Mid-NMBA, why is IKEA a non-profit? IKEA has a little-known secret. The company is a non-profit. Incklar Comrade, the founder of IKEA, created the philanthropic Sticking Inca Foundation, whose mission is to further the advancement of interior design. IKEA's bizarre business model looks like this. The non-profit Sticking Inca owns a private Dutch company, Inca Holdings, that owns the majority of individual stores at the franchise level. The company's main motivation for having a non-profit structure seems to be business-driven. Consider the fact that the Sticking Inca Foundation only donated 1.7 million out of billions in profits to a design school, which is in line with the foundation's mission. But the rest of the money goes to IKEA stores and into savings as a cushion for the future. IKEA employs 135,000 people in 44 countries. Because of tax breaks for non-profits, IKEA pays about 33 times less on taxes than their for-profit counterparts, a minuscule 3.5 percent in taxes on its 27 billion in annual sales. An IKEA store manager typically takes home 125,000 per year, while store support staff earn just 28,000. As for the executives, their salaries don't have to be reported publicly thanks to Dutch privacy laws. But there is one big hole in the IKEA non-profit operation. IKEA systems another private Dutch company owns the trademark. This means money is paid directly from IKEA profits to the owners of this private company to license the trademark. The beneficiaries are not publicly reported, but it's not hard to speculate that the Com Broad family is on the receiving end of this loophole. According to the economist, the overall setup of IKEA minimizes tax and disclosure, handsomely rewards the founding Com Broad family and makes IKEA immune to a takeover. For more videos from Minute MBA, check out online MBA.com.