The environment in which American nonprofits operate is being transformed. New laws affecting nonprofit structure and finance have been enacted by dozens of state governments.

We at Triplett Consulting have created a new training program to help nonprofits and their advisors understand these law changes — and take advantage of the opportunities these new laws provide. We will briefly summarize these changes in this section of our website.

Bridging the sharp divide

US law has historically maintained a sharp divide between for-profit and nonprofit organizations. Separate laws govern the structure, governance, finance and taxation of the two organizational types.

The a�?bright linea�? distinction between for-profits and nonprofits observed in American law is not followed in other nations. The United Kingdom and Canada, for example, have created new categories of entities that are often called a�?hybridsa�? reflecting their sharing of characteristics of both for-profit and nonprofit entities.

American states are beginning to follow this lead. Nearly 30 states have in the past 2–3 years enacted variations of a a�?benefit corporationa�? law. These new entities are for-profit corporations but they all have some form of a�?social goalsa�? which are reminiscent of a nonprofita��s mission.

Social enterprise

These new corporate structures are often referred to as a�?social enterprises.a�? That term, broadly applied, can also refer to any traditional for-profit or nonprofit that operates a business — selling a product or service — that has both social and financial goals.

The broad field of social enterprise is ballooning in size and attracting legions of adherents, with a surprising corps of young followers. The idea of social enterprises raising money while pursuing social or environmental goals is another indicator of the diminishing distinction between the nonprofit and for-profit worlds.

A superb source of information on social enterprise is The Social Enterprise Alliance also has an excellent listserve at that provides an opportunity for nonprofit enterprises to share and seek advice on specific topics. Tom served on both the national and Twin Cities boards of SEA.

Access to new capital

Yet one more indicator is the diminishing distinction between for-profits and nonprofits is emergence of a new capital source for social enterprises.

Crowdfunding, meaning raising small sums of money from large numbers of contributors, has generated billions of dollars nationally for a broad variety of ventures and causes. But until recent legislation, crowdfunding contributors to social enterprises achieved no ownership interest in the venture; instead they might receive a thank-you gift of little monetary value.

While awaiting implementation of federal regulations, individual states have moved ahead with a variety of a�?equity crowdfundinga�? laws. These laws permit the granting of ownership shares with investments in social enterprises.

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