Features and Aims of Partnerships and Non-Profit-Making Businesses

Features and Aims of Partnerships

Key Concepts

A partnership refers to a business where two or more individuals share ownership. Each partner contributes to every aspect of the business, including capital, labour, property, and skills.

Key Characteristics

Shared Profit and Loss: Profits and losses are usually shared equally amongst partners, or according to their agreement.
Joint Decision Making: Each partner shares in the decision-making process, giving each a say in how the business is run.
Shared Liability: All partners share the liability and financial risk of the business. However, in limited partnerships, liability can be limited to the extent of their investment.
No Separate Legal Entity: Unlike corporations, a partnership isn’t a separate legal entity.

Aims of Partnerships

Shared Financial Commitment: Starting up a company requires capital, and in a partnership, each partner contributes to help get the business off the ground or to keep it operational.
Leveraging Combined Skills & Knowledge: Two or more partners can pool their skills, experiences and specializations to achieve business objectives more effectively.
Mitigate Risk: Sharing the business risk across partners can protect each individual’s financial investment.

Features and Aims of Non-Profit-Making Businesses

Key Concepts

A non-profit-making business, also known as a not-for-profit organization, operates to achieve goals other than making a profit, such as promoting a cause or supporting a community.

Key Characteristics

Public Benefit Objective: Non-profit-making businesses exist to further a social, environmental or cultural cause or to serve a group in society.
Income Ploughed back: Profits are used to further the aims of the organization or provide services, rather than being distributed to owners or shareholders.
Legal Status: Non-profits have different legal status depending on their structures such as trusts, associations or corporations.

Aims of Non-Profit-Making Businesses

Fulfill a Social Mission: The main aim is to serve their cause or community, not generating profit. They measure success in terms of impact rather than money.
Encourage Volunteering and Giving: As these organisations don’t aim to earn a profit, they often rely on volunteers and donations to operate and pursue their goals.
Create Public Value: They strive to generate public value through various initiatives and services, enriching lives and advancing societal wellbeing.