User:Drkazakos/sandbox

Nonprofit Sharing
An accounting theory postulated by Daniel Kazakos for attributing goodwill to companies through sharing profits with those outside company ownership. It was first used in the social enterprise Vuzama.

In application, companies share funds that would otherwise go to ownership. These funds are instead dispersed to other entities. Goodwill is increased under assets and a new account under equity is created titled “nonprofit sharing.” The nonprofit sharing account is increased as money is distributed to non-ownership interests such as nonprofits, businesses or individuals. The nonprofit sharing account is treated exactly as an ownership equity account for all intents and purposes of the accounting equation and closing entries. However, it is increased as monies are dispersed to other interests.

An example:

Company “A” sells a membership for $40.00 to customer “X.” Of that total, $10 is shared with a nonprofit; decreasing cash by $10 and increasing operating expenses, goodwill and nonprofit sharing by $10.