Nonprofit or For-Profit? Here's How I Decided to Go For-Profit
Because I was starting a company that was handling the reuse of clothing donations, the decision was a little bit complicated.
When I was starting up my company, Wearable Collections clothing recycling, I was confronted by the decision of whether to open it up as a nonprofit or a for-profit. In many cases there would be a clear-cut answer. However, because I was starting a company that was handling the reuse of clothing donations, the decision was a little more complicated.
I chose to found the company as a for-profit for several reasons, some more pertinent than others. As an entrepreneur, I appreciate the flexibility that being a for-profit lends me. We had an idea and wanted to put it into action immediately. To start a for-profit company all you need to do is file the paperwork, pay the fee and you're ready to rock. I am not ashamed to say that I have big ambitions for Wearables and believe that when you mix a capitalist drive with a social mission, amazing things can happen.
We have been committed from the beginning to dedicate a portion of our gross proceeds to our partner organizations, many of whom are nonprofits. Our goal is to help many organizations raise funds through the collection of clothing. We believe we could build a sustainable business by working with a network of like-minded organizations, helping us divert textiles from landfills while raising funds for their organizations.
This model has helped us in ways we could have never imagined. Just as when you make a purchase from a brand, you are making a vote to support the company, when you work with, or donate to, a nonprofit you are supporting their mission. However, Wearable Collections allows our partners to dedicate their portion of the proceeds to whichever organization they choose, whether it’s their own or one they support. In fact, since the beginning of 2011, Wearable Collections has generated over $100,000 for our partner organizations.
Not a day goes by without someone mistakenly referring to Wearable Collections as a nonprofit. We have been transparent about our status from day one, however in this age of social media it is difficult to keep up with all of the misinformation.
As a partner of GrowNYC, an amazing nonprofit organization in New York City that runs 54 Greenmarkets and other environmental programs, we get a lot of facetime with the donors we collect from at 19 weekly Greenmarkets. I have had the pleasure of working the booth at many of these community hubs. The main talking point at these markets is how we operate and inevitably a discussion about what happens with the clothes. We explain to the donors that we bring the clothing to a sorting facility who pays for the clothing by pound, and we dedicate a portion of these proceeds to our partnering charities, in this particular case GrowNYC. Their clothing donations at the Greenmarket actually support the GrowNYC’s programs like Greenmarket or community gardens.
Every once in a while, I would encounter some donor really uncomfortable with this, and tell me that they were going to take their donation to a local thrift charity store. Never to let an educational moment pass, I would quickly explain that nonprofits also have operating expenses. They too have to pay for employees, transportation, rent and executive salaries. Just as there are for-profits that don’t run efficiently and will eventually need to shut down, there are also nonprofits where less than 20 percent of revenues go towards their mission. So status—whether it’s for-profit or nonprofit—is not necessarily a determining factor of the good being provided by an organization.
My intentions are not to downplay the value that nonprofits bring to society. On the contrary, we are fervent supporters of nonprofits and value the role they play in our society. The clothing recycling industry is one in which the nuanced differences between nonprofit and for-profit status can be highlighted and examined. For over a century people have been donating their clothing to charity. This is what people are comfortable doing.
As the fashion industry has gone global over the last several decades, so too has the clothing recycling industry. Our consumption of fashion continues to increase, causing more and more textiles to be discarded in landfills. We have developed a waste management solution that supports our partner organizations. We think this model creates a win-win and hope that in the future waste managers in other industries will follow suit. If so, more and more value can be extracted from the wastestream, and products that still have use will be kept in circulation rather than buried in a landfill.