The primary purpose of a corporation is (and always has been) to make money. Without profits, corporations go out of business, people lose their jobs and governments receive none of the taxes that corporations pay.
Non-profits, on the other hand have always been perceived as benevolent organizations whose sole purpose is a common societal good. But without donations, non-profits go the same way as corporations without profits. They go out of business, people lose their jobs and their taxes aren’t paid (non-profits aren’t exempt from all taxes).
Social expectations have changed and the path to revenues has become more competitive. I’m seeing the rise of a hybrid corporation. Hybrid corporations can generate money, even multi-billions of dollars, as long as that company is perceived to practice corporate social responsibility.
What’s the difference between an “Inc.” and an “Org.”?
Entities select a tax status, “inc” or “org” when they start up. They each have compliance requirements, but they both depend on the same thing – revenue! It’s just a matter of whether the revenue is called “earnings” or “donations”.
How much does reputation matter?
It depends. As transparency increases, corporate and non- profit practices are more exposed to public scrutiny.
The expectations of society have adapted and grown, putting more pressure on entities to adhere to more people and planet friendly practices –
- consider the rash of sexual harassment allegations and the publications of questionable, and even unethical and illegal, corporate diversity policies and practices. Companies can no longer afford to ignore the social aspect of their organizations
- numerous sites exist where current and former employees rate their perception of the company CEO, the company practices and direct supervisors. This has a direct effect on talent pools
- real (and fake) news affects corporate stock prices
- corporate reputation matters when recruiting high demand employees
As long as shareholders and board members exist, the fight for revenue will continue. Can revenue and social good co-exist? Will this co-existence create an environment of greater prosperity?
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