STRUCTURING YOUR SOCIAL !
ENTERPRISE
#FTW
by Jon Gosier
@jongos
FOR

THE

WIN!
GROUND RULES
1. An excuse from doing is not an excuse
from knowing.
!

2. If you don’t want to learn, find a job.
!

3. It...
THE LAY OF THE LAND*
1. For-Profit
2. Non-Profit
3. Not-For-Profit
4. Social Enterprise
5. Hybrid
6. Partnership

* Focuse...
Growth & !
Profits

Public Benefit!
&!
Charity

Service &!
Support
For-Profit

Non-Profit

Not-For-Profit
B Corp
L3C
For-Profit

LLC

Non-Profit

Not-For-Profit

501(c)
B Corp
L3C
Growth & !
Profits

LLC

Public Benefit!
&!
Charity

Service &!
Support

501(c)
FOR-PROFIT
You want institutional investors.
Eventually you want to sell or go public.
Equity pool for employees.
Preferre...
FOR-PROFIT
Sole-Proprietorship (no employees)
LLC (choose taxation)
S-CORP (flow-through)
C-CORP (taxed separately from ow...
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 ...
NON-PROFIT
You have an important cause, but no [important] money.
You like a lot of paper work.
!

You are seeking grant, ...
NOT-FOR-PROFIT
The IRS explains that ‘not-for-profit’ refers to organizations supporting
activities, for example, hobbies ...
SOCIAL ENTERPRISE
You want it all!
!

You want to do good & make money.
You want to become an expert at creative accountin...
SOCIAL ENTERPRISE
LLC (choice of taxation model)

L3C (can accept Investor or Foundation funding, charitable first, taxed ...
SOCIAL ENTERPRISE
From the point of view of IRS, the benefit corporation and L3C are no
different from traditional for-pro...
HYBRID MODELS
Brother-Sister Relationship
For-Profit Subsidiary
Shared Management

EXAMPLES:
PARTNERSHIPS
Fiscal Agent
Joint-Venture Agreement
Corporate Sponsorship
B Corp
L3C
Growth & !
Profits

LLC

Public Benefit!
&!
Charity

Service &!
Support

501(c)
SupporTED Collaboratorium 2013

Jon Gosier, CEO D8A Group
Technology | Ideation | Design
@jongos
SupporTED 2013
Collaboratorium
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Structuring Your Social Enterprise #FTW

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One of the most intimidating things about being an entrepreneur or founder of an organization can be the first steps of incorporating and legally structuring things.

The good thing to note is that if you make a mistake at the beginning, its almost always addressable down the road (but it can require a lot of time or significant cost).

What's the best legal structure for your social enterprise? Why do these different models exist?

Published in: Business, Economy & Finance
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Structuring Your Social Enterprise #FTW

  1. 1. STRUCTURING YOUR SOCIAL ! ENTERPRISE #FTW by Jon Gosier @jongos
  2. 2. FOR THE WIN!
  3. 3. GROUND RULES 1. 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.
  4. 4. 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
  5. 5. Growth & ! Profits Public Benefit! &! Charity Service &! Support
  6. 6. For-Profit Non-Profit Not-For-Profit
  7. 7. B Corp L3C For-Profit LLC Non-Profit Not-For-Profit 501(c)
  8. 8. B Corp L3C Growth & ! Profits LLC Public Benefit! &! Charity Service &! Support 501(c)
  9. 9. FOR-PROFIT You 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:
  10. 10. FOR-PROFIT Sole-Proprietorship (no employees) LLC (choose taxation) S-CORP (flow-through) C-CORP (taxed separately from owners) EXAMPLES:
  11. 11. 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’.
  12. 12. NON-PROFIT You 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:
  13. 13. 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."
  14. 14. SOCIAL ENTERPRISE You 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:
  15. 15. 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
  16. 16. SOCIAL ENTERPRISE From the point of view of IRS, the benefit corporation and L3C are no different from traditional for-profit entities.
  17. 17. HYBRID MODELS Brother-Sister Relationship For-Profit Subsidiary Shared Management EXAMPLES:
  18. 18. PARTNERSHIPS Fiscal Agent Joint-Venture Agreement Corporate Sponsorship
  19. 19. B Corp L3C Growth & ! Profits LLC Public Benefit! &! Charity Service &! Support 501(c)
  20. 20. SupporTED Collaboratorium 2013 Jon Gosier, CEO D8A Group Technology | Ideation | Design @jongos
  21. 21. SupporTED 2013 Collaboratorium

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