Date post: | 08-May-2015 |
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STRUCTURING YOUR SOCIAL !ENTERPRISE
by Jon Gosier @jongos
#FTW
FOR THE WIN!
GROUND RULES1. An excuse from doing is not an excuse
from knowing. !
2. If you don’t want to learn, find a job. !
3. It’s only on intimidating until you take the time to research.
THE LAY OF THE LAND*1. For-Profit 2. Non-Profit 3. Not-For-Profit 4. Social Enterprise 5. Hybrid 6. Partnership
* Focuses on legal entities recognized in the United Sates
Growth & !Profits
Public Benefit!&!
Charity
Service &!Support
For-Profit Non-Profit
Not-For-Profit
LLC
B Corp L3C
501(c)
For-Profit Non-Profit
Not-For-Profit
Growth & !Profits
LLC
B Corp L3C
501(c)
Public Benefit!&!
Charity
Service &!Support
FOR-PROFITYou want institutional investors. Eventually you want to sell or go public. Equity pool for employees. Preferred options for critical staff. You are seeking profits and/or growth.
EXAMPLES:
FOR-PROFIT
Sole-Proprietorship (no employees) LLC (choose taxation) S-CORP (flow-through)
C-CORP (taxed separately from owners)
EXAMPLES:
FOR-PROFIT
If you’re a start-up seeking venture capital, you’ll almost certainly need to convert to a C Corp but it’s not necessary to transition prior to receiving funding. The conversion costs are usually covered by the investor (deducted from the amount invested). !
Many Startup Accelerators and Angel investors are experienced at helping startups become ‘investible’.
NON-PROFITYou have an important cause, but no [important] money.
You like a lot of paper work. !
You are seeking grant, foundation, or donor support. !
Being a non-profit does not mean instant poverty.
EXAMPLES:
NOT-FOR-PROFIT
The IRS explains that ‘not-for-profit’ refers to organizations supporting activities, for example, hobbies (like fishing or comic collecting).
!
In contrast, "nonprofit" refers to an organization established for purposes other than profit-making. Non-profit and not-for-profit do not necessarily
mean "charitable."
SOCIAL ENTERPRISEYou want it all!
!
You want to do good & make money. You want to become an expert at creative accounting!
!
Legal framework and related policies are rapidly evolving.
EXAMPLES:
SOCIAL ENTERPRISE
LLC (choice of taxation model) L3C (can accept Investor or Foundation funding, charitable first, taxed like LLC)
B-Corp (taxed like an S or C Corp with public responsibility) Hybrid model Partnership
SOCIAL ENTERPRISE
From the point of view of IRS, the benefit corporation and L3C are no different from traditional for-profit entities.
HYBRID MODELS
Brother-Sister Relationship For-Profit Subsidiary Shared Management
EXAMPLES:
PARTNERSHIPS
Fiscal Agent Joint-Venture Agreement Corporate Sponsorship
Growth & !Profits
LLC
B Corp L3C
501(c)
Public Benefit!&!
Charity
Service &!Support
Jon Gosier, CEO D8A Group Technology | Ideation | Design
@jongos
SupporTED Collaboratorium 2013
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