Types of ventures: Entrep mod 1 Flashcards
1
Q
Sole Traders:
Formation:
How many persons in a sole trader?
A
One. It is run independently.
2
Q
Sole Traders:
Owner’s Liability:
A
The owner has unlimited personal liability for the debts and liabilities of the business. This means that personal assets can be used to satisfy business debts if the business assets are insufficient.
3
Q
Sole Traders:
Tax Liability:
A
The profits of the business are taxed as part of the owner’s personal income. The business itself does not pay separate taxes, which simplifies the tax reporting process.
4
Q
Sole Traders:
Transferability of ownership
A
the ownership cannot be easily transferred. If the owner wishes to sell or transfer the business, they will typically need to sell the assets or the entire business as a going concern.
5
Q
Sole Traders:
Continuity of venture
A
The continuity of a sole trader business is directly tied to the owner. If the owner chooses to cease operations or passes away, the business may cease to exist unless arrangements are made for its continuation.
6
Q
Sole Traders:
Cost of formation
A
Forming a sole trader business is relatively simple and inexpensive. There are minimal legal requirements, and the owner can start operations without significant startup costs.
7
Q
Sole Traders:
Ability to raise capital
A
Sole traders typically face challenges when it comes to raising capital. They rely on personal savings, loans, or profits generated by the business for funding. It can be difficult to attract outside investors or secure large amounts of financing.
8
Q
General Partnership:
Formation
A
It can be established through a formal written agreement, but it can also be created through an oral agreement or implied by the conduct of the partners.
9
Q
General Partnership:
Owner’s Liability
A
In a general partnership, each partner has unlimited personal liability for the debts and liabilities of the business. This means that personal assets can be used to satisfy business debts if the partnership assets are insufficient.
10
Q
General Partnership:
Number of owners
A
Two or more
11
Q
General Partnership:
Tax Liability
A
A general partnership is considered a pass-through entity for tax purposes. This means that the partnership itself does not pay taxes. Instead, profits and losses “pass through” to the individual partners, who report their share on their personal tax returns.
12
Q
General Partnership:
Transferability of ownership
A
Unlike a corporation, a general partnership typically does not have shares that can be easily transferred. If a partner wishes to sell or transfer their ownership interest, they will usually need the consent of the other partners.
13
Q
General Partnership:
Continuity of Venture
A
The continuity of a general partnership is dependent on the partnership agreement. If a partner leaves, dies, or becomes incapacitated, the partnership may dissolve unless there are provisions in place to address such situations.
14
Q
General Partnership:
Cost of Formation
A
Forming a general partnership is relatively simple and inexpensive. While it is advisable to have a written partnership agreement, it is not a legal requirement in many jurisdictions.
15
Q
General Partnership:
Ability to raise capital
A
General partnerships may face challenges when it comes to raising capital. Partners rely on their personal resources, loans, or profits generated by the business for funding. It can be difficult to attract outside investors or secure large amounts of financing.
16
Q
Sole Traders:
Decision making authority
A
The owner has complete control and authority over all decisions related to the business. They make all strategic, operational , and financial decisions
independently.
17
Q
Sole Traders:
Ease of dissolution
A
Dissolving a sole trader business is relatively straightforward. The owner can choose to close the business at any time without having to navigate complex legal processes or obtain approval from other stakeholders.
18
Q
Sole Traders:
Privacy of Financial information
A
Sole traders have a level of privacy in terms of financial information. Unlike corporations, they are not required to disclose detailed financial statements to the public.
19
Q
Sole Traders:
Regulatory Compliance
A
The compliance requirements for sole traders are typically less stringent compared to larger business structures like corporations. They may have fewer reporting obligations and less regulatory oversight.
20
Q
Sole Traders:
Flexibility and Autonomy
A
Sole traders enjoy a high degree of flexibility and autonomy in how they run their business. They have the freedom to make decisions based on their own preferences and objectives
21
Q
General Partnership:
Decision making authority
A
In a general partnership, all partners typically have an equal say in the management and decision-making process, unless otherwise specified in the partnership agreement.
22
Q
General Partnership:
Ease of dissolution
A
Dissolving a general partnership can be relatively straightforward, especially if there is a clear dissolution process outlined in the partnership agreement. However, it’s important to address the distribution of assets and liabilities among the partners.
23
Q
General Partnership:
Regulatory Compliance
A
General partnerships may have fewer regulatory requirements compared to more complex business structures like corporations. However, they are still subject to certain legal and financial obligations.
24
Q
General Partnership:
Profit sharing
A
Profits and losses are typically shared equally among the partners unless the partnership agreement specifies a different distribution method.
25
**General Partnership:**
Risk sharing
Partners share both the profits and the risks associated with the business. This can provide a sense of **collective responsibility and commitment to the success of the venture**
26
***Limited* Partnership:**
Formation
A limited partnership is formed by filing the necessary paperwork with the relevant state authorities. It requires at least **one general partner** and **one limited partner.** **The partnership agreement**, which outlines the roles and responsibilities of each partner, is a crucial document in the formation process.
27
***Limited* Partnership:**
Owner’s Liability
In a limited partnership, there are two types of partners: general partners and limited partners. **General partners have unlimited personal liability** for the debts and liabilities of the business. Limited partners, on the other hand, have limited liability, meaning their personal assets are typically **protected** beyond their initial investment.
28
***Limited* Partnership:**
Number of Owners
A limited partnership must have at least one general partner and one limited partner. There can be **multiple limited partners,** but there must be **at least one general partner** who is responsible for **managing** the business
29
***Limited* Partnership:**
Tax Liability
Similar to a general partnership, a limited partnership is considered a **pass-through entity for tax purposes.** Profits and losses flow through to the individual partners, who report their share on their **personal tax returns.**
30
***Limited* Partnership:**
Transferability of Ownership
The ownership interests of **limited partners** can be **transferred or sold,** but doing so may require the **consent** of the other partners, as specified in the partnership agreement.
31
***Limited* Partnership:**
Continuity of Venture
The continuity of a limited partnership is contingent on the partnership agreement. If a general partner leaves, dies, or becomes incapacitated, the partnership may dissolve unless there are provisions in place to **address** such situations.
32
***Limited* Partnership:**
Cost of Formation
Forming a limited partnership typically requires filing formal paperwork with the state and may involve legal fees. While it is not as simple and inexpensive as forming a general partnership, it provides **limited liability benefits** for certain partners.
33
***Limited* Partnership:**
Ability to Raise Capital
Limited partnerships can be an attractive option for investors because **limited partners have limited liability.** This can make it easier to attract passive investors who are not involved in the **day-to-day management of the business.**
34
***Limited* Partnership:**
Decision Making Authority
General partners have **full authority** and control over the management and decision-making process, while limited partners usually have a more **passive role and limited say in operational matters.**
35
***Limited* Partnership:**
Ease of Dissolution
Dissolving a limited partnership can be relatively straightforward if there are provisions outlined in the partnership agreement. However, it's important to address the **distribution of assets and liabilities among the partners.**
36
***Limited* Partnership:**
Regulatory Compliance
Limited partnerships may have additional regulatory requirements compared to general partnerships, especially when it comes to reporting and compliance with state laws.
37
***Limited* Partnership:**
Profit sharing
Profits and losses are typically shared according to the terms specified in the partnership agreement. **General partners often receive a larger share due to their active role in management.**
38
***Limited* Partnership:**
Risk Management
Limited partners benefit from limited liability, which means their personal assets are protected beyond their initial investment. This feature provides a level of **risk protection** for passive investors.
39
**Joint Ventures:**
Formation
A joint venture is established through a **formal agreement** between the parties involved. This agreement outlines the purpose, objectives, contributions, responsibilities, and governance structure of the joint venture.
40
**Joint Ventures:**
Owner’s Liability
In a joint venture, the parties maintain their **separate legal identities and liabilities.** Each party is generally responsible for their **own actions and obligations** within the scope of the joint venture.
41
**Joint Ventures:**
Number of owners
A joint venture involves two or more parties, known as joint venture partners. The number of owners can vary depending on the nature and complexity of the venture.
42
**Joint Ventures:**
Tax Liability
Joint ventures do not have a separate legal status for tax purposes. Instead, the tax implications depend on the legal structure of the parties involved. Each party is responsible for **reporting their share of the joint venture's income or losses on their individual tax returns.**
43
**Joint Ventures:**
Transferability of Ownership
The ownership interests in a joint venture can be defined in the **joint venture agreement.** Depending on the terms of the agreement, ownership interests may be **transferable**, subject to the consent of the other parties.
44
**Joint Ventures:**
Continuity of Venture
The duration of a joint venture is typically defined in the joint venture agreement. Joint ventures can be established for specific projects with a **defined end date** or can be **ongoing for an extended period.**
45
**Joint Ventures:**
Cost of Formation
The cost of forming a joint venture includes legal fees for drafting the joint venture agreement, as well as any initial capital contributions or resources provided by the partners.
46
**Joint Ventures:**
Ability to Raise Capital
Joint ventures can raise capital through the contributions of resources, capital, or expertise from the parties involved. The ability to raise additional capital may depend on the specific terms outlined in the joint venture agreement.
47
**Joint Ventures:**
Risk Sharing
Parties in a joint venture **share** both the risks and rewards associated with the project or objective. This shared risk can provide a level of security for each party involved.
48
**Joint Ventures:**
Management and Decision Making
The management structure of a joint venture is defined in the joint venture agreement. It may be managed collectively by **all** parties, *or* **one** party may take the lead in decision-making, depending on the terms negotiated.
49
**Joint Ventures:**
Industry and Project Focus
Joint ventures are commonly used in industries such as **construction, real estate development, technology, and manufacturing,** where specialized expertise or resources are required to complete a specific project or pursue a business opportunity.
50
**Joint Ventures:**
Exit Strategy
Joint venture agreements often include provisions for how the venture can be terminated or how one party can exit the venture. This can help address situations where one party wants to discontinue their involvement.
51
**Franchise:**
Formation
Franchises are formed through a legal agreement between the franchisor and franchisee, known as the **franchise agreement.** This agreement outlines the terms and conditions of the franchise relationship, including the rights and responsibilities of each party.
52
**Franchise:**
Owner’s Liability
The liability of the franchisee varies based on the specific terms of the franchise agreement. In many cases, the *franchisee* has **limited liability,** meaning their personal assets are protected from business debts and liabilities. However, they may still be responsible for certain obligations outlined in the agreement.
53
**Franchise:**
Number of Owners
A franchise typically involves at least two parties: the franchisor and the franchisee. The franchisor may have multiple franchisees operating under its brand, making it possible for multiple owners to be involved.
54
**Franchise:**
Tax Liability
Tax liability can vary depending on the specific structure of the franchise agreement and the jurisdiction in which the business operates. Franchisees are often responsible for their **own** tax obligations, including income taxes, payroll taxes, and other applicable taxes.
55
**Franchise:**
Transferability of ownership
The transferability of ownership in a franchise can be limited by the **franchisor.** The franchise agreement may include provisions regarding the sale or transfer of the franchise, and the **franchisor** typically has the right to approve or disapprove of any potential new owners.
56
**Franchise:**
Continuity of Venture
The continuity of a franchise is tied to the terms of the **franchise agreement.** Franchise agreements often have a set term, and the franchisee may have the option to renew the agreement at the end of the term. However, the franchisor may have the right to terminate the agreement under certain conditions.
57
**Franchise:**
Cost of Formation
The cost of forming a franchise includes various expenses, such as franchise fees paid to the franchisor for the right to use their brand, training and support fees, and costs associated with setting up the physical location or business operations. These costs can vary widely depending on the franchise system.
58
**Franchise:**
Ability to raise Capital
Franchisees are responsible for financing their own franchise operations. They may need to secure financing through personal savings, loans, or other sources of capital. Franchisees do not typically raise capital by selling ownership interests, as in the case of corporations.
59
**Franchise:**
Support and Training
**Franchisors** often provide extensive support and training to franchisees to help them operate their businesses successfully. This can include initial training, ongoing support, marketing assistance, and access to the franchisor's resources and expertise.
60
**Franchise:**
Brand Recognition
Franchisees benefit from the established brand recognition and reputation of the franchisor. This can provide a competitive advantage and help attract customers.
61
**Franchise:**
Marketing and Advertising
Franchisors often have centralized marketing and advertising programs that benefit all franchisees. Franchisees typically contribute to a marketing fund to support these efforts.
62
**Franchise:**
Regulatory Compliance
Franchise relationships are subject to specific legal regulations in many jurisdictions. Franchisors must comply with franchise disclosure and registration laws, and franchisees have certain rights and protections under these laws.
63
***C* Corporation :**
Formation
Forming a C corporation involves filing articles of incorporation with the appropriate state authority, specifying the corporation's name, purpose, location, and structure. It may also require the appointment of initial directors and issuance of stock.
64
***C* Corporation :**
Owner’s Liability
Shareholders in a C corporation have limited liability. This means that their personal assets are generally protected from business debts and liabilities, and they are only liable up to the amount of their investment.
65
***C* Corporation :**
Number of Owners
A C corporation can have an unlimited number of shareholders. This allows for significant potential for growth and diversity in ownership.
66
***C* Corporation :**
Tax Liability
C corporations are subject to what is commonly known as "double taxation." The **corporation itself** pays taxes on its profits, and then **shareholders** pay taxes on any dividends or capital gains they receive.
67
***C* Corporation :**
Transferability of Ownership
Shares of a C corporation can be **easily** bought and sold, providing a high degree of flexibility in terms of ownership transfer.
68
***C* Corporation :**
Continuity of Venture
C corporation has perpetual existence, meaning it continues to exist even if
shareholders change, sell their shares, or pass away. It is **not dependent on the individual owners.**
69
***C* Corporation :**
Cost of Formation
Forming a C corporation typically involves more complex legal processes and may require legal assistance. This can make the initial formation more **costly** compared to simpler business structures.
70
***C* Corporation :**
Ability to Raise Capital
C corporations have **significant potential for raising capital.** They can issue different classes of stock, which allows for** various ownership and voting rights.** This makes it attractive to investors.
71
***S* Corporation :**
Formation
To become an S corporation, a business **first needs to be formed as a C corporation.** After that, it must meet specific tax eligibility requirements and submit an election form to become an S corporation.
72
***S* Corporation :**
Owner’s Liability
Similar to C corporations, shareholders in an S corporation have limited liability. Their personal assets are generally protected from business debts and liabilities.
73
***S* Corporation :**
Number of Owners
An S corporation is more restricted in terms of ownership. It can have a **maximum** of **100** shareholders (US Definition).
74
***S* Corporation :**
Tax Liability
S corporations are "pass-through" entities for tax purposes. This means that the corporation itself does not pay corporation taxes. Instead, profits and losses are passed through to the shareholders, who report them on their individual tax returns.
75
***S* Corporation :**
Transferability of Ownership
S corporations have restrictions on ownership, and there are **limitations** on the types of shareholders they can have. This can limit the ease of transferring ownership compared to C corporations.
76
***S* Corporation :**
Continuity of Venture
Similar to C corporations, S corporations have perpetual existence, independent of the individual owners.
77
***S* Corporation :**
Cost of Formation
Becoming an S corporation involves **additional administrative requirements** and may require legal and accounting assistance. This can lead to **higher formation costs** compared to simpler business structures.
78
***S* Corporation :**
Ability to Raise Capital
Like C corporations, S corporations can issue stock and have the potential to raise capital. However, they have restrictions on the types of shareholders they can have, which may affect their attractiveness to certain investors.
79
**Limited Liability Company:**
Formation
Forming an LLC involves filing articles of organization with the appropriate state agency. This document outlines essential details about the business, such as its name, address, management structure, and the names of its members (owners).
80
**Limited Liability Company:**
Owner’s Liability
The primary advantage of an LLC is the limited liability it offers to its members. This means that members are generally not personally liable for the company's debts or liabilities. Their personal assets are protected in case of legal issues or financial difficulties.
81
**Limited Liability Company:**
Number of Owners
An LLC can have **seven or more members,** making it suitable for both single-member businesses and multi-member ventures.
82
**Limited Liability Company:**
Tax Liability
LLCs are typically treated as pass-through entities for tax purposes. This means that the business itself does not pay taxes; instead, profits and losses are
passed through to the individual members, who report them on their personal tax returns. However, LLCs have the flexibility to choose how they are taxed, and they can **elect to be taxed as a corporation if it is more beneficial.**
83
**Limited Liability Company:**
Transferability of Ownership
The ownership interests (membership interests) in an LLC can be transferred, but this often requires the consent of other members as specified in the operating agreement or under state law. Some restrictions on transferability can be put in place.
84
**Limited Liability Company:**
Continuity of Venture
The continuity of an LLC is generally not affected by changes in membership. If a member leaves or new members join, the LLC can continue to operate without interruption.
85
**Limited Liability Company:**
Cost of Formation
The cost of forming an LLC varies by state, but it is generally moderate compared to other business structures like corporations. There are filing fees and, in some cases, costs associated with drafting an operating agreement.
86
**Limited Liability Company:**
Ability yo Raise Capital
LLCs have the ability to raise capital through various means, including contributions from members, loans, or taking on additional members. However, compared to corporations, raising capital through the sale of ownership interests may be more complex.
87
**Limited Liability Company:**
Management Structure
LLCs have flexibility in choosing their management structure. They can be member-managed, where all members participate in the day-to-day operations, or manager-managed, where one or more designated managers handle operations.
88
**Limited Liability Company:**
Privacy of Ownership
In many jurisdictions, the ownership of an LLC is not required to be disclosed publicly. This can provide a level of privacy for the members.
89
**Limited Liability Company:**
Regulatory Compliance
LLCs may have fewer regulatory requirements compared to corporations. However, they are still subject to certain legal and financial obligations.
90
**Limited Liability Company:**
Flexibility in Operating Agreement
LLCs have the freedom to create an operating agreement that outlines the internal operations, management structure, and distribution of profits. This document can be tailored to the specific needs and preferences of the members.
91
***Private* Liability Company:**
Formation
Formation of a Private Limited Company involves registering the business with the appropriate government authority, which varies by jurisdiction. This typically includes providing information about the company's name, address, business activities, and the names of its directors and shareholders.
92
***Private* Liability Company:**
Owner’s Liability
The liability of the owners (shareholders) in a Private Limited Company is limited to the amount they have invested in the company. Personal assets of the shareholders are generally protected from the company's debts and liabilities.
93
***Private* Liability Company:**
Number of Ownersk
APrivate Limited Company can have **two to fifty shareholders.** The exact number may vary depending on the jurisdiction.
94
***Private* Liability Company:**
Tax Liability
Private Limited Companies are subject to **corporate income tax** on their profits. The company itself pays taxes on its earnings. Shareholders are only taxed on any **dividends they receive from the company.**
95
***Private* Liability Company:**
Transferability of Ownership
Shares in a Private Limited Company can be transferred or sold, but this usually requires the **approval** of other shareholders and may be subject to restrictions outlined in the company's articles of association or shareholder agreement.
96
***Private* Liability Company:**
Continuity of Venture
The continuity of a Private Limited Company is not affected by changes in ownership. The company can continue to operate even if shareholders change.
97
***Private* Liability Company:**
Cost of Formation
The cost of forming a Private Limited Company can vary depending on the jurisdiction and may include registration fees, legal fees, and other associated costs. It is generally more **expensive** to establish compared to simpler business structures like sole proprietorships.
98
***Private* Liability Company:**
Ability to Raise Capital
Private Limited Companies have the ability to raise capital through various means, including issuing shares to new shareholders, borrowing from financial institutions, or reinvesting profits back into the company.
99
***Private* Liability Company:**
Privacy of Ownership
Ownership of shares in a Private Limited Company is typically not a matter of public record. This provides a level of privacy for the shareholders.
100
***Private* Liability Company:**
Regulatory Compliance
Private Limited Companies are subject to regulatory requirements, including filing annual financial statements and complying with local business laws. However, they often have fewer regulatory obligations compared to public companies.
101
***Private* Liability Company:**
Management and Governance
Private Limited Companies are typically managed by **directors appointed by the shareholders.** The shareholders have the **ultimate authority** in major decisions, and they may appoint and remove directors as per the company's **articles of association.**
102
***Private* Liability Company:**
Flexibility in Operation
Private Limited Companies have flexibility in terms of management structure and can be **customized** to suit the needs and preferences of the shareholders.
103
**State Owned Enterprises:**
Formation
SOEs are typically established through **government legislation** or by specific statutes. The legal framework for their establishment and operation is **defined** by the government.
104
**State Owned Enterprises:**
Owner’s Liability
As SOEs are government-owned entities, the **government is the sole owner.** Since the government cannot be held personally liable, it **assumes the liabilities** of the enterprise.
105
**State Owned Enterprises:**
Number of Owners
SOEs are owned **solely by the government.** They do not have multiple owners or shareholders like private companies.
106
**State Owned Enterprises:**
Tax Liability
SOEs may have specific tax arrangements. They might be subject to **special tax rules or exemptions** depending on their function and the policies of the government.
107
**State Owned Enterprises:**
Transferability of Ownership
Since the ownership of SOEs is vested in the government, it is not transferable in the same way as shares in a privately-owned company. The government may choose to privatize or divest the enterprise through specific procedures.
108
**State Owned Enterprises:**
Continuity of Venture
SOEs typically have a long-term perspective and are expected to **continue their operations regardless** of changes in government leadership or
political shifts.
109
**State Owned Enterprises:**
Cost of Formation
The cost of forming an SOE can vary widely depending on the nature and scale of the enterprise. It may involve **significant initial capital investment**
for infrastructure, equipment, and other resources.
110
**State Owned Enterprises:**
Ability to Raise Capital
SOEs may have the ability to raise capital through various means, including **government funding, loans, or issuing bonds.** They may also generate revenue through their **commercial activities.**
111
**State Owned Enterprises:**
Activities
SOEs can engage in a wide range of activities, including providing **essential public services like utilities,** transportation, and healthcare. They can also be involved in **commercial ventures** such as manufacturing, mining, or financial services.
112
**State Owned Enterprises:**
Regulation and Oversight
SOEs are subject to government regulations and policies. They are often **overseen by specific government departments or agencies** to ensure they fulfill their designated functions efficiently and transparently.
113
**State Owned Enterprises:**
Objectives
SOEs may have dual objectives: fulfilling their **commercial goals** while also serving broader **social, economic, or developmental purposes** set by the
government.
114
**State Owned Enterprises:**
Reporting and Accountability
SOEs are typically required to provide regular reports and financial statements to the government and, in some cases, to the public. This ensures **transparency and accountability in their operations.**
115
*NGO*
**Community Based Organizations:**
*CBOS*
Purpose
CBOs are non-profit organizations that operate at the local level to address specific community needs or concerns. They are often founded and led by **community members.**
116
*NGO*
**Community Based Organizations:**
*CBOS*
Funding
CBOs typically rely on a mix of **government grants, private donations, and community fundraising** efforts for funding.
117
*NGO*
**Community Based Organizations:**
*CBOS*
Structure
They are structured around a specific **mission or goal,** which could range from healthcare and education to social services or environmental conservation.
118
*NGO*
**Community Based Organizations:**
*CBOS*
Operations
CBOs **work directly** with the community they serve and often **involve community members** in decision-making and program implementation.
119
*NGO*
**Social Enterprises:**
Purpose
Social enterprises are businesses that aim to generate **social, economic or environmental impact** alongside **financial profit.** They use **entrepreneurial approaches to address social issues.**
120
*NGO*
**Social Enterprises:**
Funding
They generate *revenue* through their **business activities**, which is used to support their **social or environmental mission.**
121
*NGO*
**Social Enterprises:**
Structure
Social enterprises can take various forms, including **for-profit companies, non-profit organizations, or hybrid models.** The key is that they **prioritize social impact.**
122
*NGO*
**Social Enterprises:**
Operations
They operate with a dual focus on achieving both **financial sustainability and social objectives.** They often measure their success based on both **financial and social metrics.**
123
*NGO*
**Charities:**
Purpose
Charities are non-profit organizations that are established to provide **assistance and support to specific causes, groups, or communities.** They focus on **humanitarian,educational, or social welfare objectives.**
124
*NGO*
**Charities:**
Structure
Charities are organized around a **specific mission or cause**, such as *poverty alleviation, education, health, or disaster relief.*
125
*NGO*
**Charities:**
Funding
Charities rely *heavily* on **donations,
grants, and fundraising efforts** to support their activities. They are often **tax-exempt,** and donations to charities are typically **tax-deductible for donors.**
126
*NGO*
**Charities:**
Operations
They implement programs and activities that **directly contribute** to the betterment of society or the targeted group
127
*NGO*
**ENDOWMENTS/FOUNDATIONS:**
Purpose
Endowments and foundations are organizations that manage and **distribute financial resources** to support *charitable, educational, scientific, or cultural causes.*
128
*NGO*
**ENDOWMENTS/FOUNDATIONS:**
Funding
They are typically established with an **initial endowment,** and the funds
generated from **investments or other sources** are used to support their chosen causes.
129
*NGO*
**ENDOWMENTS/FOUNDATIONS:**
Structure
Endowments and foundations are governed by a **board of directors or trustees,** who oversee the organization's operations and grant-making activities.
130
*NGO*
**ENDOWMENTS/FOUNDATIONS:**
Operations
They focus on the **long-term impact** of their investments and grants, often
providing funding for **projects, programs, or initiatives aligned with their mission.**
131
**NGO*S***
**INCLUDING CBOS, SOCIAL
ENTERPRISES, CHARITIES,
ENDOWMENTS/FOUNDATIONS:**
Formation
• Formed by **individuals or groups** who share a common **social, environmental, or charitable goal.**
• Typically require legal registration with relevant government authorities, which may vary by country and jurisdiction.
• Often guided by a **mission statement or charter** that outlines their purpose and objectives.
132
**NGO*S***
**INCLUDING CBOS, SOCIAL
ENTERPRISES, CHARITIES,
ENDOWMENTS/FOUNDATIONS:**
Owner’s Liability
• Generally, there are no individual owners in the traditional sense. These organizations are typically managed by a **board of directors or trustees.**
• Members of the board or trustees usually have **limited liability,** protecting their *personal assets from the organization's debts and liabilities.*
133
**NGO*S***
**INCLUDING CBOS, SOCIAL
ENTERPRISES, CHARITIES,
ENDOWMENTS/FOUNDATIONS:**
Number of Owners
May have a **board of directors or trustees,** but there are no traditional owners or shareholders.
134
**NGO*S***
**INCLUDING CBOS, SOCIAL
ENTERPRISES, CHARITIES,
ENDOWMENTS/FOUNDATIONS:**
Tax Liability
Depending on their *status and activities*, NGOs may have **tax exemptions or favorable tax treatment.**
135
**NGO*S***
**INCLUDING CBOS, SOCIAL
ENTERPRISES, CHARITIES,
ENDOWMENTS/FOUNDATIONS:**
Ability to Raise Capital
•Typically rely on **donations, grants, and fundraising efforts for funding.**
•Some social enterprises within this category may generate revenue through **business activities.**
136
**NGO*S***
**INCLUDING CBOS, SOCIAL
ENTERPRISES, CHARITIES,
ENDOWMENTS/FOUNDATIONS:**
Continuity of the Venture
Generally, the mission and activities of these organizations persist **independently of changes in leadership or membership.**
137
**NGO*S***
**INCLUDING CBOS, SOCIAL
ENTERPRISES, CHARITIES,
ENDOWMENTS/FOUNDATIONS:**
Cost of Formation
Formation costs *vary* by **jurisdiction and the complexity of the organization's structure.** Costs may include **legal fees, registration fees, and ongoing compliance expenses.**
138
**NGO*S***
**INCLUDING CBOS, SOCIAL
ENTERPRISES, CHARITIES,
ENDOWMENTS/FOUNDATIONS:**
Transferability of Ownership
Ownership and control typically **do not transfer easily** since there are **no traditional owners or shareholders.**
139
**Cooperative Societies:**
Purpose
Cooperative societies are organizations
formed by **individuals or businesses with shared economic interests.** They operate for the **mutual benefit of their members.**
140
**Cooperative Societies:**
Funding
Members contribute **capital and share** in the profits or benefits generated by the cooperative's activities.
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**Cooperative Societies:**
Structure
Cooperatives can take various forms, such as **agricultural cooperatives, worker cooperatives, or consumer cooperatives.** They are owned and ***democratically* controlled by their members.**
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**Cooperative Societies:**
Operations
They engage in economic activities, such as **production, distribution, or services**, with the aim of benefiting their **members collectively.**
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**Cooperative Societies:**
Formation
• Formed by a **group of individuals or businesses with shared economic interests**. Cooperatives can take various forms, such as **agricultural cooperatives, worker cooperatives, or consumer cooperatives.**
• Registration requirements vary by location and the type of cooperative.
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**Cooperative Societies:**
Owner’s Liability
• Members of a cooperative share **collective ownership and management responsibilities.**
• Members typically have **limited liability** and are **not personally responsible^* for the cooperative's debts beyond their investment or shares.
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**Cooperative Societies:**
Number of Owners
Have **multiple members**, with *each member* having a **stake in the cooperative's operations.**
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**Cooperative Societies:**
Tax Liability
The tax treatment of cooperatives varies by jurisdiction and type. **Some cooperatives may enjoy tax advantages.**
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**Cooperative Societies:**
Ability to Raise Capital
•Can raise capital by **selling shares or membership interests to members.**
•May also generate capital through the
**cooperative's business activities or trading.**
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**Cooperative Societies:**
Continuity of Venture
The continuity of a cooperative depends on the **cooperative's rules and governance structure.** It **may continue even with changes in membership or leadership.**
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**Cooperative Societies:**
Cost of Formation
Costs associated with forming a cooperative society can also vary depending on **local requirements and the type of cooperative being established.**
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**Cooperative Societies:**
Transferability of Ownership
Ownership interests or shares in cooperatives can often be **transferred to other members,** subject to the **cooperative's bylaws and regulations.**
