Using Nonprofits to Serve Charitable Goals of Social Businesses in the United States: Circumventing the Lack of Recognition of the Social Business Model in the Federal Tax Code

29 Pages Posted: 4 Jul 2012  

Gautam Jagannath

Social Justice Collaborative

Date Written: 2012

Abstract

This Article considers the possibility of reincorporating a social business as a tax-exempt nonprofit. An analysis of the costs and benefits is performed with an eye toward federal tax law. First, I discuss the potential problems with running a social business as an exempt nonprofit. There are federal regulations that get in the way of making this a savvy decision. Second, I posit that a social business can benefit from devising a parallel exempt organization with similar or identical charitable goals. There are a few ways to do this and I consider the pros and cons. Finally, I consider the practical hurdles that social businesses face by maintaining and operating tax-exempt organizations within the context of how social businesses have positive consequences for global development.

Keywords: nonprofit, charitable, 501c3, social, enterprise, business

Suggested Citation

Jagannath, Gautam, Using Nonprofits to Serve Charitable Goals of Social Businesses in the United States: Circumventing the Lack of Recognition of the Social Business Model in the Federal Tax Code (2012). Pace Law Review, Vol. 32, No. 1, p. 239, Winter 2012. Available at SSRN: https://ssrn.com/abstract=2100575

Gautam Jagannath (Contact Author)

Social Justice Collaborative ( email )

420 3rd Street, Suite 130
Oakland, CA 94607
United States
510.992.3964 (Phone)

HOME PAGE: http://www.socialjusticecollaborative.org

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