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

SupporTED 2013Collaboratorium