By Christina Fernández-Morrow
When Alexis Espinoza-Arrubla launched Fern Vibes in 2022, she knew exactly what she wanted to create: mindfulness-based regulation programs using trauma-informed yoga, relaxation techniques, sound therapy, and creative activities. What she didn’t know was that two years later, she would be running two separate entities.
In 2024, she established Fern Foundation, a nonprofit offering free services to children and families, but she kept Fern Vibes operating as a for-profit business.
The shift brought unexpected challenges. Espinoza-Arrubla quickly discovered that finding and writing grants can be a full-time job on its own.
Her experience raises a question that mission-driven entrepreneurs increasingly face: Should you structure your venture as a 501(c)(3) nonprofit, operate as a traditional small business, or manage both?
Six Critical Differences
1) Structure and Governance
Small business: You control decisions. Espinoza-Arrubla runs Fern Vibes with complete autonomy, adjusting programs and pricing based on market and community demand in Omaha.
Nonprofit: A board of directors provides oversight and must approve major decisions. Espinoza-Arrubla’s board members also lead operations and fundraising, opening doors and making connections she couldn’t access alone.
Bottom line: Nonprofits trade speed for accountability but gain strategic partners in board members, often local leaders who know the community.
2) Revenue
Small business: Sell goods and services at rates designed to generate profit for owners. Espinoza-Arrubla charges market rates for Fern Vibes programs, from workshops to private sessions.
Nonprofit: Can charge for services, but all revenue must support the mission rather than enrich individuals. Fern Foundation relies on fundraising events, grants, and donations to cover the cost of offering free services.
Bottom line: Both can generate revenue, but only businesses can distribute profits to owners.
3) Taxes
Small business: Pay taxes on profits.
Nonprofit: Exempt from federal income tax and often state and local taxes. More significantly, donations to Fern Foundation are tax deductible for donors, which can strengthen fundraising appeals in a giving community like Omaha.
Bottom line: Tax deductible donations are a nonprofit’s superpower, but qualifying requires meeting specific IRS criteria and maintaining ongoing compliance, which can cost money.
4) Funding Options
Small business: Espinoza-Arrubla can reinvest Fern Vibes’ profits as she chooses, take out business loans, or bring in investors willing to accept equity stakes.
Nonprofit: These options do not exist. Instead, Fern Foundation pursues grants, corporate sponsorships, individual donations, and fundraising events.
Many funding sources will only support registered nonprofits, and accessing funds requires substantial work. Espinoza-Arrubla spent hours searching online for local grants before finding the Futuro Latino grant awarded by the Omaha Foundation. She then spent four months gathering statistics to prove her programs achieved desired outcomes, followed by a full week writing the application. She asked for $50,000 and was awarded $10,000.
“There are search engines that can find grants, but those are pricey,” Espinoza-Arrubla said. She used AI to find potential sources, then verified that the grants were legitimate. She built a calendar of due dates to plan around applications, a practical habit to stay on track.
The work does not end when grants are awarded. Espinoza-Arrubla must carefully track results to write required grant reports and ensure eligibility for renewal.
Bottom line: Nonprofits access charitable funding that can be unreliable; businesses access investment capital. Grant funding requires skills, systems, and significant time investment. It also involves rejection, receiving less than anticipated, and opportunities may not be renewable year after year.
5) Operational Flexibility
Small business: Espinoza-Arrubla can test new Fern Vibes offerings, adjust pricing weekly if needed, and shift her entire business model without external approval, which is useful when responding to Omaha families’ changing schedules and distinct needs.
Nonprofit: Adding a new program area, vendor, or employee requires board discussion and approval. Changing how funds are allocated also requires documentation and sometimes permission from the funding source.
Bottom line: Businesses can pivot when necessary; nonprofits move by processes that take time and depend on various decision-makers.
6) Reporting Requirements
Small business: Espinoza-Arrubla can use basic accounting, tax returns, and whatever reporting she chooses for her own management purposes.
Nonprofit: Beyond standard bookkeeping, Fern Foundation must file annual Form 990 returns with the IRS (public record), track restricted grants separately from general donations, maintain detailed program expense records, and produce reports for multiple stakeholders.
Bottom line: Nonprofit transparency requirements are substantial, can be costly, and are ongoing.
Which Path Is Right for You?
Can your target audience afford to pay market rates? If yes, a business structure offers maximum flexibility with minimum bureaucracy. If not, you’ll need charitable funding that typically requires nonprofit status.
Does your mission fall within IRS-recognized charitable purposes? These commonly include the relief of poverty, advancement of education or religion, promotion of health, government support, or other community benefits. Outside these categories, nonprofit status may not be available.
Can you dedicate time to grant work? “Grant writing is different than almost anything you do in business,” Espinoza-Arrubla said. She took a course to learn. It takes time away from operations. Hiring grant writers is an option, but it is usually costly and is usually not covered by other grants, so it requires a reserve of unrestricted funds. Aside from searching for and writing grants, you’ll need protocols that generate required data, tracking systems, and ongoing reporting capabilities.
How quickly do you need to make decisions? Startups and ventures in rapidly changing fields often find nonprofit governance constraining. Board oversight slows decision-making but provides strategic support.
Can you manage nonprofit compliance? Espinoza-Arrubla spent months and several thousand dollars establishing Fern Foundation. She now manages two sets of financial records, holds regular board meetings, and ensures neither entity violates any rules.
Are you serving two distinct populations? Espinoza-Arrubla kept both structures because she wanted representation in mindfulness and wellness spaces. “Paying it forward while bridging cultural and generational gaps is close to my heart and central to my mission,” she explained.
The Bottom Line
Structure follows strategy. Before choosing between nonprofit and for-profit status, clarify your mission, identify your funding sources, and honestly assess your capacity.
The question isn’t which structure is better. It’s which structure, or combination of structures, best serves the impact you’re trying to create and the reality of how you’ll fund that work.
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