What are organizations that are in the business of benefiting society and operate like a business called *?

All companies aim to profit, but some of them are doing something for the society. They’re called benefit corporations.

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• What is a benefit corporation
• The legislation in Italy and the US
• Benefit corporations and B-Corps aren’t the same
• Start » Strategy
• Choosing the Right Nonprofit Type: Which Is Right For Your Business?
• What is a nonprofit?
• Types of nonprofit designations
• Subscribe to our newsletter, Midnight Oil
• More tips to grow your business
• What is business Organisation and its types?
• What is the major difference between corporation and other kinds of businesses?
• What is a non profit organization and how does it work?
• What type of business is non profit?

Benefit corporations operate in any sector. But they must define and report their social impacts © Geber86/Getty Images

The legislation in Italy and the US

Having Italy recently introduced them in its legislation, LifeGate has decided to become a benefit corportation. “A benefit corporation is a company which combines the goal of profit with the purpose of creating a positive impact for society and the environment and which operates in a transparent, responsible and sustainable way,” reads the legislation.

These goals are to be included in the business objective and should be carried out trying to balance the corporations’ interests with those of the parties involved, directly or indirectly. Every year benefit corporations are required to report what they’ve done so far for the common good. Also, they are required to declare the objectives they had set, how they achieved them (or not), and what they’re planning for the following year.

Benefit corporations and B-Corps aren’t the same

At first glance, benefit corporation might seem a synonym of B-Corp. Actually, they’re two separate things. A B-Corp is a company, of any legal forms, that obtains a certification by B-Lab, a US non-profit organisation, voluntarily. The company fills in a questionnaire of the Benefit Impact Assessment and B-Lab evaluates its social and environmental policies. If they meet B-Lab standards, the company is certified. So, a benefit corporation can be a B-Corp and vice versa, but they’re two separate things.

All over the world there are more than 2,000 B-Corps across 50 countries, working in 130 different sectors. And they’re likely to increase. This is a sign of a growing awareness and of the will of putting into practice the company’s purposes while doing something tangible for the environment and the people.

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Choosing the Right Nonprofit Type: Which Is Right For Your Business?

Learn more about the 27 different types of nonprofit designations and the requirements that pertain to each one.

If you're considering starting a nonprofit organization, you'll want to understand the different types of nonprofit designations. Each designation has their own requirements and compliances. Here are the types of nonprofit designations to help you decide which is right for your organization.

What is a nonprofit?

A nonprofit is an organization operating to further a social cause or support a shared mission. Nonprofits are tax-exempt by the IRS as their organizations are a benefit to the public, and they’re required to keep financial information public to ensure donations are only for the nonprofit’s further advancement.

[Read: Education, Partnerships and Community Are Essential to Nonprofit Success]

Types of nonprofit designations

Today, there are over 1.6 million nonprofit organizations in the United States that are categorized into 27 different types of designations. Here is a general overview of each type of nonprofit organization:

• Social Advocacy Groups: Advocate or lobby for a certain social or political cause. Classified under 501(c)(4).

• 501(c)(1): Organized and enacted by Congress, including federal credit unions. Contributions are allowed only for public purposes.

• 501(c)(2): Controlled by another tax-exempt organization where they must pass any revenue to the parent organization.

• 501(c)(3) – Charitable Organizations: Include religious, scientific, charitable or literary organizations. Typically funded through donations, membership dues and government grants.

• Foundations: Fund other nonprofit organizations, sponsor events and raise awareness for causes. Required to donate a certain portion of income annually to maintain their status.

• 501(c)(4) - Civic League, Social Welfare Organization or Local Employee Association: Tend to the general welfare of members and those going through hard times. Fewer restrictions on lobbying or other political activities.

• 501(c)(5): Within the agricultural, labor or horticultural spectrum and specialize in improving education and working conditions of these sectors.

• 501(c)(6) - Trade or Professional Association: Improves conditions for their members. Usually business leagues, chambers of commerce or real estate boards.

• 501(c)(7) - Social or Recreational Club: Organizes activities that are recreational or social in nature such as hobby groups, country clubs or sports leagues.

• 501(c)(8) - Fraternal Societies: Exist to provide for the payment of life, sickness, death or accident benefits to members.

• 501(c)(9) - Employee Beneficiary Association: Provides payment or insurance to their members upon sickness or other traumatic life events. Membership must be within the same workplace or union.

• 501(c)(10) - Domestic Fraternal Societies and Associations: Use membership dues to support outside causes without payment to members.

• 501(c)(11) - Teacher’s Retirement Fund Associations: Set up and manage teachers’ retirement funds.

• 501(c)(13) - Cemetery Companies: Exist solely to assist in the burial proceedings for members.

• 501(c)(14) - State Chartered Credit Union and Mutual Reserve Fund: Offers financial services to their members, usually at a discounted rate. They receive funding through business activities and government grants.

• 501(c)(15) - Mutual Insurance Companies of Association: Require members to pay a fee in order to provide them with insurance benefits, typically for property damage and funerals.

• 501(c)(16) - Cooperative Organizations to Finance Crop Operations: Usually created by farmers to pool together resources for agricultural operations.

• 501(c)(17) - Supplemental Unemployment Benefits Trust: Supported by the employer or employee and provides support to those on sick leave or who are permanently unemployed.

• 501(c)(18) - Employee Funded Pension Trust: Applies to employee trusts funded exclusively on member contributions and payments can only be used to benefit members.

A nonprofit is an organization operating to further a social cause or support a shared mission.

• 501(c)(19) - Veterans Organizations: 75% of the members must be active or previous members of the armed forces. Provide benefits to U.S. Armed Forces members.

• 501(c)(21) - Black Lung Benefits Trust: Pays claims to coal miners sick from black lung disease based on the Federal Black Lung Benefit Act of 1969.

• 501(c)(22) - Withdrawal Liability Payment Fund: Helps employers fulfill pension obligations and is funded by employers.
• 501(c)(23) - Veterans Organization: Applies to veterans organizations established before 1880.

• 501(c)(26) - State Sponsored Organizations Providing Health Coverage for High-Risk Individuals: Created at the state level for high-risk individuals who may not have access to proper healthcare.

• 501(c)(27) - State Sponsored Workers’ Compensation Reinsurance Organization: Provides insurance for worker’s compensation programs supported by government grants and member dues.

• 501(d) - Religious and Apostolic Associations: Religious-based organizations that share a common treasury. They pool members’ income and pay taxes on this amount.

• 501(e) - Cooperative Hospital Service Organizations: Provide cooperative services for two or more hospitals.

While each nonprofit designation is exempt from paying most federal income tax, each type has its own rules concerning eligibility, lobbying, electioneering and whether contributions or donations qualify as tax deductible. IRS Publication 557 provides detailed information about the various rules and regulations surrounding each nonprofit designation.

[Read: 7 Things to Consider When Starting a Nonprofit]

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Published February 05, 2021

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What is business Organisation and its types?

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What type of business is non profit?