I’ve gotten a lot of questions about why we went the non-profit route vs forming as a social enterprise. It would probably be a little bit easier to be a for-profit organization and just donate 100% of our proceeds. For me though, there was two main reasons to form Three Avocados as a non-profit organization.
The first reason is for credibility. By forming as a non-profit, our customers are ensured that no employee or board member may take a distribution from the organization. This doesn’t mean we’ll never pay employees. Quite the opposite. We’re going to have to have employees, therefore, we will have to pay them. But, this does mean that we will never have a CEO that gets paid a $1/yr salary and a $50 million bonus based on performance.
The second main reason I wanted to form as a non-profit is tied to the first. Greed. Again, by forming as a non-profit, we are legally locked into not taking any distributions from the company. To me, this leaves no room for anyone to get greedy and decide that giving away 80% of the profits is good enough. Let’s face it, if you’re doing $100 Million a year in sales, it would be real easy to say, “Ah, the difference between funding projects with $20 million and $21 million is minor. I’ll just keep that other $1 million”. I wanted to nip that in the bud before it even started.
A lot of people assume that there are also tax benefits. As of right now, no there’s not. We’re not a 501c3, and as much as I would love to be, I’m not sure the IRS is going to grant it for us. So, that means we’ll be paying corporate taxes, just like any other business. The key difference is that, by law, 100% of our proceeds will go back to Uganda. That’s all I care about. Now and long after I’m gone.