should you start a for-profit or nonprofit company? If you really want to help people, if you really want to have a big impact and reach a ton of people for the better, then in my opinion, the best way to do it is to have a for-profit company that gives back to the community. I got a great question from a reader, Greg, who, he wants to start up a business. He wants to help nursing homes and artists, and he wants to start a business around that that can give back, and he's not sure if it should be a for-profit or nonprofit business. Here's the thing, okay? If you are just doing a nonprofit, if it's just you, if you're trying to raise money through donations, you're always going to be limited. If you are out just volunteering for a company, you can have an impact, and that might be a really meaningful contribution that you are giving your time to something, but if you really want to have a big impact, If you want to help more than a few people, then the best way to do it is to build a highly profitable business and invest the money that you make back into the causes that you support. Here's an example of a friend of mine. He runs a design shop and he'll help create great products for companies. And one of the challenges he had when he was starting up was, I love working with with these nonprofits, with these charities, because I love what they're all about, I love their cause. But if I do that, I'm not making money, right? I either do it at a loss, I do it for free, I do it at cost, I'm not making money. So his opportunity here is either do I go and basically just work with these nonprofits and give them my services, and I love doing that work, and it's maybe personally fulfilling, but he's always going to be limited by how much time he has. He's never going to be able to grow and scale and build a team because he's not making money. Whereas if he were to go out and build a design shop that is for-profit, that is doing work for companies who pay him, who pay him what he's worth, that he has mad skills, and then donate 10% of his time, 20% of his time, whatever it is, back to helping those causes, then in the longer run, he'll have much more impact because it's not just going to be him And his time, it can be his team. Where if you're just volunteering, if you're just donating your time, or you believe in a cause and you're just investing your time into something, you're building a nonprofit, then it's going to be so limited. It can be 100% of your time, but it's harder to build up a team around you. Whereas if you're a for-profit company, you're making lots of money, you bring on a team, say you're a 10-person company, a 20-person company, if everybody's giving 20% of their time to this cause with tons of different skill sets, you're going to have a much greater impact. So that's my challenge to you. How much of an impact do you want to have? And really the decision you have to make is the first option, you can get personally involved and it will be very personally fulfilling for you because it's your time, but you're not going to make a lot of money doing it, if anything, but you're giving everything you got to it. Whereas the other one, you're not giving as much time to it, but you're having a bigger impact because you have a business that can support the cause that you belong to. I'm a big believer that entrepreneurs need to give back to their community. If it's through sponsorships, if it's through, you know, dollars, if it's through time, if it's through mentoring, whatever it is, something that you proudly believe in, make that part of your business. Bring that into what you do as a company. But then it's still a for-profit business, and the bigger that I can grow my business, the bigger that you can grow your business, the greater positive impact you can have in your community and afford to give more dollars and resources and time of yourself and your team to support the cause that you believe in. So if I was ever given the option, I would always pick go for-profit, have a huge impact, Change the world and believe. For those of you watching, like the video, please give it a thumbs up below. It always makes me want to do more for you. And let me know what you think. Leave a comment underneath. You like this video? Stop just being a stalker. Leave a comment, say something. I love to hear from you. And if you have a question, leave it below. I'll make a video response. Thank you so much. I'll see you soon.
