Forms of Business Organisation (PART - 2)
By Elina Kapoor · Tier 1 · 2026-01-08
Not-for-Profit Organisation
These organisations work for social, charitable, or welfare purposes. Profits are reinvested in achieving objectives instead of being distributed as dividends.
1. Society
A society is a charitable or non-profit organisation formed by a group of people for a social purpose.
Features
• Governed by Society Registration Act, 1860 • Registered under Registrar of Societies • Members do not own assets; assets belong to the society • Works for education, health, or community welfare
Example Red Cross Society, Lions Club.
2. Trust
A trust is a legal arrangement where a person transfers property or assets to another for charitable or religious purposes.
Features
• Minimum 2 trustees • Registered with Charity Commissioner • Governed by Indian Trusts Act, 1882 • Managed by a governing council or managing committee
Example Tata Trusts, Birla Trusts.
3. Company
A company formed under Section 8 of the Companies Act, 2013 for promoting commerce, art, science, education, charity, or social welfare.
Features
• Profit is reinvested into company objectives • Cannot distribute dividends to members • Can attract investors for social entrepreneurship • Legally treated as a non-profit company
Tax and CSR
Tax
Non-profit organisations are exempted from income tax under certain sections if they spend at least 85% of their income on charitable activities.
CSR
Companies earning beyond a certain limit must spend 2% of the average net profits of the last 3 years on Corporate Social Responsibility activities such as education, health, and environment.
Entrepreneurial Process -
Step 1: Conceptualising
• Reframing the problem • Information gathering • Counterfactual thinking • Preliminary validation • Hypothetical testing • Feasibility analysis
Step 2: Institutionalising
• Defining scope of enterprise (B2B, B2C) • Setting milestones for achievement of objectives (SMART) • Developing a strategy • Formalising the core team • Acquiring necessary resources and assets • Establishing alliances • Launching a low-cost pilot program
Step 3: Trust Building
• Demonstrating positive outcomes • Engaging stakeholders
Step 4: Refining the Model
• Reviewing and updating plausible outcomes • Re-hypothesizing the business model
Step 5: Scaling
• Impact creation • Partnerships and alliances • Replication • Franchising