Judah S. Harris
		Other differences How does the public benefit sector work in relation to the other two sectors? Ownership: Profit sector corporations are owned by shareholders, who invest in these companies for private gain. A public benefit sector corporation, or nonprofit organization, is owned by the public. The assets are held in public trust. If a nonprofit corporation dissolves, for example, its assets cannot be transferred to private parties (for their profit). These are seen as the public's assets, and by law must be transferred to another nonprofit entity. Boards: Profit sector boards of directors are elected by shareholders as owners to represent their profit-making interest in the corporation. public benefit sector boards are elected to represent the public's interest. Board members are often call "trustees," because their office is a public trust. Their primary responsibility is to ensure that private profit does not occur, and that genuine philanthropic benefits do. Bottom line: The profit sector's incentive for activity is private profit, measured in dollars. The public benefit sector's incentive is public public benefit combined with personal philanthropic satisfaction - far more elusive, complex, and subtle than just the bottom line. Public benefit sector corporations must balance their books to stay afloat just like any for-profit business. But that process is a means, not an end. To succeed, a nonprofit organization solicits funds from the public so it can then provide the public the public benefit of the organization's charitable services. The donations are tax-deductible for the giver, and tax-exempt for the charity. Nonprofits are also allowed non-taxable income if earned through "program-related" activities (such as an educational museum store). © 2002 Whatcom Community Foundation. All rights reserved.