How can for-profit entities primarily raise capital?

For-profit entities primarily raise capital by selling shares of stock. This method allows these businesses to attract investments from individuals and institutional investors who believe in the company's potential for growth and profitability. By issuing shares, a for-profit can obtain funds that can be used for various purposes such as expanding operations, investing in new technologies, paying off debt, or enhancing marketing efforts.

This approach not only generates immediate capital but also aligns the interests of shareholders with those of the company; as the company grows and becomes more profitable, the value of the shares increases, benefiting the investors. Selling shares via an initial public offering (IPO) or subsequent offerings provides a significant means of funding for many for-profit entities, particularly as they scale or embark on major projects.

In contrast, the other methods listed—such as donations, grants, tax-exempt bonds, and government funding—are more aligned with non-profit organizations or specific circumstances and do not generally apply to for-profit entities in the same way. Non-profits rely heavily on donations and grants, while tax-exempt bonds are typically used by government entities or non-profit organizations for funding projects with a public benefit. Government funding may be accessible in certain contexts but is not a primary capital-raising mechanism for for-profit enterprises.